Medigrow, LLC v. Natalie M. Laprade Med. Cannabis Comm'n

• Decision Date: 16 September 2020
• Docket Number: Civil Action No. RDB-20-0504
• Citation: 487 F.Supp.3d 364
• Parties: MEDIGROW, LLC, Plaintiff, v. NATALIE M. LAPRADE MEDICAL CANNABIS COMMISSION, et al., Defendants.
• Court: U.S. District Court — District of Maryland

487 F.Supp.3d 364

MEDIGROW, LLC, Plaintiff,

v.NATALIE M. LAPRADE MEDICAL CANNABIS COMMISSION, et al., Defendants.

Civil Action No. RDB-20-0504

United States District Court, D. Maryland.

Signed September 16, 2020

Kelly Lynn Burchell, Theresa Taing, Burchell and Hughes PLLC, Washington, DC, for Plaintiff.

Brian E. Frosh, Heather Benson Nelson, James Tansey, Office of the Attorney General Maryland Department of Health, Baltimore, MD, for Defendant Natalie M. LaPrade.

Heather Benson Nelson, Maryland Office of the Attorney General, Baltimore, MD, for Defendants Chairman Brian P. Lopez, Jinlene Chan, M.D., M.P.H., Ehsan Abdeshahian, M.D., Nancy Rosen-Cohen, Ph.D., Phillip Cogan, R. Ph., Konrad Dawson, M.D., Megan Dingus, M.S.N., Elizabeth Q. Hines, M.D., Charles P. Lodico, M.S., Ph.D., C. Obi Onyewu, M.D., Tiffany D. Randolph, J.D., Saundra O. Washington, Scott Welsh.

MEMORANDUM OPINION

Richard D. Bennett, United States District Judge

The Federal Controlled Substances Act ("CSA"), 21 U.S.C. § 801, et seq. , prohibits the possession and distribution of marijuana, which is defined to include "all parts of the plant Cannabis sativa L." 21 U.S.C. § 802(16). Notwithstanding the illegality of marijuana under federal law, Maryland and several other states have recently permitted the possession and distribution of cannabis for medical purposes.¹ In 2013, the Maryland General Assembly established the Natalie M. LaPrade Medical Cannabis Commission (the "Commission") as an independent commission within the Maryland Department of Health to study the use of medical cannabis. Md. Code Ann., Health-Gen. § 13-3301, et seq. (2013). Ultimately, the Commission was tasked with issuing licenses for medical cannabis growers and processors. Health-Gen §§ 13-3306 and 3309.

In conformity with the Maryland General Assembly's legislative efforts to promote diversity in the Maryland cannabis industry, the Commission established a race and gender-conscious application process for medical cannabis grower and processor licenses. In this lawsuit, Plaintiff MediGrow, LLC ("Plaintiff" or "MediGrow"), has filed an eight-count Complaint alleging federal claims in the first three counts and state law claims in the remaining five counts. Specifically, MediGrow alleges that the Commission's application process unfairly rewards non-minority applicants in violation of the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution. Furthermore, Plaintiff alleges violations of Maryland common law and administrative law. MediGrow files suit against the Commission and all of its members in their official capacities (collectively, the "Defendants").²

Now pending is the Defendants’ Motion to Dismiss Plaintiff's Amended Complaint (ECF No. 21). The parties’ submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2018). As set forth below, the Eleventh Amendment to the U.S. Constitution bars suit in federal court against state agencies and state officials acting in their official capacity. The Defendants in this case are therefore shielded from Plaintiff's federal claims. Alternatively, MediGrow lacks standing to bring those claims. Pursuant to 28 U.S.C. § 1367(c), this Court declines to exercise supplemental jurisdiction over the remaining state law claims, both as a matter of discretion and because federal abstention principles require this Court to refrain from disrupting Maryland's medical cannabis regulatory scheme. Ultimately, this court must avoid settling Maryland law disputes concerning the distribution of cannabis for medicinal purposes, as federal law prohibits the possession and distribution of this substance. See 21 U.S.C. § 801, et seq. For these reasons, and for the reasons set forth below, Defendants’ Motion to Dismiss Plaintiff's Complaint (ECF No. 21) is GRANTED. Plaintiff's Complaint is DISMISSED in its entirety. Counts I, II, and III are DISMISSED WITH PREJUDICE because Plaintiff cannot overcome the Defendants’ Eleventh Amendment immunity. The remaining Counts (Counts IV, V, VI, VII, and VIII) are DISMISSED WITHOUT PREJUDICE.

