Seven medical cannabis companies have filed an appeal with the Virginia Board of Pharmacy, with some calling its decision to award licenses to other companies “arbitrary” and “wildly prejudicial.”

Five licenses to cultivate and process medical cannabis into CBD oils and other products for state-registered patients were awarded to five companies for each of the state’s designated health service areas.

New York-based Columbia Care, which operates and oversees dispensaries across the nation and overseas, won the license for Hampton Roads, much to the disappointment of local applicants who felt the board shunned local, smaller applicants for a processor giant.

Columbia Care will open a 65,000-square-foot facility at an undisclosed industrial area off of Greenwood Drive in Portsmouth this spring.

Several applicants have spoken out about their perception of the board’s application and selection process as lacking transparency, clarity and fairness. Appeals were sent for each service area except Northern Virginia.

The board sent orders to all applicants in December that shed some more light into its selection, but applicants were still left with what they called “vague” answers.

The appeals

Chesapeake applicant Chesapeake Bay Therapeutics said it believed the board “alleged certain arbitrary justification for the rejection of its license” in its appeal letter.

In an October protest to the board and its appeal letter, CBT suggested dividing existing service areas into two, allowing for five more permits.

“The Board has the discretion and means available to remedy the faulty decision by reestablishing the regions or supporting legislation that allows for the inclusion of additional qualified candidates to serve the regions,” CBT stated.

The company claimed the board had a lack of “meaningful” review and evaluation of the applications and failed to use industry experts to support the award decision. The applications were reviewed by an ad hoc committee prior to board discussion.

The board consists largely of pharmacy professionals, but with cannabis as an emerging industry, it’s not clear what direct experience the board members possessed in the field.

CBT noted that each application, which cost $10,000 to submit, was around 300 pages or more and contends that with 51 applications, upwards of 15,000 pages were reviewed over only two meetings, both closed to the public.

Virginia Board of Pharmacy Executive Director Carolina Juran previously told The Virginian-Pilot that the applications went to ad hoc committee members late June for their review and to do preliminary scoring. The board discussed the applications in September.

When asked for board comment, spokeswoman Diane Powers said in an email that the board “does not comment on pending litigation.” Applicants are required to file a petition for appeal with the circuit court and a case “will potentially be heard on the matter,” she said.

“The process has to play out,” said CBT consultant James Lee. “They had half a million dollars to run this program and it’s just crazy the way it’s done.”

Chris Horton, consultant to applicant Commonwealth Organics, said he believes that the board has not done a “remotely decent job” in handling the pharmaceutical processors and made up reasons to deny certain applicants.

The company, which applied for the southwestern region of the state, said in its appeal letter that it believed it was prejudiced in the scoring process and it had “grave concerns about the scoring practices and implementation of the program. Furthermore, we believe the Board of Pharmacy has thus far shown itself to lack the industry expertise and experience necessary to regulate this medicine…”

Among its appeal claims are that the board provided “patently false” reasons for dismissing its application which scored about 49 points over awardee Dharma Pharmaceuticals and that it was a “wildly prejudicial process.”

The board found Commonwealth Organics’ proposed location to be not as close to an interstate and less accessible to the potential patient population of the area than Dharma, as well as a “vague” delivery plan and a marketing plan that “acknowledged” potential recreational use.

Horton said the location was less than a mile from a state road that connects to Interstate 81 and the company submitted delivery plans that included a GPS tracker and cameras on trucks. As far as the marketing plan, Horton said the company provided examples of education that it publishes in legal adult-use states, but did not state that it would use the same material.

Spokespeople for applicants Green Roots Pharm VA and Virginia Medical CBD said the companies chose not to appeal because of the assumed expense of an appeal process, but both expressed that the companies had concerns about the process. The process was not “fair, open or valid,” Green Roots stated.

More dispensaries?

CBT’s suggestion of splitting the service areas echoes Del. Glenn Davis’ proposed legislation in House Bill 2245 to issue five more licenses to the companies with the highest scores and no issued permit by Sept. 1 and allow each licensed processor to operate two facilities. Davis represents the 84th district in Virginia Beach. Of the five license holders statewide, four received lower scores than others competing for the same area. A House subcommittee recommended laying the bill on the table on Wednesday.

“Those that probably need it the most — the aged and severely disabled — are probably the least likely to be able to travel the long distances to get to one of those five locations,” Davis previously told The Virginian-Pilot this month. “Initially, the production that could come from the five locations would be significantly under what the demand would be.”

Horton doesn’t believe the bill is an answer to fixing what he sees as an issue: too few companies controlling the industry — companies that lobbyists will ensure get a seat at the table.

“Vertical integration is always bad,” he said. “What is does it give a few people control over the entire industry.”

Horton said the issue that needs to be fixed lies with the board.

“There’s got to be something at least publicly said and done to review the direction that the Board of Pharmacy took in the sense that they’re overreaching,” he said. “They want absolute control but they’re not wanting to put a program in place where they can let industry experts take some lead.

“I just feel like this was so predetermined and predestined.”