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In re Institute for Health Research and Abunda Life Center

Superior Court of New Jersey, Appellate Division

August 22, 2013

IN THE MATTER OF THE INSTITUTE FOR HEALTH RESEARCH AND ABUNDA LIFE CENTER. IN THE MATTER OF THE ABATIN WELLNESS CENTER. IN THE MATTER OF GARDEN STATE MEDICAL MARIJUANA ASSOCIATES, INC.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted (A-0069-11 and A-0102-11) and argued (A-0103-11) February 11, 2013

On appeal from the New Jersey Department of Health and Senior Services.

Bronstein, Gewirtz & Grossman, LLC, attorneys for appellant Institute for Health Research and Abunda Life Center (Neil Grossman, of counsel; Ralph Fucetola, on the briefs). Pringle Quinn Anzano, PC, attorneys for appellant Abatin Wellness Center (Michael P. O'Connell, on the brief).

Jeffrey S. Chiesa, Attorney General, attorney for respondent New Jersey Department of Health and Senior Services (A-0069-11 and A-0102-11) (Melissa H. Raksa, Assistant Attorney General, of counsel; Kimberly E. Jenkins, Deputy Attorney General, on the briefs).

Charles X. Gormally argued the cause for appellant Garden State Medical Marijuana Associates, Inc. (Brach Eichler, LLC, attorneys; Mr. Gormally, of counsel and on the briefs; Paul M. Bishop, on the briefs).

Michael J. Kennedy, Deputy Attorney General, argued the cause for respondent New Jersey Department of Health and Senior Services (A-0103-11) (Melissa H. Raksa, Assistant Attorney General, of counsel; Kimberly E. Jenkins, Deputy Attorney General, on the brief).

Before Judges Ashrafi, Espinosa and Guadagno.

PER CURIAM

Each of the appellants here[1] applied for permits to operate alternative treatment centers (ATCs) to cultivate and distribute medical marijuana pursuant to the New Jersey Compassionate Use Medical Marijuana Act (the Act), N.J.S.A. 24:61-1 to -16. They appeal from the final decisions of the Department of Health and Senior Services[2] (the Department), see N.J.S.A. 24:61-7(e), and present challenges to: the authority of the Department to act before the formal adoption of regulations to govern the selection process, the selection process itself, and the constitutionality of the Act. We affirm.

N.J.S.A. 24:61-7 grants the Department the authority to accept applications and issue permits for the operation of ATCs, setting forth certain standards for the application process. N.J.S.A. 24:61-7(a), which authorizes the Department to accept applications, states, in part, that the Department "shall seek to ensure the availability of a sufficient number of alternative treatment centers throughout the State, pursuant to need, including at least two each in the northern, central, and southern regions of the State." In addition, subsection (a) requires the first two ATCs in each region to be nonprofit entities.[3] The Act mandates that the issuance of a permit requires a finding by the Department that "issuing such a permit would be consistent with the purposes of this act[.]" N.J.S.A. 24:61-7(e). The Department is also required to approve or deny an application within sixty days of receipt of a completed application. Ibid.

The Act was enacted on January 18, 2010[4] and was originally scheduled to go into effect on July 1, 2010, L. 2009, c. 307, § 19. However, at the Department's request, the Legislature amended the Act to delay the effective date to October 1, 2010. See L. 2010, c. 36, § 1. It is evident that this delay was not intended to preclude any action by the Department to implement the objectives of the Act because the Act explicitly states the Department "may take such anticipatory administrative action in advance [of the effective date] as may be necessary to effectuate the provisions of [the Act]." L. 2009 c. 307, § 19.

Consistent with its authorization for "anticipatory administrative action, " the Legislature manifested an intent to accelerate the adoption of regulations necessary to implement the Act. Although N.J.S.A. 24:61-16(a) directed the Commissioner to promulgate rules and regulations pursuant to the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -25, N.J.S.A. 24:61-16(b) explicitly authorized the Commissioner to adopt interim regulations:

Notwithstanding any provision of [the APA] to the contrary, the commissioner shall adopt, immediately upon filing with the Office of Administrative Law and no later than the 90th day after the effective date of this act, such regulations as the commissioner deems necessary to implement the provisions of this act. Regulations adopted pursuant to this subsection shall be effective until the adoption of rules and regulations pursuant to subsection a. of this section and may be amended, adopted, or readopted by the commissioner in accordance with the requirements of [the APA].