BACKGROUND

In ruling on a motion to dismiss, this Court "accept[s] as true all well-pleaded facts in a complaint and construe[s] them in the light most favorable to the plaintiff." Wikimedia Found. v. Nat'l Sec. Agency , 857 F.3d 193, 208 (4th Cir. 2017) (citing SD3, LLC v. Black & Decker (U.S.) Inc. , 801 F.3d 412, 422 (4th Cir. 2015) ). In 2013, the Maryland General Assembly established the Natalie M. LaPrade Medical Cannabis Commission as an independent commission within the Maryland Department of Health to study the use of medical cannabis. (Compl. ¶ 10, ECF No. 1.) Md. Code Ann., Health-Gen. § 13-3301, et seq. (2013). In 2014, the General Assembly expanded the Commission's purview by permitting it to set policies, procedures, and regulations for a state-wide medical cannabis program. Health-Gen. § 13-3302 (2014). The Commission's statutory duties include awarding licenses to medical cannabis growers and processors. Health-Gen. §§ 13-3306 and 3309.

On May 15, 2018, the General Assembly passed an emergency amendment to Health-Gen. § 13-3301, et seq. , designed to ameliorate inequality in the medical cannabis industry. Under the amended statutes, the Commission was directed to "seek to achieve racial, ethnic, gender, and geographic diversity when licensing" medical cannabis growers and processors and to "encourage ... minority business enterprise[s] ... to apply for licenses" as medical cannabis growers and processors. Health-Gen. § 13-3306, 13-3309.

Pursuant to the General Assembly's statutory mandate, the Commission instituted a gender and race-conscious grower and processor license application process. (ECF No. 1 ¶ 25); COMAR 10.62.08.05 ; COMAR 10.62.19.04. Under this process, the Commission conducts a preliminary review of the applications for purposes of awarding pre-approval licenses. (ECF No. 1 ¶¶ 25, 42; ECF No. 1-17 at 114, 207.) Applicants are ranked based on a 100-point system that is designed to account for several weighted criteria, such as "Operational Factors," "Safety and Security Factors," and the like. (Id. ) Of the 100 points available for allocation, 15 points may be awarded based on "Diversity & Social and Economic Equity Factors" (the "equity points"). Applicants for grower and processor licenses could, at least theoretically, receive equity points even if they had few "racial, ethnic, gender, or geographically diverse owners, investors, managers, and employees." (ECF No. 1 ¶ 29.) For example, applicants could acquire equity points by demonstrating "minimal efforts to promote diversity" even if they had "[n]o diverse owners, investors, and managers" and only "some diverse employees." (ECF No. 1-17 at 116, 209-210.)

MediGrow, a Maryland LLC and alleged minority business,³ submitted timely grower and processer applications via the Commission's online platform and, as subsequently required, by hand. (ECF No. 1 ¶¶ 46-62.) On September 24, 2019, the Commission notified MediGrow by email that neither its grower license application nor its processor license application was among the highest scoring applications. (Id. ¶ 80.) Accordingly, neither application qualified to receive pre-approval for a license. (Id. ¶¶ 81-82.) Plaintiff alleges that the highest-ranking grower and processor applicants are not minority owned businesses. (Id. ¶ 85.) The Commission has not yet awarded pre-approvals to any 2019 applicant. (Id. ¶ 87.)

On February 25, 2020, MediGrow initiated this lawsuit by filing an eight-count Complaint, alleging violations of the Equal Protection Clause of the Fourteenth Amendment and Maryland law. Counts I and II bring equal protection and race discrimination claims under 42 U.S.C. § 1983 and 42 U.S.C. § 1981, respectively. Counts III seeks a declaratory judgment pursuant to 28 U.S.C. § 2201. The remaining Counts (Counts IV-VIII) bring various state law claims. On June 11, 2020, Defendants moved to dismiss Plaintiff's Complaint in its entirety pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), 28 U.S.C. § 1367(c), and federal abstention principles.

STANDARD OF REVIEW

I. Motion to Dismiss for Lack of Subject Matter Jurisdiction.

Defendants assert a facial challenge to this Court's subject matter jurisdiction, arguing that the allegations of the complaint establish their immunity to suit under the Eleventh Amendment to the United States Constitution. See Cunningham v. Gen. Dynamics Info. Tech., Inc. , 888 F.3d 640, 649 (4th Cir. 2018) (holding that sovereign immunity deprives the court of subject matter jurisdiction). A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction challenges a court's authority to hear the matter brought by a complaint. See Davis v. Thompson , 367 F.Supp.2d 792, 799 (D. Md. 2005). A challenge to jurisdiction under Rule 12(b)(1) may proceed either as a facial challenge, asserting that the allegations in the complaint are insufficient to establish subject matter jurisdiction, or a factual challenge, asserting "that the jurisdictional allegations of the complaint [are] not true." Kerns v. United States , 585 F.3d 187, 192 (4th Cir. 2009) (citation omitted). The Defendants in this case clearly present a facial challenge and accordingly "must show that [the] complaint fails to allege facts upon which subject matter can be predicated." Amador v. Mnuchin , ELH-20-1102, 476 F.Supp.3d 125, 139 (D. Md. Aug. 5, 2020) (quoting Hutton v. Nat'l Bd. of Exam'rs Inc. , 892 F.3d 613, 620-21 (4th Cir. 2018) ).

II. Motion to Dismiss for Failure to State a Claim.

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a claim upon...