Opinion
A-0569-21 A-1751-21 A-1752-21 A-1753-21 A-1754-21 A-1763-21 A-1810-21 A-1811-21
05-04-2023
IN THE MATTER OF THE CANNABIS REGULATORY COMMISSION'S DISQUALIFICATION OF BLOOM MEDICINALS OF PA, LLC FROM FURTHER CONSIDERATION OF AWARD OF PERMIT TO OPERATE AN ALTERNATIVE TREATMENT CENTER UNDER THE 2018 REQUEST FOR APPLICATIONS PURSUANT TO COURT ORDERED REMAND. IN THE MATTER OF THE DENIAL OF PERMIT TO OPERATE ALTERNATIVE TREATMENT CENTERS OF BLOOM MEDICINALS OF PA, LLC PURSUANT TO THE 2018 REQUEST FOR APPLICATION PROCESS. IN THE MATTER OF THE DENIAL OF A PERMIT TO OPERATE AN ALTERNATIVE TREATMENT CENTER OF GGB NEW JERSEY, LLC PURSUANT TO THE 2018 REQUEST FOR APPLICATION PROCESS. IN THE MATTER OF THE DENIAL OF PERMIT TO OPERATE AN ALTERNATIVE TREATMENT CENTER OF HARVEST OF NEW JERSEY, LLC PURSUANT TO THE 2018 REQUEST FOR APPLICATION PROCESS. IN THE MATTER OF THE DENIAL OF PERMIT TO OPERATE AN ALTERNATIVE TREATMENT CENTER OF LIBERTY PLANT SCIENCES, LLC PURSUANT TO THE 2018 REQUEST FOR APPLICATION PROCESS. IN THE MATTER OF THE APPLICATION FOR MEDICAL MARIJUANA ALTERNATIVE TREATMENT CENTER FOR PANGAEA HEALTH AND WELLNESS, LLC. IN THE MATTER OF THE APPLICATION FOR ALTERNATIVE TREATMENT CENTER - SOUTHREGION OF ALTUS NEW JERSEY, LLC PURSUANT TO THE 2018 REQUEST FOR APPLICATION PROCESS. IN THE MATTER OF THE APPLICATION FOR ALTERNATIVE TREATMENT CENTER - CENTRAL REGION OF ALTUS NEW JERSEY, LLC PURSUANT TO THE 2018 REQUEST FOR APPLICATION PROCESS.
Stuart M. Lederman argued the cause for appellant Bloom Medicinals of PA, LLC, in A-0569-21 and A-1754-21 (Riker Danzig Sherer Hyland & Perretti, LLP, attorneys; Stuart M. Lederman, of counsel and on the briefs; Diane N. Hickey, on the briefs). Joshua S. Bauchner argued the cause for appellant GGB New Jersey, LLC in A-1751-21 (Ansell Grimm & Aaron, PC, attorneys; Joshua S. Bauchner and Rahool Patel, of counsel and on the briefs). Maeve E. Cannon argued the cause for appellant Harvest of New Jersey, LLC in A-1752-21 (Stevens & Lee, PC, attorneys; Maeve E. Cannon and Patrick D. Kennedy, of counsel and on the briefs; Michael A. Cedrone, on the briefs). Seth R. Tipton argued the cause for appellant Liberty Plant Sciences, LLC in A-1753-21 (Florio Perrucci Steinhardt Cappelli Tipton & Taylor, LLC, attorneys; Seth R. Tipton, of counsel and on the briefs). John W. Bartlett argued the cause for appellant Pangaea Health and Wellness, LLC in A-1763-21 (Murphy Orlando, LLC, attorneys; John W. Bartlett and Jason F. Orlando, on the briefs). Melissa A. Chapaska (Hawke McKeon & Sniscak LLP) argued the cause for appellants Altus New Jersey, LLC (South Region) in A-1810-21, and Altus New Jersey, LLC (Central Region) in A-1811-21 (Melissa A. Chapaska and Kevin J. McKeon (Hawke McKeon & Sniscak LLP) of the Pennsylvania bar, admitted pro hac vice, attorneys; Melissa A. Chapaska and Kevin J. McKeon, of counsel and 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 briefs).
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.
Argued March 27, 2023
On appeal from the Cannabis Regulatory Commission.
Stuart M. Lederman argued the cause for appellant Bloom Medicinals of PA, LLC, in A-0569-21 and A-1754-21 (Riker Danzig Sherer Hyland & Perretti, LLP, attorneys; Stuart M. Lederman, of counsel and on the briefs; Diane N. Hickey, on the briefs).
Joshua S. Bauchner argued the cause for appellant GGB New Jersey, LLC in A-1751-21 (Ansell Grimm & Aaron, PC, attorneys; Joshua S. Bauchner and Rahool Patel, of counsel and on the briefs).
Maeve E. Cannon argued the cause for appellant Harvest of New Jersey, LLC in A-1752-21 (Stevens & Lee, PC, attorneys; Maeve E. Cannon and Patrick D. Kennedy, of counsel and on the briefs; Michael A. Cedrone, on the briefs).
Seth R. Tipton argued the cause for appellant Liberty Plant Sciences, LLC in A-1753-21 (Florio Perrucci Steinhardt Cappelli Tipton & Taylor, LLC, attorneys; Seth R. Tipton, of counsel and on the briefs).
John W. Bartlett argued the cause for appellant Pangaea Health and Wellness, LLC in A-1763-21 (Murphy Orlando, LLC, attorneys; John W. Bartlett and Jason F. Orlando, on the briefs).
Melissa A. Chapaska (Hawke McKeon & Sniscak LLP) argued the cause for appellants Altus New Jersey, LLC (South Region) in A-1810-21, and Altus New Jersey, LLC (Central Region) in A-1811-21 (Melissa A. Chapaska and Kevin J. McKeon (Hawke McKeon & Sniscak LLP) of the Pennsylvania bar, admitted pro hac vice, attorneys; Melissa A. Chapaska and Kevin J. McKeon, of counsel and 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 briefs).
Before Judges Whipple, Smith, and Marczyk.
PER CURIAM
In these eight back-to-back appeals, Bloom Medicinals of PA, LLC (Bloom); Pangaea Health and Wellness, LLC (Pangaea); Harvest of New Jersey, LLC (Harvest); Liberty Plant Sciences, LLC (Liberty); GGB New Jersey, LLC (GGB); and Altus New Jersey, LLC (Altus) (collectively, appellants) challenge the rejection of their applications to operate Alternative Treatment Centers (ATCs) by the Department of Health (DOH) pursuant to a Request for Applications (RFA) issued in July 2018 for a second time.
