On May 22, 2018, the Commonwealth Court of Pennsylvania issued a temporary injunction that prevents the Pennsylvania Department of Health (DOH) from issuing permits to Clinical Registrants (CRs). The not-yet issued permits would have allowed the CRs to work with Academic Clinical Research Centers (ACRCs) to conduct medical research. Under the temporary regulations issued by the DOH, a licensed CR would be permitted to conduct medical research and at the same time act as a commercial grower/processor and dispensary, all with the added privilege of selling cannabis plants and seed to other CRs and operating twice as many dispensaries as non-CR licensees.

The Pennsylvania Commonwealth Court is entrusted with reviewing the activities of Commonwealth agencies, including the regulatory functions of the DOH. In AES Compassionate Care, LLC v. Rachel L. Levine, 233 MD 2018, the Court found that a preliminary injunction was warranted to “prevent immediate and irreparable harm” to commercial cannabis grower/processors and dispensaries that currently hold permits and to “maintain the status quo” under Pennsylvania’s 2016 Medical Marijuana Act (MMA).

Preliminary injunctions are issued only if the moving party satisfies a number proofs. The Commonwealth Court made several findings that if felt warranted a stay of the issuance of the first CR permits. Specifically, the Court found that the Petitioners’ challenge to the DOH’s regulations of Chapter 20 of the MMC had a reasonable chance of success on the merits because:

  • The MMA conceived of CRs as highly funded, specialized medical research facilities that would generate revenue through the development of intellectual property, but the Chapter 20 regulations only require CRs to dedicate 8 percent of their yearly operations to medical research. This apparent contradiction might invalidate DOH’s regulations to the extent that Petitioners establish that the MMA was intended to strictly limit CRs to conducting research for ACRCs.
  • Requiring entities to contract with ACRCs prior to applying for CR licenses may violate Pennsylvania’s constitutional prohibition against delegating state regulatory authority. The Court found that under the MMA, the DOH has the duty to identify the most qualified CR, but the eight ACRCs, each of which can only contract with a single applicant, functionally limit the applicant pool prior to any review by the DOH.
  • Petitioners established that the issuance of CR permits would likely cause indefinite “irreparable harm” to current licensees from lost business opportunities, erosion of market share and loss of business value.

The preliminary injunction will continue until the Court has an opportunity to determine the case on the merits or the DOH successfully appeals the Commonwealth Court’s injunction ruling. The Court specifically directed that the injunction would continue during the course of any appeal.

Conflicts & Current State

The injunction has been hailed by current grower/processors and dispensaries as necessary to ensure that their facilities can continue to provide cannabis to Pennsylvania patients. The medical schools holding ACRC permits have decried the ruling as delaying medical research in the Commonwealth, while other states, notably Michigan, are proceeding apace. As noted by the Court, the DOH’s research program, as envisioned under Chapter 19 of the MMA, cannot proceed unless the Drug Enforcement Administration reschedules marijuana and approves research studies. At present, the MMA’s medical research paradigm will not proceed until the Commonwealth Court resolves what it believes to be a conflict between the statute and the DOH’s regulations.

About the Author

William F. McDevitt is a partner in the Philadelphia office of national law firm Wilson Elser, where he is a member of the firm’s Cannabis Law practice. He can be reached atwilliam.mcdevitt@wilsonelser.com.