In the Matter of the Denial of Dispensary Permit Endorsement for Spectrym Consulting Group, LLC

New Jersey Superior Court Appellate Division·Decided December 20, 2023·No. A-1465-21·Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-1465-21

IN THE MATTER OF THE DENIAL OF DISPENSARY PERMIT ENDORSEMENT FOR SPECTRYM CONSULTING GROUP, LLC, TO OPERATE AN ALTERNATIVE TREATMENT CENTER PURSUANT TO THE 2019 REQUEST FOR APPLICATION PROCESS.

Submitted November 8, 2023 – Decided December 20, 2023 Before Judges Whipple, Mayer and Enright.

On appeal from the Cannabis Regulatory Commission.

Pashman Stein Walder Hayden, attorneys for appellant Spectrym Consulting Group, LLC (Gregg Howard Hilzer and Janie Byalik, on the briefs).

Matthew J. Platkin, Attorney General, attorney for respondent Cannabis Regulatory Commission (Melissa H. Raksa, Assistant Attorney General, of counsel;

Jacqueline R. D'Alessandro, Deputy Attorney General, on the brief).

PER CURIAM

Appellant Spectrym Consulting Group, LLC (Spectrym), (d/b/a The Helix Center), 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). We affirm.

I.

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, A-0943-21, A-1326-21 (App. Div. Dec. 8, 2023) (slip op. at 2).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.

1 While Rule 1:36-3 generally precludes reference to unpublished opinions, we may refer to an unpublished decision for case history.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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Briefly, the Compassionate Use of Medical Cannabis Act, N.J.S.A. 24:6I-

1 to -56 (the Act), provides qualifying patients and their caregivers with protection from arrest, prosecution, and other penalties for possessing cannabis for medical purposes. N.J.S.A. 24:6I-2(e).2 The Act also protects those authorized to produce, process, and dispense marijuana pursuant to the statute 's terms. N.J.S.A. 24:6I-7. Initially, the Act charged the Department of Health (DOH) with implementing New Jersey's Medical Cannabis Program (MCP). This included creating a registry of qualified patients and issuing permits for the operation of ATCs. N.J.S.A. 24:6I-4; N.J.S.A. 24:6I-7.1. The CRC has since assumed management of the MCP. N.J.S.A. 24:6I-24(a).

N.J.S.A. 24:6I-7(h)(3) requires that the CRC "seek to ensure the availability of a sufficient number of [ATCs] throughout the State, pursuant to need." The CRC promulgated regulations, N.J.A.C. 17:30A-1.1 to -13.11, providing the framework through which it issues Requests for Applications (RFAs) for the operation of ATCs.

2 All citations to the Act are to its current amended form, L. 2021, c. 252.

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The Act was amended effective July 2, 2019,3 and now allows the CRC to issue separate permits for entities to operate as medical cannabis cultivators, manufacturers, or dispensers. N.J.S.A. 24:6I-7(a)(1); N.J.A.C. 8:64-7.1(e). The new N.J.S.A. 24:6I-7.2(c), (d), and (e) set forth detailed lists of criteria the CRC must use in evaluating applications for each type of permit.

On July 1, 2019, the DOH issued an RFA, seeking applicants for the new types of permits that would soon be available: five cultivation endorsements, 4 fifteen dispensary endorsements, 5 and four vertically integrated (VI)6 endorsements. The RFA contemplated one VI, two cultivation, and five dispensary endorsements each for the northern and central regions of the State, and one VI, one cultivation, and five dispensary endorsements for the southern

3 See L. 2019, c. 153. Because the RFA was issued one day prior to the amendments' effective date, it is governed by the prior iteration of the Act. 4 These endorsements are the functional equivalent of permits. Thus, the terms were used interchangeably in the RFA. 5 The CRC subsequently doubled the dispensary awards issued under the 2019 RFA from fifteen to thirty "to keep pace with expanding patient enrollment." 6 VI endorsements allow an entity to grow, process, and sell marijuana as part of the State's MCP.

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region. The DOH received 198 applications for the various types of endorsements, including 109 applications for dispensary permit endorsements.

The 2019 RFA described the application. Part A, titled "Mandatory Information," included the applicant entity's organizational documents; evidence of good standing with the Department of the Treasury; information about principal officers, directors, owners, and board members; verification of the approval of the municipality where the ATC would be located; evidence of ownership or lease of the proposed site; and evidence of compliance with local laws.

Part B consisted of the "Scored Criteria" upon which applicants would be judged. These criteria asked applicants to describe their proposed operations, experience, security and quality control plans, financing, and other aspects of running an ATC. Applicants were directed to file a PDF or printed document of not more than 100 pages for each endorsement they sought for Part B.

Once received, the DOH would "review [all applications] for completeness and truthfulness" to determine "whether an applicant passe[d] or fail[ed] a particular requirement in the mandatory section." If the DOH deemed an application complete, its Part B would then be "reviewed and scored by a selection committee" comprised of nine employees from the DOH, the

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Department of the Treasury, the Department of Environmental Protection, and the Department of Labor.

In September 2019, the selection committee members attended a training, which included instruction on how they were to review applications. They also were given detailed instructions for scoring each criterion and measure. The instructions informed reviewers what to consider when evaluating applications and when it was appropriate to give a score of zero, the maximum possible points, or any score in between.

To complete scoring of the applicants' Part B submissions, the CRC divided the nine selection committee members into three teams of three, based on their expertise, and assigned each team to review a specific group of criteria and measures for which that expertise was relevant. Team One, which consisted of Reviewers 2, 5, and 6, had experience in quality assurance, public health, emergency preparedness, pharmaceutical assistance, fiscal management, public affairs, and the management of environmental resources. This team reviewed Criteria 1 through 5, which involved an applicant's "[a]bility to meet the overall health needs of qualified patients and safety of the public"; "[h]istory of compliance with regulations and policies governing government-regulated marijuana programs"; "[a]bility and experience . . . in ensuring an adequate

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supply of marijuana"; "[c]ommunity [s]upport and [p]articipation"; and "[a]bility to provide appropriate research data."

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