In a previous set of appeals, we concluded the scores appellants' applications received raised concerns about DOH's selection process. In re Application for Med. Marijuana Alt. Treatment Ctr. for Pangaea Health and Wellness, LLC, 465 N.J.Super. 343 (App. Div. 2020). We found it problematic that appellants received a wide variety of scores-ranging from "zero" to "perfect"-from different reviewers on some of the same application criteria. We also found the lack of explanation from DOH for these anomalous scores rendered the agency's rejection of the applications arbitrary and capricious. We remanded the matter for further action.
On remand, DOH's successor, the Cannabis Regulatory Commission (CRC), reviewed the application process, changed no scores awarded to any applicant, and issued new final agency decisions again rejecting appellants' applications. These appeals followed.
Appellants argue the CRC's remand procedures denied them due process, and their scores are improper for largely the same reasons raised in the previous appeals. They assert the explanations given by the CRC lacked evidential support and were designed to justify DOH's previous decisions without engaging in the kind of statistical correction they contend is necessary. Bloom and Altus also argue the CRC wrongly informed them they had become ineligible to receive ATC permits pursuant to the 2018 RFA because they were selected to move forward with permitting pursuant to a 2019 RFA.
Although we agree the CRC incorrectly found Bloom and Altus are disqualified from receiving a permit under the 2018 RFA, we affirm the CRC's decisions denying permits to all appellants because the agency's procedures on remand complied with our mandate. Its new decisions provided sufficient explanations and analysis.
I.
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). To qualify, a patient must suffer from one of the conditions enumerated in the Act or from any condition the CRC establishes as debilitating. N.J.S.A. 24:6I-3. The Act also protects those authorized to produce, process, and dispense cannabis pursuant to the statute's terms. N.J.S.A. 24:6I-7.
All citations to the Act are to its current amended form, L. 2021, c. 252.
In 2010, the Act charged DOH with implementing New Jersey's Medical Cannabis Program (the MCP). Nat. Med., Inc. v. N.J. Dep't of Health & Senior Servs., 428 N.J.Super. 259, 262 (App. Div. 2012). 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; Nat. Med., 428 N.J.Super. at 262. The CRC has since assumed the management of the MCP. N.J.S.A. 24:6I-24(a).
N.J.S.A. 24:6I-7(a)(3) requires that the CRC "seek to ensure the availability of a sufficient number of [ATCs] throughout the State, pursuant to need." The CRC must issue permits for "at least two [ATCs] each in the northern, central, and southern regions of the State." Ibid. Beyond this minimum, "the [CRC] has discretion to determine how many ATCs are needed to meet the demand for medicinal marijuana and whether the issuance of a permit to a particular applicant would be consistent with the purposes of the Act." Nat. Med., 428 N.J.Super. at 263 (citing N.J.S.A. 24:61-7(e)). To this end, the CRC has promulgated regulations, N.J.A.C. 17:30A-1.1 to -13.11, which provide the framework through which it issues RFAs for the operation of ATCs.
These regulations were codified at N.J.A.C. 8:64-1.1 to -13.11 during the 2018 RFA process, but they were amended and recodified effective May 2019. See 50 N.J.R. 1398(a); 51 N.J.R. 732(a).
The 2018 RFA
In March 2018, DOH issued an RFA for the selection of six entities, two in each region, to receive ATC permits. The RFA had two sections: the pass/fail Part A, which required the applicant to submit certain forms and information related to corporate structure, proposed site locations, and manager and staff identities; and the committee-scored Part B, which consisted of sixty criteria asking for narrative responses concerning applicants' experience, expertise, and plans for operating an ATC in New Jersey. The RFA informed applicants that responses to Part B would be evaluated on a 1000-point scale. The totals awarded by each member of an evaluation committee would be averaged to create a final score.
DOH received 146 applications from 103 entities. The applicants included appellants: Altus applied in the central and southern regions; Bloom in all three; GGB in the northern region; Harvest in the southern region; Liberty in the northern and southern regions; and Pangaea in the central region.
Applications were reviewed by a six-member evaluation committee including four employees from DOH, one from the Department of Agriculture, and one from the Department of Treasury. The reviewers attended a workshop that provided guidance on scoring applications, as well as training on diversity and bias. The committee members completed disclosure forms and certified they had no conflicts of interest or financial or personal ties to any applicant.
DOH gave the reviewers additional printed scoring instructions for the sixty RFA criteria. For each criterion, committee members were to award points on a scale from zero to the maximum number of points. Scores of zero were to be reserved for "non-responsive" answers. During the scoring process, reviewers emailed questions to DOH about how to score some of the RFA criteria, which DOH answered.
In December 2018, the reviewing committee submitted its report to DOH, recommending the top-scoring applications for each region for "further consideration." DOH issued final agency decisions (FADs) to all applicants accepting or denying their applications.
DOH did not award more than one permit to any single applicant in order to promote a diversity of products and mitigate the effects of setbacks like crop failures. It ranked the three regions by need for medical cannabis and explained the mathematical formula it used. Based on its calculations, DOH awarded permits in the northern region first, the southern region second, and the central region third.
For the northern region, DOH chose the two highest scoring applicants: NETA NJ, LLC (NETA) and GTI New Jersey, LLC (GTI). For the southern region, MPX New Jersey (MPX) and NETA scored highest. Because NETA was already selected for a permit, DOH chose MPX and the third-highest scorer, Columbia Care New Jersey, LLC (Columbia). In the central region, MPX, NETA, Columbia, and GTI scored highest, so the next two highest-scoring applicants-Verano NJ, LLC (Verano) and JG New Jersey, LLC (JG)-were chosen. Altus, Bloom, Harvest, Liberty, GGB, and Pangaea were not selected. They all scored lower than the chosen six applicants in the regions where they applied.
Initial Appeals
Altus, Bloom, Harvest, Liberty, GGB, and Pangaea appealed, each highlighting anomalies in the scores they received, asserting that there was too high a degree of "relative error" in their scores on some specific measures. Pangaea, 465 N.J.Super. at 363-64. Relative error is a concept that, here, measures the difference between scores given on the same measure by different reviewers; low relative error means that all reviewers generally gave the same scores, while 100% relative error means one reviewer gave a perfect score and another gave a zero. Id. at 364. Appellants pointed to measures where the latter occurred and argued it should have been impossible for some reviewers to view their responses as very good while others believed they were non-responsive. Id. at 364-69.
