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New Jersey Appellate Division Largely Sides with Department of Health’s Rejection of Certain Applications for Medical Marijuana Licenses

February 18, 2021


Today, the Superior Court of New Jersey, Appellate Division, issued an opinion (per curiam) largely affirming the New Jersey Department of Health’s decisions that disqualified certain applicants seeking licenses to operate medical marijuana Alternative Treatment Centers (ATCs). With respect to one appellant, ZY Labs, LLC, the Appellate Division reversed and remanded the matter back to the Department for further proceedings.

The appeals arose as a result of applications that were submitted in response to the Department’s Request for Applications in July 2019. The Department rejected certain applications that were submitted electronically because the Department could not open attached files, the submissions were untimely, or the submissions were determined to be unresponsive for failure to provide the mandatory information required in Part A of the application. While noting the deference that applies to an agency’s decision, the panel concluded that the Department’s decisions were not arbitrary, capricious or unreasonable “in failing to excuse appellants’ inability to timely file complete and uncorrupted applications.” With respect to ZY Labs, LLC, the panel determined that letters from three prominent community members satisfied the requirement that the applicant submit proof of the “approval of the community or governing body of the municipality in which the [ATC] is or will be located.” The panel concluded that the Department’s contrary conclusion and disqualification of ZY Labs was arbitrary, capricious, and unreasonable.

The panel also determined that appellants were not entitled to an administrative hearing before the applications were denied by the Department. The panel noted that the “Department was neither judging nor scoring the information provided by these appellants; it was merely determining whether appellants submitted the information required by Part A of the application.” Consequently, the panel concluded that the Department “was not required to initiate or engage in any further procedures to address challenges by disappointed applicants like appellants.”

Finally, in response to appellant’s argument that the Department’s actions are preventing access to the growing number of qualified patients in New Jersey, the panel held that the appellant “is simply quarreling with what it deems the improper actions or inactions of the executive and legislative branches; this is nothing but a non-justiciable political diatribe to which we will not respond.”