In the Matter of the Denial of a Dispensary Permit Endorsement to Guadco2 LLC, Etc.

New Jersey Superior Court Appellate Division·Decided December 19, 2023·No. A-1472-21·Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

DOCKET NO. A-1472-21

IN THE MATTER OF THE DENIAL OF A DISPENSARY PERMIT ENDORSEMENT TO GUADCO2 LLC TO OPERATE AN ALTERNATIVE TREATMENT CENTER PURSUANT TO THE 2019 REQUEST FOR APPLICATION PROCESS.

Argued November 8, 2023 – Decided December 19, 2023 Before Judges Whipple, Mayer and Enright.

On appeal from the New Jersey Cannabis Regulatory Commission.

John W. Bartlett argued the cause for appellant GuadCo2 LLC (Murphy Orlando LLC, attorneys; John W. Bartlett, Jason F. Orlando, and Tyler Newman, on the briefs).

Jacqueline R. D’Alessandro, Deputy Attorney General, argued the cause for respondent New Jersey Cannabis Regulatory Commission (Matthew J. Platkin, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Jacqueline R.

D’Alessandro, on the brief).

PER CURIAM

Appellant GuadCo2 LLC (GuadCo) appeals from a December 7, 2021 final agency decision issued by respondent New Jersey Cannabis Regulatory Commission (CRC) denying its application for a medicinal marijuana dispensary permit to operate an alternative treatment center (ATC) pursuant to the 2019 Request for Applications (RFA). GuadCo's appeal challenges the CRC's scoring of its application regarding the criteria designed to ensure diversity in issuing medicinal cannabis permits, known as Criterion Seven, Measure Three. Specifically, GuadCo contends the score it received under Criterion Seven, Measure Three, addressing women-owned businesses, was arbitrary, capricious, and unreasonable. We affirm.

We incorporate the background regarding the CRC's issuance of dispensary permits to operate ATCs set forth in the back-to-back companion cannabis permit cases presented to the panel on October 11, 2023. See I/M/O Denial of the Dispensary Permit Endorsement for AP NJ Health, LLC, No. A- 0783-21 (App. Div. Dec. 8, 2023); I/M/O Denial of Dispensary Permit Endorsement for Green Leaf Medical of New Jersey, LLC, No. A-0943-21 (App. Div. Dec. 8, 2023); I/M/O Denial of Dispensary Permit Endorsement for NJ

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Holistic Health, LLC, No. A-1326-21 (App. Div. Dec. 8, 2023).1 In our consolidated opinion on these back-to-back cannabis permit cases, we described, in detail, the process adopted by the CRC for reviewing permit applications to operate ATCs.

The RFA established an August 21, 2019 deadline for applicants seeking a dispensary permit. The RFA declared the deadline to be "absolute," noting that late filed applications would not be reviewed. The RFA also required all materials relevant to the review of an application to be provided by the deadline.

The CRC assigned teams to review each dispensary permit application.

Each team, consisting of selection committee members with relevant experience or expertise in a specific field, reviewed and scored a specific portion of the application.

Relevant here, Reviewer Three scored Criterion Seven, Measure Three regarding an applicant's status as a minority-owned business enterprise (MBE), women owned business enterprise (WBE), or veteran owned business (VOB).

1 While Rule 1:36-3 generally precludes reference to unpublished opinions, we may refer to an unpublished decision for case history. See Animal Prot. League of N.J. v. N.J. Dep't of Env't Prot., 423 N.J. Super. 549, 556 n.2 (App. Div. 2011) (citing Pressler & Verniero, Current N.J. Court Rules, cmt. 2 on R. 1:36-3 (2011)).

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According to the CRC, Reviewer Three had expertise in business development and minority, women, and veteran-owned businesses. Consistent with the directions provided with the RFA and the CRC's scoring instructions, Reviewer Three awarded points to applicants under Criterion Seven, Measure Three.

Reviewer Three awarded a full thirty-point score under Criterion Seven, Measure Three to applicants providing a MBE/WBE certification from the Department of Treasury's Division of Revenue. Those applicants lacking a Department of Treasury certification could receive a partial credit score based on the strength of the evidence supporting the applicant's claim to be a n MBE, WBE, or VOB. To receive partial credit, an applicant needed to demonstrate it would "meet the criteria [for certification] once generating revenue."

In awarding a partial credit score, Reviewer Three "was instructed to use their expertise to determine appropriate partial credit, based on the strength of the evidence provided in the application and their knowledge of the statutes and rules governing the . . . certification process[]." Additionally, in evaluating Criterion Seven, Measure Three, Reviewer Three was directed to consider only those persons or entities with an ownership interest of five percent or greater as listed in Part A, Question 20 of the RFA.

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After the applications were scored, the CRC audited the scores for statistical consistency and reviewed the scores for compliance with the scoring and the RFA instructions. The CRC also reviewed the scoresheets for accuracy and interviewed the scorers. The CRC's analysis confirmed "the overall scores, scores delivered by specific reviewers, and [whether] scores from each team were consistent and distributed in accordance with a normal and expected statistical curve."

In a November 10, 2021 memorandum entitled "General Responses to Debrief Questions," the CRC explained the scoring process. The memorandum addressed questions raised by applicants, including concerns about the scoring of Criterion Seven, Measure Three. The memorandum advised that applicants providing a Department of Treasury certification received the full thirty points allotted for this measure. In the absence of a Department of Treasury certification, a partial credit score up to twenty-five points was awarded if the applicant provided evidence that it would otherwise meet the MBE, WBE, or VOB certification requirements "once generating revenue."

Additionally, the memorandum provided examples of circumstances where an applicant received only a partial credit score, such as: stating the applicant possessed or would apply for certifications from entities other than the

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Department of Treasury, Division of Revenue 2; submitting information responsive to Part B of the application that contradicted the ownership information provided in Part A of the application or was inconsistent with certification requirements; providing certifications for a related entity rather than the current applicant; presenting a certification as its own where the certification was actually registered to a different entity; stating it did not meet certification requirements but would otherwise attempt to promote inclusivity and diversity in the future; or failing to submit sufficient information to determine whether it could qualify for a certification in the future. The memorandum further explained Reviewer Three's scores complied with the scoring instructions and were "consistent across applicants, consistent with the scoring instructions and RFA instructions, and reflective of the reviewer utilizing their unique expertise to evaluate the information submitted by applicants."

GuadCo timely filed an application for a dispensary permit in the Central region of the State. As of the filing deadline, GuadCo lacked a Department of

2 The CRC previously advised that only "certifications from the . . . Department of the Treasury's Division of Revenue ad Enterprise Services" would be considered in support of WBE status and declined to accept similar certifications from third-party organizations.

A-1472-21

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