We agreed in part and issued our opinion in Pangaea because there were some unclear aspects of DOH's scoring process and results that required remand to the CRC for further proceedings. Id. at 363-65. DOH "tolerated too great a degree of 'relative error' in its scoring . . . ." Id. at 363. It did not explain or justify the anomalies, instead providing "nothing more than the computations made from the raw data . . . ." Id. at 375.
We reinforced that agencies "must 'articulate the standards and principles that govern their discretionary decisions in as much detail as possible[,]'" and found the absence of such findings by DOH hindered effective review. Id. at 384 (quoting Van Holten Grp. v. Elizabethtown Water Co., 121 N.J. 48, 67 (1990)).
Ultimately, we thought DOH should have done more to verify the appropriateness of the evaluation committee's recommendations than "just checking [the committee's] arithmetic[,]" and should have "search[ed] for odd or outlying scores that could unfairly skew the results." Id. at 381. We concluded appellants were not afforded due process, and, "in the absence of some procedure for ensuring and verifying the reviewing committee's conclusions," deemed the results of the RFA "arbitrary, capricious, unreasonable, and untethered to the record[.]" Id. at 382. We remanded the matter to DOH, directing the agency to "engage in some sort of additional process for receiving and considering the appellants' contentions and . . . explain its determinations on those contentions." Ibid.
Significantly, we did not dictate what that process should involve, instead leaving it to DOH "in the first instance to determine the best way of going about its statutory obligation to verify its results." Id. at 381. More specifically, we did "not decide or impose on [DOH] whether it should conduct a plenary hearing, whether it should create a quality control committee to hear, consider, and make recommendations about appellants' concerns, or whether it should devise some other system for resolving appellants' complaints." Id. at 382. Nor did we require DOH to make changes to appellants' scores or adopt any particular mathematical method for doing so. Id. at 371 n.11. Instead, we advised "if such adjustments are to be made, it is for [DOH] to make them," and we would "not intervene to the point of imposing a better system or determining what a better system would be." Ibid.
Proceedings on Remand
In December 2020, appellants asked for a meeting with DOH to discuss how it would move forward with remand proceedings and suggested "the only appropriate and fair remedy" was to award an additional six permits to them. DOH asked appellants to submit any arguments or factual material they wished the agency to consider and asked appellants to use their supplemental submissions to raise challenges to scores they or the winning applicants received or to "the scoring process more generally." It would then conduct a detailed review of any submissions made and issue new FADs.
Dissatisfied with that process, appellants sent identical letters to DOH raising complaints, arguing DOH was insufficiently forthcoming about what procedures it would be undertaking and demanding the agency "engage in a dialogue" so they could "ensure that the process comports with [our] instructions." Appellants attached reports by a medical cannabis policy consultant and a statistical analyst, who opined that DOH's 2018 RFA process was "ineffective and deficient" and the resulting scores were "unreliable and arbitrary."
DOH responded it had created a quality control committee (QCC) to "conduct a review of the entire RFA process, including a review of the applications, the RFA and related scoring criteria, the supplemental submissions received [from] the [a]pplicants, responses provided by the selected entities, and any other materials related to the 2018 RFA that are responsive to the [a]pplicants' concerns . . . ." The QCC would provide recommendations, including any scoring adjustments found to be appropriate. DOH informed appellants the QCC members' qualifications would be provided in the FADs resulting from the recommendations.
Appellants decried DOH's refusal to consider their expert reports, complained the agency's process was "improperly subjective and nebulous," and averred the court had required DOH to propose an alternate scoring methodology to them which they would then approve or reject. They requested a conference with DOH "to discuss how the parties can comply with the [c]ourt's [o]pinion."
DOH replied the court had left it to the agency to determine the procedures to be used on remand. The QCC's review could lead to scoring adjustments, but DOH would not give appellants any further information about what the outcome might be and advised appellants they had sixty calendar days from the date of this latest letter in which to make their supplemental submissions.
This back-and-forth culminated in appellants filing motions in aid of litigants' rights, for a stay of the remand process, and for leave to appeal, arguing DOH was not complying with our decision. We denied the motions because contrary to these assertions, we did not fix the scope, manner, or timing of the remand proceedings. We had instructed DOH to allow appellants to question their scores and obtain an explanation, but had not mandated it hold a full-blown hearing or dictated any particular procedure was required. We concluded the process DOH outlined in its letters was consistent with the remand mandate and appellants' argument that DOH was required to consult with them or collaborate as to a methodology going forward was simply without merit.
Appellants submitted their supplemental materials to the CRC, which had by then assumed authority over the MCP. They raised several issues with the scoring process generally and with specific scores they received, which were similar or identical to those they asserted in their appeals.
Bloom and GGB took issue with scores they received from one evaluation committee member designated as "Reviewer Three." This member gave scores lower than other reviewers; in Bloom's case, for instance, Reviewer Three's score was almost 300 points lower than the next lowest score. Therefore, Bloom and GGB viewed Reviewer Three's scores to be "outliers" that should not be considered.
In other places in the record, this reviewer is referred to as "Scorer One." For clarity, we refer to the person as Reviewer Three throughout.
Bloom, Liberty, and Harvest also noted high relative error in their scores and suggested ways to "correct" them. Additionally, Pangaea compared its scores to those of JG and Verano, which were selected over it, and argued its responses were just as good or better than theirs. It also believed some of the questions were handled too subjectively and should have been yes-or-no questions. Harvest argued it should have received perfect scores on certain measures, while Altus contended some of its answers should not have been deemed unresponsive. Altus also contended the fact its applications in the southern and central regions received identical scores was evidence of flaws in the scoring process, because there were differences in its responses on each. All appellants asserted without the flaws they believed existed in the process, they would have received higher scores and won permits.
In a Remand Recommendation Report (RRR) dated January 7, 2022, the CRC explained two QCC members investigated the scoring; one reviewed the administrative history of the RFA itself, and one conducted a statistical analysis of all applicants' scores.
As to the administrative review, the CRC determined based on the QCC's recommendations, the RFA complied with all relevant statutes and rules concerning RFAs in effect in 2018. The CRC noted two deficiencies with the process: 1) the development of a "complex application" designed "to prioritize selection of experienced companies that could get operational quickly" to "address the significant expansion in the patient population"; and 2) DOH's action in "push[ing] the selection committee aggressively to finish the process so that awards could be issued . . . and the market could avoid significant supply shortages." These two issues, along with the number of applications received, meant the original evaluation committee needed to complete a large volume of work in a short time. However, because all applicants faced the same conditions, the CRC concluded the issues did not make the whole process arbitrary, capricious, or unreasonable.
