Medical marijuana growers, labs file lawsuit against 2-lab rule

A new rule in Pennsylvania requiring cannabis growers to use different labs to test their products at the harvesting and final stages is on hold as the case is litigated in Commonwealth Court.

In early March, a group of cannabis growers and labs went to court to block the rule, saying its immediate implementation would have the result of voiding existing contracts and creating other problems.

The plaintiffs in the case are Green Analytics North LLC, doing business as Steep Hill PA; Hanging Gardens LLC; Pennsylvania Medical Solutions LLC; Curaleaf PA LLC; AES Compassionate Care LLC; Standard Farms LLC; and Parea BioSciences LLC.

Harrisburg attorney Judith Cassel, who is among those representing the plaintiffs, explained in an email that the state Department of Health developed temporary regulations for the medical marijuana program in 2017, permitting “each grower/processor to contract with a lab of their choice for testing at both of these stages.”

On March 4, the department released new, permanent regulations, mandating that one laboratory be used to test at the harvest stage and another at the final stage.

In their filing to block the two-lab rule, the plaintiffs argued that it throws a spanner into the existing system, effectively freezing the production and sale of medical cannabis, creating shortages and increased prices.

The permanent rules had been voted on and approved last October by the body that regulates the medical marijuana program in Pennsylvania. One of the reasons given by the state to defend the two-lab rule is it would better protect the public from contaminants.

Asked for a response from the Health Department, a spokesman from its press office released the following statement: “The department does not comment on pending litigation.” Its website did note that the two-lab reg is not being enforced as court action plays out.

The requirement strips “50% of the business away from a lab that previously performed testing for a grower/processor at both stages,” Cassel said. “And grower/processors lose the continuity and cost savings they achieve with using a single lab for both testing stages.”

The extra costs incurred will at least partly be passed on to patients, she said.

“The other potential harm is that production on products could be halted or less safe, which will also lead to negative impacts on patients.”

Cassel, of the firm Hawke McKeon & Sniscak LP, said the Department of Health “admits that there is no problem in Pennsylvania for which this regulation is aimed. And DOH has not justified its implementation of this regulation. In addition to not providing any rationale for the promulgation of this regulation, DOH has not provided any guidance as to its use. In other words, what if these two laboratories get two different results, which is likely since the two laboratories use different processes, different equipment, and different personnel and are testing two completely different products? … DOH doesn’t bother explaining what will happen when the inevitable discrepancies occur.”

She asked: “Will there be a third test required and would all three laboratories get different results? Does the product get destroyed? If the product is getting stalled or destroyed, that will mean less product in the market, which translates to higher prices again.”

The plaintiffs are challenging the rule legally on three counts, Cassel explained: that it is beyond DOH’s enabling statute, the regulation is an abdication of DOH regulatory responsibility, and the regulation violates the Constitution’s (state and federal) contract clause.

Both parties have been ordered by Commonwealth Court to file applications for summary relief. If neither wins, she said, “then the issues will go to full litigation.”

Oral arguments before the full court (en banc) are scheduled for May 10.

Paula Wolf is a freelance writer