JG Ohio, L.L.C. v. Ohio Dept. of Commerce

2024 Ohio 5066
CourtOhio Court of Appeals
DecidedOctober 22, 2024
Docket23AP-435
StatusPublished

This text of 2024 Ohio 5066 (JG Ohio, L.L.C. v. Ohio Dept. of Commerce) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
JG Ohio, L.L.C. v. Ohio Dept. of Commerce, 2024 Ohio 5066 (Ohio Ct. App. 2024).

Opinion

[Cite as JG Ohio, L.L.C. v. Ohio Dept. of Commerce, 2024-Ohio-5066.]

IN THE COURT OF APPEALS OF OHIO

TENTH APPELLATE DISTRICT

JG Ohio LLC, :

Appellant-Appellant, : No. 23AP-435 v. : (C.P.C. No. 21CV-639)

State of Ohio, Department of Commerce, : (REGULAR CALENDAR)

Appellee-Appellee. :

D E C I S I O N

Rendered on October 22, 2024

On brief: Loevy & Loevy, Frank Newell, and Mike Kanovitz; The Law Office of Michele L. Berry, LLC, and Michele L. Berry, for appellant. Argued: Frank Newell.

On brief: Dave Yost, Attorney General, and Daniel J. Martin, for appellee. Argued: Daniel J. Martin.

APPEAL from the Franklin County Court of Common Pleas

DORRIAN, J. {¶ 1} Appellant, JG Ohio, LLC (“JG”), appeals from a judgment of the Franklin County Court of Common Pleas affirming an order issued by appellee, Ohio Department of Commerce (“the Department”), denying JG’s application for a medical marijuana processor provisional license. For the following reasons, we affirm. No. 23AP-435 2

I. Facts and Procedural History {¶ 2} In 2016, the General Assembly created the Ohio Medical Marijuana Control Program.1 2016 Sub.H.B. No. 523; R.C. 3796.02. Pursuant to R.C. 3796.02, the Department is responsible for licensure of medical marijuana processors. The Department has promulgated rules, contained in Ohio Adm.Code Chapter 3796:3, to govern the licensure and operations of medical marijuana processors. {¶ 3} The Department was authorized to issue up to 40 processor provisional licenses during the initial licensure period. Ohio Adm.Code 3796:3-1-01(A). An applicant for a processor license was required to submit a non-refundable application fee, a business plan, an operations plan, a quality assurance plan, a security plan, and a financial plan. Ohio Adm.Code. 3796:3-1-02(B). Applicants’ plans were required to meet minimum requirements set forth in the rules. Ohio Adm.Code. 3796:3-1-02(B). Applications were to be ranked using an “impartial and numerical process” based on certain criteria related to each of the plans. Ohio Adm.Code 3796:3-1-03(B). The rules provided that “[a] provisional license shall be issued to the qualified applicant receiving at least the minimum required score in each category and the highest total score overall as compared to the other applicants.” Ohio Adm.Code 3796:3-1-04(A). A. Request for applications and scoring of applications {¶ 4} The Department issued a request for applications for processor provisional licenses. The application was divided into two sections; the first part was a “pass/fail” portion assessing whether an applicant satisfied the mandatory qualification criteria, and the second part was a scored portion assessing an applicant’s business, operations, quality assurance, security, and financial plans. The business plan was worth up to 10 points, the operations plan was worth up to 30 points, the quality assurance plan was worth up to 30 points, the security plan was worth up to 20 points, and the financial plan was worth up to 10 points. Applicants were required to achieve a minimum total score of 60 points and a

1 As originally enacted, responsibility for administering the Ohio Medical Marijuana Control Program was

divided between the Department and the Ohio Board of Pharmacy. 2016 Sub.H.B. No. 523; JG City, L.L.C. v. State Bd. of Pharmacy, 10th Dist. No. 21AP-38, 2021-Ohio-4624, ¶ 2. The General Assembly amended R.C. 3796.02 in 2023, creating a Division of Marijuana Control within the Department and giving that division sole responsibility for administering the program. 2023 Am.Sub.H.B. No. 33. Licensure of medical marijuana processors was always within the purview of the Department; therefore, the change to R.C. 3796.02 does not affect this appeal. No. 23AP-435 3

minimum score for each scored plan (6 points each for the business and financial plans, 12 points for the security plan, and 18 points each for the operations and quality assurance plans) to be eligible for a processor provisional license. The Department used three-person teams to score each plan—i.e., there was a business scoring team, an operations scoring team, a quality assurance scoring team, a security scoring team, and a financial scoring team. The scoring teams used standardized score sheets developed by the Department to determine whether applicants’ plans satisfied the scoring criteria. {¶ 5} The Department received 104 applications for processor provisional licenses, including the application JG filed on December 14, 2017. JG scored 10 points for its business plan, 21 points for its operations plan, 21 points for its quality assurance plan, 0 points for its security plan, and 10 points for its financial plan. {¶ 6} Of the 104 applications the Department received, only 14 obtained the required minimum score on each of the five plans evaluated in the scored part of the application. JG’s application failed to meet the minimum score requirement because JG received 0 points for its security plan. Therefore, JG was not eligible for a processor provisional license based on its initial application. B. Security plan clarification request and scoring {¶ 7} Because fewer than 40 applicants met the minimum score requirements, in October 2018, the Department sent a clarification request to the applicants that had not met the minimum required score for the security plan, including JG. The clarification request required an applicant to affirm that it would comply with certain provisions of the Ohio Revised Code and submit a revised facility plot plan. The clarification request provided that an applicant’s score on the security plan clarification would supersede its prior security plan score. {¶ 8} Security plan clarification submissions were scored as follows: 4 points were granted for making the required affirmation and the plot plans were evaluated for compliance with 8 specified criteria. Two points would be awarded for each criteria that was met; thus, 16 points were available on the scored portion if all 8 criteria were satisfied. {¶ 9} JG submitted a security plan clarification, which received a total score of 12 points—4 points for making the required affirmations and 8 points for satisfying 4 of the 8 scored criteria required for the plot plan. After the security plan clarification phase, JG had No. 23AP-435 4

a total overall score of 148.00.2 The lowest-ranking applicant receiving a processor provisional license had a total overall application score of 148.40. Because JG’s application was not within the top 40 qualifying scores, the Department gave JG notice of intent to deny its application for a medical marijuana processor license. C. Administrative hearing {¶ 10} JG requested a hearing on the notice of intent to deny its application. Prior to the hearing, JG issued subpoenas on the Department and members of the scoring teams. JG also requested the issuance of subpoenas to the entities that received processor provisional licenses (the “winning applicants”) seeking testimony and production of unredacted portions of the winning applicants’ applications. {¶ 11} The Department moved to quash the subpoenas issued to individuals who were not part of the scoring teams for the operations, quality assurance, or security plans. The Department argued that because JG received perfect scores on its business and financial plans it could not gain additional points by demonstrating error in those scores. Therefore, the Department argued, only the members of the scoring teams for the operations, quality assurance, or security plans could give testimony relevant to JG’s appeal. The Department also filed a motion in limine requesting an order limiting JG from introducing any evidence or testimony concerning any other applicant for a processor provisional license.

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Bluebook (online)
2024 Ohio 5066, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jg-ohio-llc-v-ohio-dept-of-commerce-ohioctapp-2024.