As to the substantive review of applicants' scores, the CRC explained the QCC had faced obstacles because members of the selection committee, which had long been disbanded, moved on to new jobs or retired. Even if consulted, it was unlikely reviewers would remember their rationale for awarding a particular score.
As a result, the QCC considered "the scores delivered, the applications themselves, the supplemental submissions from appellants, and the scoring instructions" to determine whether each score an appellant received was "reasonably justified" and whether the evaluation committee complied with the RFA's scoring guidelines. The CRC said it would only overturn or amend a score on a given criteria "if there was clear and convincing evidence that the selection committee erred . . . ."
The QCC identified two specific criteria that suffered "the most variation among scores and that scorers may have struggled to assess": Criterion 1, Measure 5-Financial Suitability; and Criterion 2, Measure 3- Diversity. These were the two criteria where the reviewers were "most likely to utilize scores of [zero.]" The QCC reviewed appellants' and the winners' responses to determine whether the scores awarded were justified.
The QCC reported high-scoring responses to the Financial Suitability measure contained "clear" explanations of the applicants' business plans and financial projections and provided financial statements, proof of past tax compliance, third-party verification of claims regarding finances, and "a clear demonstration of the ability to become profitable[.]" By contrast, lower-scoring responses contained business plans and projections that were "not as clearly explained as they could have been," did not "clearly explain" financial sources, "[m]ade statements that they did not have financial statements or a record of paying taxes as a new company[,]" made claims contradicted in other areas of the application, and/or did not provide third-party verification of access to funds.
The QCC concluded the evaluation committee's scoring was reasonable, since applications "that scored lower generally provided lower quality responses." In cases where scores of zero were given on this measure, "the applicant made a statement that could be deemed non-responsive[,] . . . presented information that was not easily understood or connected to the question, or the information contradicted a response on another part of the application." The QCC recommended not altering scores on this measure.
As to the Diversity measure, the QCC reported high-scoring responses generally contained statements indicating a clear commitment to diversity throughout the organization and proof the applicant or an entity with a significant ownership percentage possessed a New Jersey women-, minority-, or veteran-owned business (WBE, MBE, or VOB, respectively) certification. Responses receiving scores near the middle demonstrated a commitment to diversity but no proof of any certification. Such responses also did not provide sufficient information for the evaluation committee to discern if the applicants could qualify for a certification in the future or contained information that appeared to contradict statements in other parts of the applications. Meanwhile, low scores were given where an applicant gave less detail about diversity in the proposed company and no evidence of certifications.
The QCC found appellants' and the winners' scores on this measure reflected a "reasonable determination of the quality of the responses received." It explained the zeroes some applicants received from one or more reviewers could possibly have resulted from those reviewers focusing on the fact the applicants did not possess MBE, WBE, or VOB certifications. The QCC recommended the CRC not alter any applicant's scores on this measure.
Next, the RRR discussed the QCC's statistical analysis of all the applicants' scores, which was intended to determine whether any scores were outliers whose impact should be removed or minimized in some way. The CRC concluded, based on the analysis, that Reviewer Three tended to give the lowest scores, and in general Reviewers One, Two, and Three gave lower scores than Reviewers Four, Five, and Six. The CRC found "consistency within one reviewer's set of scores [was] more important than a show of consistency between reviewers," stating it was "acceptable and even expected that two reviewers would disagree on the merits of a particular application or response . . . ." It found "each reviewer delivered scores in a statistically consistent manner[.]"
However, to address appellants' claims it was improper for some reviewers to give lower scores than others, the CRC also stated the winning applicants "were the ones that the most reviewers agreed should receive the highest scores." It further found each reviewer's scores fit a "normal curve," meaning there were few anomalies. More specifically, the QCC had found there were thirteen true outlier scores out of 810 total application scores, and all of them were given to the lowest-scoring applications, which had significant deficiencies that led reviewers to score them outside of their normal range.
In the RRR, the CRC rejected appellants' assertion there was too high a degree of relative error in the scores they received, explaining the use of this concept was inappropriate. Applicants were asked to provide narrative responses. To use relative error, one would have to assume an applicant's words had an inherent and defined value in relation to each criterion and measure, which is not the case here. And although the selection committee members were "trained on a common rubric . . . to score responses to common questions," the "whole point" of having members "with diverse experiences, different professional expertise, and different points of view" was to "take those diverse perspectives and combine them into one final composite score."
Thus, it was "very probable-even expected and encouraged-an applicant could have a slate of high scores, and a score or two that were considerably lower because a selection committee member was able to use their experience to better assess the response of [the] applicant." The CRC stated if the agency wished to receive the same scores from all members, it would have instead "assigned one person to score all the applications . . . ." The agency asserted the differences in scores among reviewers should not be seen as relative error, but as "an example of the review process functioning as it should."
The CRC reported the level of subjectivity in the RFA criteria was a conscious decision by DOH, explaining if the agency had put out a detailed checklist for each criterion or measure instead of requesting narratives, it would likely have received many identical applications prepared by hired writers who knew how to play to the test. This would have left DOH with no good differentiator between applicants, which would in turn have stymied the selection of the best candidates.
In the final sections of the RRR, the CRC addressed some of the specific complaints by appellants concerning particular scores they received and the possible reasons for these scores. The CRC reported Liberty received two scores of zero on the final measure in its northern region application because two reviewers noticed the application was one page over the limit and did not consider the material on the final page. Meanwhile, Pangaea received scores of zero on a measure requesting floor plans because the plans it submitted were not compliant with DOH's instructions and were difficult or impossible to review due to their large size.
Other low and zero scores were deemed justified because the applicant gave a confusing or seemingly self-contradictory response. The CRC concluded it was not the committee members' fault if an applicant presented ambivalent or otherwise unclear information that yielded disagreement about how to score a given measure, did a poor job of explaining a particular answer, or submitted information in a problematic manner or format for which they were penalized.
The CRC accepted the QCC's findings and analyses, and ultimately found the evidence did not support any of appellants' claims regarding specific scores they received or the scoring process generally. It found "no clear evidence of wrong[]doing, non-compliance with authorizing statutes or regulations, and no evidence that any selection committee member[] acted in an arbitrary, capricious, or unreasonable manner." On January 7, 2022, the CRC voted in favor of a resolution denying appellants' ATC applications and issued FADs to each appellant explaining this result, with references to the RRR in response to the relevant appellant's particular arguments. This appeal followed.
Bloom filed a motion asking us to enforce litigant's rights, claiming the CRC's decisions resulted from proceedings that did not conform to our remand mandate. We denied the motion because it was not a proper vehicle for review of the decisions and that an appeal was necessary.
II.
On appeal, our capacity to review agency actions is limited. Pub. Serv. Elec. & Gas Co. v. N.J. Dep't of Env't Prot., 101 N.J. 95, 103 (1985). An agency's "final quasi-judicial decision" should be affirmed unless there is a "'clear showing' that it is arbitrary, capricious, or unreasonable, or that it lacks fair support in the record." Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9 (2009) (quoting In re Herrmann, 192 N.J. 19, 27-28 (2007)).
We are restricted to three inquiries: 1) whether the agency action violated the enabling act's legislative polices; 2) whether there is "substantial evidence in the record to support the findings upon which the agency based" its decision; and 3) whether the agency "clearly erred by reaching a conclusion that could not reasonably have been made upon a showing of the relevant factors." Pub. Serv. Elec. & Gas, 101 N.J. at 103 (citing Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963)). So long as an agency's factual findings "are supported by sufficient credible evidence, courts are obliged to accept them." Self v. Bd. of Rev., 91 N.J. 453, 459 (1982).
"The interest of justice . . . authorizes a reviewing court to abandon its traditional deference . . . when an agency's decision is manifestly mistaken." Outland v. Bd. of Trs. of the Tchrs.' Pension and Annuity Fund, 326 N.J.Super. 395, 400 (App. Div. 1999). Nevertheless, "[e]ven if a court may have reached a different result had it been the initial decision maker, it may not simply 'substitute its own judgment for the agency's.'" Circus Liquors, 199 N.J. at 10 (quoting In re Carter, 191 N.J. 474, 483 (2007)). Our "strong inclination" is to "defer to agency action that is consistent with the legislative grant of power." Lower Main St. Assocs. v. N.J. Hous. and Mortg. Fin. Agency, 114 N.J. 226, 236 (1989). This inclination "is even stronger when the agency has delegated discretion to determine the technical and special procedures to accomplish its task," In re Application of Holy Name Hosp. for a Certificate of Need, 301 N.J.Super. 282, 295 (App. Div. 1997), particularly "when the agency is concerned with the protection of the health and welfare of the public." Barone v. Dep't of Hum. Servs., 210 N.J.Super. 276, 285 (App. Div. 1986).
We also typically defer to an administrative agency's "technical expertise, its superior knowledge of its subject matter area, and its fact-finding role." Messick v. Bd. of Rev., 420 N.J.Super. 321, 325 (App. Div. 2011). However, this deference "is only as compelling as is the expertise of the agency, and this generally only in technical matters which lie within its special competence." Application of Boardwalk Regency Corp. for a Casino License, 180 N.J.Super. 324, 333 (App. Div. 1981). Thus, we need not defer to an agency's findings in areas outside its area of expert knowledge, which it is "no better able to evaluate . . . than is a reviewing court." Clowes v. Terminix Int'l, Inc., 109 N.J. 575, 588 (1988). Further, an agency must "disclose its reasons for any decision, even those based upon expertise, so that a proper, searching, and careful review by [the] court may be undertaken." Balagun v. N.J. Dep't of Corr., 361 N.J.Super. 199, 203 (App. Div. 2003).
In Pangaea, 465 N.J.Super. at 374, we thought it "unclear" whether we should defer to DOH's selection of the winning applicants. This was because the original evaluation committee was made up of members from different agencies who were directed to score applicants on all measures, not just those within their respective areas of expertise. Id. at 373-74. Because we did not know who the committee members were, we could not determine "the caliber of their opinions concerning matters beyond what their [DOH] affiliation might suggest." Id. at 374. However, we did not need to reach a "definitive conclusion" about the applicable standard of appellate review at that time because DOH needed to first explain its scoring procedures and results on remand. Ibid.
Now, the questions before us are whether the CRC: 1) developed procedures to review the application scoring that complied with our instructions, providing appellants with the due process that was previously lacking; 2) reached conclusions regarding appellants' applications that were based on sufficient evidence, fulfilling our mandate; and 3) correctly deemed Bloom and Altus disqualified from receiving 2018 permits.
We do not defer to the CRC's decisions for the first and third issues. The third is a legal question, and the first concerns whether the CRC followed our instructions on remand-a question we are in the best position to answer. As to the second, we defer to the CRC to the extent its decisions are based on sufficient credible evidence and are not "manifestly mistaken." Self, 91 N.J. at 459; Outland, 326 N.J.Super. at 400.
III.
Challenges to the CRC's Remand Procedures
We first address appellants' challenges to the CRC's procedures on remand. Appellants argue they were denied due process. Bloom, Harvest, Liberty, GGB, and Altus take issue with the CRC's use of a clear and convincing standard of proof. Pangaea similarly contends it was unfair to apply a deferential standard to the original reviewers' scoring decisions since there was no way to question them. Harvest and Altus also argue the CRC failed to produce any evidence concerning reviewers' reasons for awarding particular scores, resulting in an improper record.
Most appellants also assert the CRC erred in failing to address all of their arguments. For instance, the CRC did not address Harvest's argument it was unfair to award permits for the southern region before the central region. The CRC also did not consider Bloom's suggested scoring alternatives-meant to correct the "outlier" scores received from Reviewer Three-or allow Bloom and Harvest to present expert statistical analysis.
Where a remand has been ordered, a trial court or agency "is under a peremptory duty to obey in the particular case the mandate of the appellate court precisely as it is written." Flanigan v. McFeely, 20 N.J. 414, 420 (1956). "[T]he appellate judgment becomes the law of the case," and the agency must not depart from it. Lowenstein v. Newark Bd. of Educ., 35 N.J. 94, 116-17 (1961). In other words, while an agency may be "privileged to disagree with [the Appellate Division's] decisions, 'the privilege does not extend to non-compliance.'" Tomaino v. Burman, 364 N.J.Super. 224, 233 (App. Div. 2003) (quoting Reinauer Realty Corp. v. Borough of Paramus, 34 N.J. 406, 415 (1961)).
Here, we found there were troubling anomalies in the scores appellants received on their ATC applications, and DOH had done nothing to explain the scores given. We found because of that lack of explanation, the record did not contain sufficient evidence the agency did anything to check the evaluation committee followed instructions or awarded scores that were justified. We thus concluded there was inadequate support for DOH's FADs rejecting appellants' applications and accepting those of the winners. As discussed above, we directed DOH to "engage in some sort of additional process for receiving and considering the appellants' contentions and . . . explain its determinations on those contentions." Pangaea, 465 N.J.Super. at 382.
However, we explicitly declined to delineate what actions DOH needed to take on remand with specificity, leaving it to DOH "to determine the best way of going about its statutory obligation to verify its results." Id. at 381. When considering appellants' due process arguments in these appeals, the question is whether the procedures initiated by DOH and completed by the CRC complied with our intentionally general mandate that it address the scoring anomalies and appellants' complaints. We find they did.
First, the CRC's decision not to adopt any of appellants' suggested mathematical methods for recalculating their scores did not deny them due process. We directed the agency consider appellants' issues with the scoring, but we did not dictate it follow appellants' suggestions or reach any particular conclusion about how or even whether to change the scores. Indeed, we explicitly stated we "would not intervene to the point of imposing a better system" of calculating scores "or determining what a better system would be," instead leaving it to the CRC to make any "adjustments" to the scores by whatever methods it deemed appropriate. Id. at 371 n.11. Nothing in the record suggests the agency did not consider appellants' suggested calculation methodologies at all. It only indicates it did not adopt them. This decision did not render the procedure itself deficient.
For the same reason, we reject the argument the CRC's decision not to consider appellants' statistical analyses denied appellants due process. Nothing in the prior opinion directed the CRC to allow appellants to submit expert reports. Indeed, we denied appellants' motions to supplement the appeal record with these reports.
We similarly reject appellants' contention the CRC's failure to address all of their specific complaints about scores in detail in the RRR and FADs denied them due process. Although Bloom and GGB assert the CRC did not discuss their arguments, the RRR did provide an analysis of Reviewer Three's scoring and the scores of zero appellants received on the Financial Suitability and Diversity measures, which were the main issues Bloom raised in its supplemental submission.
As to arguments-posited by Liberty and Pangaea-the CRC failed to address imperfect non-zero scores, we likewise find no error. The CRC's lack of explicit response to these arguments and choice to focus on the zeroes appellants received was understandable, since these were the scores we expressed concern about in its opinion. The remand mandate did not require the agency to justify every score given on every measure, but only those that stood out as potentially anomalous.
Additionally, we already rejected Harvest's argument regarding the priority of the three regions in Pangaea. We found the process DOH used was "similar to that utilized in the first round of ATC permitting in 2011" and was not arbitrary and capricious. Pangaea, 465 N.J.Super. at 391. Here, there remains no evidence DOH intentionally excluded Harvest. Instead, the region-ranking system was based on objective supply and demand calculations and was intended to ensure patients in each region would have access to sufficient medication.
We also reject the argument the lack of an evidentiary hearing on remand denied appellants' due process. The Administrative Procedure Act, N.J.S.A. 52:14B-1 to -31 (APA), does not create a substantive right to an administrative hearing. In re Fanelli, 174 N.J. 165, 172 (2002). Instead, this right must be granted by another statute or constitutional provision. Ibid. The APA does not grant such a right; N.J.S.A. 24:6I-7(e) provides the denial of an application to operate a medical cannabis enterprise "shall be considered a final agency decision, subject to review by the Appellate Division of the Superior Court."
We explicitly stated in our prior opinion such a hearing was not necessary as part of the remand process to verify DOH's results. Pangaea, 465 N.J.Super. at 381. While DOH or the CRC could have chosen to conduct an evidentiary hearing, the remand mandate did not require one. Nor did it require the CRC to meet with appellants to decide what procedures to use on remand.
Next, we address appellants' contentions the CRC's employment of a clear and convincing evidence standard was improper. While we acknowledge this issue is less clear, we do not find use of the standard denied appellants due process. This intermediate standard exists between the "preponderance of the evidence" standard used in most civil proceedings and the "beyond a reasonable doubt" standard employed in criminal cases. Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 169 (2006). Evidence that is clear and convincing "should produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established." In re Purrazella, 134 N.J. 228, 240 (1993) (quoting Aiello v. Knoll Golf Club, 64 N.J.Super. 156, 162 (App. Div. 1960)).
The clear and convincing evidence standard is typically employed "in civil cases when more is at stake than loss of money," or when "evidentiary matters are intrinsically complex or prone to abuse." Liberty Mut., 186 N.J. at 170. A higher standard is deemed necessary in such cases because they "involve circumstances or issues that are so unusual or difficult, that proof by a lower standard will not serve to generate confidence in the ultimate factual determination." In re Polk, 90 N.J. 550, 568 (1982). The clear and convincing evidence standard may also "compensate[] for the difficulty in marshalling cogent evidence to establish or to defend against a claim." Ibid.
By contrast, "[a]pplication of the preponderance standard reflects a societal judgment that both parties should 'share the risk of error in roughly equal fashion.'" Liberty Mut., 186 N.J. at 169 (quoting Addington v. Texas, 441 U.S. 418, 423 (1979)). This "standard is one of reasonable probability; i.e., whether or not the evidence is of sufficient quality to generate a belief that the tendered hypothesis is in all likelihood the truth." Lister v. J.B. Eurell Co., 234 N.J.Super. 64, 72 (App. Div. 1989). The evidence "must be well founded in reason and logic[,]" and "must be such as to lead a reasonably cautious mind to the given conclusion," but it "need not have the attribute of certainty[.]" Ibid. (quoting Ciuba v. Irvington Varnish & Insulator Co., 27 N.J. 127, 139 (1958)).
The Supreme Court has stated "the usual burden of proof for establishing claims before state agencies in contested administrative adjudications is a fair preponderance of the evidence." Polk, 90 N.J. at 560. This standard has been employed both where an agency has raised "charges" against a person or entity, as in disciplinary proceedings, and where a petitioner disagrees with an agency's decision, as in matters concerning entitlement to benefits. Id. at 560-69 (preponderance of the evidence standard applied in proceeding to revoke medical license); Lister, 234 N.J.Super. at 72 (petitioner bore the burden to prove entitlement to workers' compensation by a preponderance of the evidence).
However, this is not a contested case for purposes of the APA; it is a remand with instructions to conduct a review process. The usual standard for contested administrative adjudications does not fit this circumstance. Further, we note the clear and convincing evidence standard has been employed in matters involving licensure in a particularly "sensitive field." Boardwalk Regency, 180 N.J.Super. at 339.
In Boardwalk Regency, the court found the Casino Control Commission's denial of a casino license to an applicant was proper because the applicant "fail[ed] to prove [itself] qualified by clear and convincing evidence." Ibid. In a similar fashion, the MCP-a relatively new, highly-regulated field with an escalating level of demand from a growing patient base-is, like the casino industry, "sensitive" in nature and "in need of public control and supervision." See N.J.S.A. 5:12-1(b)(9). We find nothing inappropriate about employing a clear and convincing standard to review challenges to a denial of an ATC permit.
