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Utah appeals court rejects challenge to medical cannabis grow licenses

Photos: One of Utah’s first medical cannabis grow facilities opens in Tooele
Posted at 7:23 AM, May 15, 2021

SALT LAKE CITY — A state appeals court will not undo a series of marijuana cultivation licenses given out by the Utah Department of Agriculture and Food — despite an audit that recommended it be done over.

In a ruling published late Friday, the Utah Court of Appeals declined to disturb a decision not to award JLPR LLC a marijuana cultivation license. The company has been fighting for one since 2019.

JLPR was among 81 companies that tried for a cultivation license from Utah's Department of Agriculture and Food and came close to getting one, the court said. JLPR protested the decision, claiming the application process was rushed, the agency changed its criteria at the last minute to allow non-Utah companies to compete, and UDAF didn't correctly follow its own scoring criteria.

It was rejected by a hearing officer, who said the company failed to provide any evidence to show a bias.

JLPR pressed forward, appealing to the state's procurement policy board "and hinted that it had found 'significant conflicts of interest and political ties' that it believed had 'driven many if not all of the selection outcomes,' and asserted that 'the selection process was based upon who you are and who you know rather than if you are truly capable and qualified' to run a cannabis business," Judge Ryan Harris wrote in the Utah Court of Appeal's ruling.

"But JLPR provided no specific information to support these allegations, stating merely that it was 'prepared if needed to disclose all the information [it had] discovered thus far.' And once again, JLPR indicated that its requested remedy was “a meeting with the appropriate decision maker(s), including, but not limited to . . . the Lieutenant Governor, the Governor, Bi-Partisan State Senators, Representatives, Legislators, Oversight Committees and the Attorney General to discuss [its] qualifications' for a cannabis license."

JLPR went to the Utah Court of Appeals after being rejected again. This time, they included a blistering audit produced by Utah State Auditor John Dougall, who found a number of problems with the state's medical cannabis cultivation license process. The state auditor went so far as to recommend UDAF scrap it and start over.

The ruling said JLPR also included emails that "indicated that UDAF employees informally met with some of the applicants during the open application period. Another document was a sworn declaration containing assertions that one of the successful licensees hired the former deputy commissioner of UDAF—who left UDAF in May 2019, just days before the application period opened—and paid him a six-figure contingent fee to help the company obtain a license."

While the new information may be helpful for JLPR, the Utah Court of Appeals said it would not consider it because it was not included in materials that went before the hearing officer or the state's procurement policy board.

"In evaluating the Board’s decision to dismiss JLPR’s protest, we are limited in our review to the record on appeal: the materials submitted to and considered by the Officer and the Board in rendering the administrative decision at issue," Judge Harris wrote. "JLPR’s attempt to attach to its briefs new material not contained in the administrative record was improper, and we may not consider that material. And when we consider the Board’s decision in light of the record it had at its disposal at the time it rendered that decision, we cannot say that its decision was arbitrary and capricious, or clearly erroneous."

Read the Utah Court of Appeals ruling here: