In re Curio Holdings NJ, LLC'S

• Docket Number: A-0947-21,A-3159-21
• Decision Date: 30 August 2023
• Parties: IN THE MATTER OF CURIO HOLDINGS NJ, LLC'S APPLICATION FOR A PERMIT TO OPERATE A VERTICALLY INTEGRATED ALTERNATIVE TREATMENT CENTER IN THE CENTRAL REGION OF NEW JERSEY. IN THE MATTER OF CURIO HOLDINGS NJ, LLC CHALLENGE TO THE WBE CERTIFICATIONS OF ALTUS NEW JERSEY LLC, HOLISTIC N.J. I LLC, and CHM CONSULTING, LLC.
• Court: New Jersey Superior Court — Appellate Division

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IN THE MATTER OF CURIO HOLDINGS NJ, LLC'S APPLICATION FOR A PERMIT TO OPERATE A VERTICALLY INTEGRATED ALTERNATIVE TREATMENT CENTER IN THE CENTRAL REGION OF NEW JERSEY. IN THE MATTER OF CURIO HOLDINGS NJ, LLC CHALLENGE TO THE WBE CERTIFICATIONS OF ALTUS NEW JERSEY LLC, HOLISTIC N.J. I LLC, and CHM CONSULTING, LLC.

Nos. A-0947-21, A-3159-21

Superior Court of New Jersey, Appellate Division

August 30, 2023

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 May 23, 2023

On appeal from the New Jersey Cannabis Regulatory Commission (A-0947-21) and from the New Jersey Department of the Treasury (A-3159-21).

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Paul P. Josephson argued the cause for appellant Curio Holdings NJ, LLC (Duane Morris LLP, attorneys; Paul P. Josephson, James R. Hearon, Matthew M. Caminiti, and Miranda S. Bovit, of counsel and on the briefs).

Mark McNally, 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, Deputy Attorney General, on the brief).

James J. Robinson, Jr., Deputy Attorney General, argued the cause for respondent New Jersey Division of Revenue and Enterprise Services (Matthew J. Platkin, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; James J. Robinson, Jr. and Judith M. O'Malley, Deputy Attorneys General, on the brief).

Maeve E. Cannon argued the cause for respondent Altus New Jersey LLC (Stevens & Lee, PC, attorneys; Maeve E. Cannon, of counsel and on the briefs; Michael A. Cedrone, on the briefs).

Kathleen McGee (Lowenstein Sandler LLP) of the New York bar, admitted pro hac vice, argued the cause for respondent Holistic N.J. I LLC (Lowenstein Sandler LLP, attorneys; Christopher S. Porrino, Kathleen McGee, and Lauren E. Van Driesen, of counsel and on the briefs).

Before Judges Gilson, Rose, and Gummer.

PER CURIAM

In these two appeals, which we consolidate for purposes of this opinion, appellant Curio Holdings NJ, LLC (Curio) contests the denial of its application

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for one of two permits to operate a vertically integrated alternative treatment center (AT Center) in the central region of New Jersey. Curio contends that several of its competitors received inflated scores as women-owned business enterprises (WBEs) when they were not really WBEs and without those inflated scores Curio would have been awarded a permit.

In A-0947-21, Curio appeals from the Cannabis Regulatory Commission's (CR Commission) decisions to award permits to Altus New Jersey, LLC (Altus) and Holistic N.J. I, LLC (Holistic) and deny Curio's challenges to those awards. Curio argues the CR Commission erroneously gave Altus and Holistic higher scores based on their status as WBEs. Altus and Holistic had been certified as WBEs by the New Jersey Department of Treasury (Treasury), through its Division of Revenue and Enterprise Services (DORES).

In A-3159-21, Curio appeals from Treasury's denial of its challenges to the WBE certifications issued to Altus, Holistic, and CHM Consulting, LLC (CHM). CHM had also applied for a permit to operate an AT Center in the central region and, although it was not awarded one of the two permits, scored higher than Curio because it had a WBE certification.

Having reviewed the arguments of the parties in light of the law and record, we affirm the decisions of both the CR Commission and Treasury. The

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CR Commission correctly relied on the WBE certifications issued by Treasury. We discern nothing arbitrary, capricious, or unreasonable in Treasury's denial of Curio's challenges to the WBE certifications issued to Altus, Holistic, or CHM. In making that ruling, we note that Altus and Holistic are subject to continued monitoring by Treasury to ensure that they are, in fact, operating as WBEs.

I.

We discern the relevant facts and procedural history from the two administrative records. To put Curio's appeals and its challenges in context, we summarize the WBE certification process and the AT Center application process.