Perhaps more importantly, the CRC's use of a heightened standard reflected the need to ensure confidence in the result of the remand review. Polk, 90 N.J. at 568. In sum, the procedures employed by the CRC when conducting its review of the scoring and appellants' arguments on remand complied with our mandate and did not deny appellants due process.
IV.
Challenges to the CRC's Decisions on Remand
We next address the appellants' challenges to the CRC's FADs on remand. Appellants put forth several arguments, taking issue with the CRC's "post-hoc rationalizations," explanations of scores, rejection of the relative error concept, and failure to remove outlier scores like those of Reviewer Three. Several appellants also once again argue the CRC erred in failing to consider their expert reports or revise its statistical analysis. They additionally argue the CRC failed to comply with the our orders on remand because it did not change any scores.
Pangaea also notes the CRC indicated reviewers may have given it low scores in one category because they believed it "embellished the accomplishments" of certain employees. It contends these reviewers' assessments of employees' qualifications were improperly based on prior familiarity with them, which exhibited personal bias and conflicts of interest. Lastly, appellants advocate for the issuance of six additional permits beyond the six contemplated by the 2018 RFA.
Pangaea speculates one of these employees was its chief operating officer, who had previously worked for DOH as a Senior Medicinal Cannabis Enforcement Officer and who, in that capacity, was involved with "investigatory and administrative duties in connection with the first round of medicinal marijuana licensing" in 2011.
We did not order DOH to alter any scores on remand, and instead simply directed it to provide explanations for the scores that were given. We stated if any adjustments were to be made to the scores, they must be made by the agency, not by us. Thus, the mere fact the CRC ultimately did not alter any of appellants' scores does not render its conclusions arbitrary and capricious. The question in these matters is whether the CRC's explanations for the scores were adequate, or in other words, whether the RFA results are now supported by sufficient credible evidence in the record.
If an agency's findings are "supported by substantial credible evidence in the record as a whole, we must accept them." Outland, 326 N.J.Super. at 400. However, an agency's discretion "must be exercised in a manner that will facilitate judicial review." R&R Mktg., LLC v. Brown-Forman Corp., 158 N.J. 170, 178 (1999). As a result, an agency "must set forth basic findings of fact, supported by the evidence and supporting the ultimate conclusions and final determination . . . ." Application of Howard Sav. Inst. of Newark, 32 N.J. 29, 52 (1960). This allows a reviewing court to "readily determine[]" whether the agency's decision is "sufficiently and soundly grounded or derives from arbitrary, capricious or extralegal considerations." Ibid.
Nevertheless, "[a]ll of the evidential data" before an agency "need not be repeated or even summarized, nor need every contention be exhaustively treated." Id. at 53. An agency decision "is sufficient if it can be determined from the document without question or doubt what facts and factors led to the ultimate conclusions reached." Ibid. Even where an agency's findings "are not nearly so clear, full and well organized" as they could be, a court "should not impede the administrative process and delay final disposition unless such is absolutely necessary to [e]nsure a just and proper review." Ibid. If the court can "understand fully the meaning of the decision and the reasons for it," there is "no sufficient reason" to remand. Ibid.
Here, we are again faced with the fact the CRC did not provide detailed discussions of the scores appellants and the winners received on every criterion and measure, nor did it learn the evaluation committee members' reasons for giving those scores. It also did not rescore the applications or change any of the scores on measures where appellants received a wide variety of results from different reviewers, despite our stated concern about these apparent discrepancies. However, the CRC's new FADs were supported by sufficient credible evidence for us to conclude the agency adequately set forth its findings of fact.
The CRC did not consult with the original evaluation committee members because they had become unavailable. This does not render the agency's explanations for the scores insufficient. In the RRR, the CRC stated, because they were unable to discover the initial reasons for the low and zero scores appellants received on some measures, the QCC performed its own review of those measures. The RRR indicates this review was thorough: When addressing two of the most contentious measures-the Diversity and Financial Suitability measures-the CRC described detailed findings by the QCC about the content of high-, middle-, and low-scoring responses and explained what made some types of answers potentially non-responsive.
Later in the report, the CRC gave further explanations for zero scores received by appellants, including Pangaea's non-compliance with size requirements for its floor plans and Liberty's error in submitting an application that was one page too long. As such, rather than stating purely "post-hoc rationalizations" of the scores and guessing at the evaluation committee's reasons, the QCC did its own factfinding and reached its own conclusions on the merits of appellants' applications.
The CRC's rejection of the relative error concept also did not render its decisions arbitrary and capricious. In Pangaea, we stated only that there appeared to be a high degree of relative error and the lack of explanation for this rendered DOH's decisions improper. 465 N.J.Super. at 364. In other words, we did not require scores be changed wherever there was high relative error; we only asked the scores be explained. The CRC provided explanations.
The CRC's choice not to "censor" certain scores was also not improper. If the agency chose to remove "outlier" scores, like those of Reviewer Three, this would have resulted in an uneven competitive playing field for the RFA. Essentially, some applicants would not have been scored on all criteria by all six committee members.
This would not only lead to absurd and unfair results, but would have a chilling effect on reviewers in future permit application proceedings. If committee members are aware their work may be invalidated if they score an application significantly different from their fellow reviewers, they may award higher scores than they feel are deserved. This could remove some of the benefits of each members' experience and knowledge from the selection process and result in permits being awarded to weaker candidates. In the RRR, the CRC explained it did not want committee members to strive to score applications identically. It said if it wanted complete uniformity, it would have assigned just one person to the task. We find the CRC's decision not to remove outlier scores was thus reasonable, not arbitrary and capricious.
Regarding Pangaea's accusations of personal bias, the CRC did state Pangaea may have been scored lower by some evaluation committee members on a measure concerning experience because these members were personally familiar with one or more of Pangaea's officers or employees. However, the evaluation committee members were presumably chosen because of their knowledge and expertise. To require members to take all material presented in an application at face value-even if they are aware of falsehoods or overstatements-would remove the benefit of these factors. Further, the record does not suggest any of the members bore personal animus toward any Pangaea officer or employee. Pangaea received high scores on many other measures. Thus, the explanation given for some of Pangaea's scores did not render the CRC's denial of its application arbitrary and capricious.
Regarding appellants' arguments about the CRC's statistical analysis, as we explained above, it was not required to consider appellants' expert reports. Nor did we direct it to change any scores based on any type of statistical calculation. The RRR shows the assigned QCC member's analysis was thorough, taking into consideration all of the scores given by each reviewer on every application.