On November 15, 2010, the Department proposed regulations to govern the discharge of its obligations under N.J.S.A. 24:61-16. 42 N.J.R. 2668(a) (Nov. 15, 2010).

On December 13, 2010, the Legislature passed a concurrent resolution declaring that the draft proposed rules were inconsistent with the purposes of the Act. S. Res. 130; Assemb. Res. 151. The resolution stated the draft proposed rules "unnecessarily delay[ed] consideration of adding . . . medical conditions or treatments" to the definition of "debilitating medical conditions" in the statute. The resolution also said that because the draft proposed rules would create two functional categories of ATCs, one of which was prohibited from dispensing marijuana directly to patients, the rules could "unreasonably limit the supply of, and reduce qualifying patients' access to, medical marijuana[.]" Finally, the resolution stated the draft proposed rules established "an arbitrary limit on the permissible levels of delta-9-tetrahydrocannabinol (THC) that medical marijuana may contain." The resolution identified no provisions of the draft proposed rules regarding the application and selection process as being inconsistent with the intent of the Legislature.

The Department then published new rules in February 2011. 4 3 N.J.R. 340(a) (Feb. 22, 2011). These rules were adopted without any amendments on November 23, 2011, and became effective on December 19, 2011. 43 N.J.R. 3335(a) (Dec. 19, 2011). There were no changes to the regulations that established the standards and processes for the Department's issuance of Requests for Applications (RFAs) to operate ATCs and evaluation of applications, which are set forth in N.J.A.C. 8:64-6.1 to -6.5.

On January 14, 2011, before the new rules were published or adopted, the Department issued an RFA to establish and operate ATCs for the cultivation and distribution of marijuana as part of the Medical Marijuana Program (the Program).[5] The RFA referenced N.J.A.C. 8:64 and the "Rules Related to the Medicinal Marijuana Program, " and even provided a link where the rules could be obtained. The Department posted the proposed rules on its website on February 3, 2011.

Among the categories of information required, the RFA instructed applicants to "clearly designate the geographic region for which it [was] applying." The information required as to the proposed location of the ATC included the specific address, if already identified, and a "legible map ... of the ATC service areas by Zip Code to be served by the ATC." If "a precise address" for the ATC had not yet been determined, the applicant was required to "identify the general location[] where the [ATC] would be sited, and when."

The Department received thirty-five applications from twenty-one applicants. The proposed rules identified three regions, northern, central and southern.[6] Garden State Medical Marijuana Associates, Inc. (Garden State) submitted an application for the northern region. The Institute for Health Research and Abunda Life Center (Abunda) submitted an application for the central region. Abatin Wellness Center (Abatin) submitted an application for each of the three regions.

Each application was reviewed by a five-member review committee, comprised of three employees from the Department, one employee from the Department of Agriculture, and one employee from the Department of Community Affairs. The members were required to certify that neither they nor their immediate families had any financial interest or personal bias concerning any of the applying entities or principals of those entities. Each committee member reviewed and scored each application; the scores were then combined. The scores for all applicants ranged from 258 to 1289. On July 21, 2011, the Department issued its Final Agency Decisions denying the applications of each of the appellants.

Compassionate Care Centers of America Foundation, Inc. received the highest score of all applicants and was granted a permit for the central region. The second applicant chosen for the central region was Breakwater Alternative Treatment Center, Corp., which was ranked fourth among all applicants with a score of 1262. In comparison to the two applicants selected for this region, Abunda received a score of 427, the second lowest score of all applicants. Abatin, which had applied for all three regions, received a score of 902, placing it fourteenth among all applicants.

The greatest competition was among applicants for the northern region. One of the permits was issued to Foundation Harmony, which had the second highest score overall (1287). Garden State had a score of 1246, which resulted in a fifth ranking overall. Garden State identified its intended location as Secaucus, the same municipality identified by Foundation Harmony. The Department issued the second permit for the northern region to Greenleaf Compassion Center ...


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