A. The WBE Certification Process.

The Legislature has given Treasury authority to establish procedures for certifying the eligibility of a business to represent itself as a "women's business." See N.J.S.A. 34:1B-227; N.J.S.A. 52:27H-21.19 and -21.20; see also N.J.A.C. 17:46-1.1 to -1.12 (establishing procedures for certification). A "women's business" is defined as:

a business which is:

(1) A sole proprietorship owned and controlled by a woman; or

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(2) A partnership or joint venture owned and controlled by women in which at least 51% of the ownership is held by women and the management and daily business operations of which are controlled by one or more women who own it; or

(3) A corporation or other entity whose management and daily business operations are controlled by one or more women who own it, and which is at least 51% owned by women, or, if stock is issued, at least 51% of the stock is owned by one or more women.

[N.J.S.A. 52:27H-21.18(i).]

See also N.J.A.C. 17:46-1.2; N.J.A.C. 17:46-1.3(c) and (d).

To be certified, an applicant must be screened "to [e]nsure that businesses seeking certification are not misrepresenting their status as . . . women's businesses . . . and that the . . . women's business applicants are, in fact, in the control of . . . women, and are not merely 'fronts' for businesses controlled by persons other than . . . women." N.J.S.A. 52:27H-21.20(d). Furthermore, businesses that have been certified must be "[m]onitor[ed] . . . to [e]nsure continued compliance with the criteria for certification and control by the appropriate persons." N.J.S.A. 52:27H-21.20(e).

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In July 2019, Altus applied to DORES for a WBE certification. Altus represented that it was an LLC established in June 2018, and its principal owner, managing member, and chief executive officer was Katherine Bio, who owned fifty-one percent of the business. Altus identified the other member-owners as Jonathan Goldrath and Robert Pease, each of whom was represented to own 24.5 percent of the business. Pease was identified as the contact person for the business.

Altus also provided DORES with a copy of its articles of organization and its operating agreement. The articles of organization stated that management of the company would be vested in the board of directors. The operating agreement, however, stated that the business would be managed by its members, with "all decisions respecting the management, operation, and control of the business and affairs of the company . . . made by a vote of over fifty percent of the members' ownership-interest." On August 6, 2019, DORES issued to Altus a WBE certification, which expired on August 5, 2022.

In July 2019, Holistic also applied to DORES for a WBE certification. Holistic represented that it was a partnership, albeit organized as an LLC, established in July 2019. It stated that its managing member was Amy Singer, who owned forty-two percent of the business. The other identified female

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owners were Morgan Greenhouse Genderson and Staci Walkes, each of whom owned nine percent of the business.

Holistic provided DORES a copy of its LLC agreement, which stated that the business would be managed by a five-member board of managers consisting of Amy Singer, Morgan Greenhouse Genderson, Staci Walkes, Joshua Genderson, and Sam Amoia. Each member of the board would have a single vote, and management decisions would require the vote of a majority of the board of managers. Concerning the day-to-day management of the business, Holistic's LLC agreement stated that those responsibilities would be delegated to "officers, agents and employees," who would be appointed, supervised, and overseen by the board of managers. Holistic informed DORES that in 2019 its only officer was Amy Singer, who was the president of the LLC. On August 2, 2019, DORES issued to Holistic a WBE certification, which expired on August 1, 2022.

In July 2019, CHM also applied to DORES for a WBE certification. It represented that it was an LLC established in May 2019, and was 100 percent owned by Morgan Zitelli, who was the president and chief operating officer. CHM also informed DORES that Nicholas Zitelli, Morgan's husband, was a managing member. The materials provided to DORES disclosed that American

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CHM Investments, Inc. was an investor in CHM. On August 14, 2019, DORES issued to CHM a WBE certification, which expired on August 13, 2022.

B. The AT Center Application Process.

The medical use of cannabis in New Jersey is authorized by and addressed in the Jake Honig Compassionate Use Medical Cannabis Act (the Act), N.J.S.A. 24:6I-1 to -30. See In re Application for Med. Marijuana Alt. Treatment Ctr. for Pangaea Health &Wellness, LLC, 465 N.J.Super. 343, 355-56 (App. Div. 2020). The Act established the CR Commission "in, but not of, the Department of Treasury." N.J.S.A. 24:6I-24. When it was formed, the CR Commission "assume[d] all powers, duties, and responsibilities with regard to the regulation and oversight of activities, authorized [by the Act]" that had previously been assigned to the Department of Health (DOH). N.J.S.A. 24:6I-24(a)(1). The Act directed the CR Commission to adopt regulations to effectuate the purpose of the Act. N.J.S.A. 24:6I-7(i) and -16. Accordingly, the CR Commission has promulgated regulations. See N.J.A.C. 17:30A-1.1 to -13.11.

The Act seeks "to promote participation in the medical cannabis industry by persons from socially and economically disadvantaged communities, including promoting applications for, and the issuance of, medical cannabis cultivator, medical cannabis...