Even if appellants are correct that the distributions for the reviewers were not perfect bell curves, this does not invalidate the CRC's choice not to alter the scores. The information the evaluation committee members were tasked with reviewing was almost entirely subjective in nature, and it is unsurprising some members may have been tougher graders generally or may have viewed some answers as better or worse than the other members did. The major question on remand was whether the scores could be harmonized with the review instructions and appellants' responses, not whether each reviewer's score distribution fit the parameters of a particular statistical model.
We conclude the CRC's new RRR and FADs were based on sufficient credible evidence in the record, including adequately detailed explanations as we mandated in Pangaea. As such, the agency's factfinding is entitled to deference. Self, 91 N.J. at 459; Outland, 326 N.J.Super. at 400.
Appellants have asked us to order the CRC to issue additional permits beyond the six contemplated by the RFA. Even if we considered it necessary, which we do not, to do so would mean disregarding DOH's statutorily authorized "discretion to determine how many ATCs [were] needed to meet the demand for medicinal marijuana." Nat. Med., 428 N.J.Super. at 263.
Although the MCP has expanded since 2018, the type of ATC permit awarded pursuant to the 2018 RFA is distinctly different from those being issued by the CRC at present. The agency determined that only six ATCs of this type were needed and has since begun issuing more restrictive permits for relatively smaller operations that are, for the most part, not vertically integrated. The Legislature has also, since 2018, enacted new statutory provisions limiting the activities in which new permit holders may engage. N.J.S.A. 24:6I-7(a)(1); N.J.A.C. 8:64-7.1(e). Requiring six more businesses be allowed to operate with the privileges of the prior type of permit would be contrary to the CRC's and Legislature's alterations to the MCP.
Moreover, our "authority to compel agency action is exercised sparingly, as courts are ill-equipped to micromanage an agency's activities." Caporusso v. N.J. Dep't of Health & Senior Servs., 434 N.J.Super. 88, 101 (App. Div. 2014) (citing Sod Farm Assocs. v. Twp. of Springfield, 366 N.J.Super. 116, 130 n.10 (App. Div. 2004)). In other words, this court's "original factfinding authority must be exercised only 'with great frugality and in none but a clear case free of doubt.'" Tomaino, 364 N.J.Super. at 234-35 (quoting Boardwalk Regency, 180 N.J.Super. at 334). This is no such case.
V.
Lastly, we address whether Altus and Bloom were correctly deemed disqualified from receiving 2018 permits. While the first appeals from the 2018 RFA were pending, the Act was amended, effective July 2, 2019. It now provides the CRC may issue permits for entities to operate as 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) lists the criteria the CRC now must use in evaluating applications for each type of permit. Notably, vertically integrated ATC permits now consist of a set of one cultivation, one manufacturing, and one dispensary permit. The ATC permits issued through the 2011 and 2018 RFAs carry certain advantages over the three-permit ATC sets available under the amended Act. These include a greater maximum "canopy size" for cultivation and permission to maintain two satellite dispensary sites. N.J.S.A. 24:6I-38(a)(2); N.J.S.A. 24:6I-7(a)(2)(d).
See L. 2019, c. 153.
On July 1, 2019, in advance of the effective date of the amended Act, DOH issued a third RFA seeking applicants for endorsements mimicking the new types of permits: five for cultivation; fifteen for dispensaries; and four for vertically integrated ATCs, distributed among the three regions. The RFA stated "[c]urrent ATC permit holders (including awardees from December 2018) [were] not eligible to participate . . . ." Bloom applied for a cultivation endorsement in the southern region, and Altus applied for a vertically integrated endorsement in the central region.
On October 15, 2021, the CRC selected winning applications following evaluation by a committee. Both Bloom and Altus were informed they had been selected for the endorsements they sought. They were told "[a]cceptance of this award may result in the applicant being disqualified from receiving award of any pending permit endorsement applications." Indeed, the 2018 RFA stated "[a]ny entity currently holding a permit issued by [DOH] to dispense medicinal marijuana, including affiliates, is not eligible to participate . . . ." Altus accepted the 2019 ATC permit on October 19, 2021. After receiving clarification from the CRC it would be disqualified from obtaining a 2018ATC, Bloom also accepted the 2019 ATC permit.
Bloom also moved to enforce litigant's rights, seeking a stay of its disqualification, which we denied.
Because we are affirming the denial of permits on the basis of the remand record, this issue appears to be moot. However, we address Bloom and Altus's arguments concerning disqualification under the public-importance exception to mootness. Busik v. Levine, 63 N.J. 351, 363-64 (1973).
Bloom argues the CRC wrongfully determined it became ineligible for consideration for an ATC permit pursuant to the 2018 RFA when it accepted a cultivation permit endorsement pursuant to the later 2019 RFA. Bloom asserts the 2018 RFA is "first in time" and its resolution should take priority over the 2019 RFA's results. It thus argues if this court decides it must be awarded a permit related to the 2018 RFA, it should receive one regardless of the fact that it has been awarded a different type of permit related to the 2019 RFA. Bloom contends to find otherwise would deprive it of due process, particularly since the permits awarded by the 2018 RFA carry distinct advantages over the cultivation permit endorsement it accepted.
Bloom further argues the language in the 2018 and 2019 RFAs does not support the CRC's conclusion it is now disqualified from receiving a 2018 ATC permit. It argues the 2018 RFA informed applicants no entity that "then" held a permit was eligible to participate in that proceeding, and the 2019 RFA similarly stated that "current ATC permit holders" were not eligible for another permit. Bloom asserts the RFAs' language did not contemplate the "unique situation" the 2019 RFA proceeding would be resolved first, and thus the ineligibility language in the 2018 RFA should not be applied to disqualify it.
Bloom has clarified it does not seek to hold more than one permit, and if it is entitled to an award under the 2018 RFA, it will have to choose between that award and the 2019 cultivation permit endorsement it accepted. Altus raises the same arguments.
We conclude it was error to disqualify Bloom and Altus from continuing to seek 2018 permits because they were not current permit holders at the time they submitted their 2018 RFA applications. The Act limits the number of permits one person or entity may hold, N.J.S.A. 24:6I-7(a)(2); N.J.S.A. 24:6I-46(a), but appellants do not seek to hold more than the legal number. Instead, they seek to hold only the 2018 permits they claim should have been theirs in the first instance. However, our conclusion does not change the ultimate outcome for either Bloom or Altus.
To the extent we have not addressed appellants' remaining arguments, we deem them without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.