Did the Pennsylvania Department of Health exceed its authority under the Pennsylvania Medical Marijuana Act in promulgating regulations requiring medical marijuana growers/processers use different laboratories?
Green Analytics North, LLC v. Pa. Dep’t of Health, 298 A.3d 181 (Pa. Cmwlth. 2023), direct appeal, appeal docket 76 MAP 2023
In this direct appeal from an order of Commonwealth Court, the Pennsylvania Supreme Court will consider whether the Pennsylvania Department of Health exceeded its regulatory authority by requiring that medical marijuana growers/processors use a different laboratory at the harvest stage and production stage of growing and processing medical marijuana (“2-Lab Requirement”).
Former Section 704(a) of Pennsylvania’s Medical Marijuana Act required a grower/processor to contract with “an independent laboratory to test the medical marijuana produced by the grower/processor.” Slip op. at 3, quoting Former 35 P.S. § 10231.704(a)(emphasis added by Commonwealth Court). On June 30, 2021, the Act was amended by the Act of June 30, 2021, P.L. 210, No. 44 (Act 44), which revised Section 704(a) to provide that:
A grower/processor shall contract with one or more independent laboratories to test the medical marijuana produced by the grower/processor. The [D]epartment shall approve a laboratory under this subsection and require that the laboratory report testing results in a manner as the [D]epartment shall determine, including requiring a test at harvest and a test at final processing….
Slip op. at 3, quoting 35 P.S. §10231.704(a) (emphasis added by Commonwealth Court). Prior to Act 44’s passage, in February 2021, the Department submitted Proposed Regulations to the Independent Regulatory Review Commission (IRRC), which included the 2-Lab Requirement, located at Section 1171a.29(c)(1)-(2) of the Proposed Regulations. In September 2022, after Section 704(a) of the Act was amended, the Department submitted to the IRRC its proposed Final Regulations, which included the 2-Lab Requirement. The IRRC approved the regulations with an effective date of Saturday, March 4, 2023. On March 4, 2023, the Department’s Regulations were published in the Pennsylvania Bulletin at 53 Pa.B. 1275 (March 4, 2023), which state that the new Regulations were effective immediately. That same day, a group of state-permitted medical marijuana entities (Petitioners) filed a Petition for Review challenging the 2-Lab Requirement, which Commonwealth Court summarized as raising the following four issues:
(1) whether Petitioners’ right to relief as to Count I of their Petition for Review (Declaratory Judgment -Lack of Statutory Authority) (Count I) is clear because the Department lacked the statutory authority to enact Section 1171a.29(c)(1)-(2) of the Department’s Regulations, 28 Pa. Code § 1171a.29(c)(1)-2(2)(Regulation), which mandates that growers/processors use a different medical marijuana laboratory (Lab) for the harvest stage and production stage of growing and processing medical marijuana (2-Lab Requirement); (2) whether Petitioners’ right to relief as to Count II of their Petition for Review (Declaratory Judgment -Improper Delegation of Authority) (Count II) is clear because the 2-Lab Requirement unconstitutionally delegates to private Labs the regulatory oversight of medical marijuana testing without any standards or protections; (3) whether Petitioners are entitled to a permanent injunction against the 2-Lab Requirement (Count V); and (4) whether Petitioners have shown that the 2-Lab Requirement amounts to a violation of the Contracts Clauses of the United States and Pennsylvania Constitutions (Count III).
Slip op. at 1-2. In addition to the Petition for Review, Petitioners filed an Application for a Preliminary Injunction with Commonwealth Court and sought an ex parte temporary injunction of the 2-Lab Requirement. Commonwealth Court granted the request for a temporary injunction. Thereafter, the parties stipulated that the Petitioners would withdraw their request for a preliminary injunction and the Department would not enforce the 2-Lab Requirement pending Commonwealth Court’s final decision on the Petition for Review. Petitioners filed an Application for Partial Summary Relief seeking judgment as to Counts I, II, and V of their Petition and for Commonwealth Court to order that:
the Department’s 2-Lab Requirement is unlawful because it exceeds the Department’s authority under the Act and does not track the meaning of the statute; the Department’s 2-Lab Requirement is unlawful because it violates the Act and article II, section 1 of the Pennsylvania Constitution insofar as it delegates the regulatory oversight of the Labs to private and competing third-party Labs; and the Department is permanently enjoined from applying or enforcing any aspect of the Department’s 2-Lab Requirement.
Slip op. at 5.
Commonwealth Court held that the Department’s 2-Lab Requirement is in conflict with the Act which mandates that growers/processors contract with one or more Labs for testing, therefore the Department exceeded its authority in mandating medical marijuana growers/processors to contract with one Lab for testing the harvested marijuana, and another Lab to test the medical marijuana before sale. Finding the Department’s 2-Lab Requirement in conflict with the Act, Commonwealth Court reasoned: “the plain meaning of Section 704(a) of the Act is that growers/processors may contract with only one Lab if they so choose. Notwithstanding, Section 1171a.29(c)(1)-(2) of the Department’s Regulations mandates growers/processors to contract with at least two separate Labs.” Slip op. at 10. Quoting Hommrich v. Pa. Pub. Utils. Comm’n, 231 A.3d 1027, 1040 (Pa. Cmwlth. 2020), Commonwealth Court concluded:
[a]lthough the [Department] argues that its [R]egulations reflect a reasonable interpretation of the [ ] Act …, the [Department] cannot alter the [ ] Act. By … adding requirements that the legislature did not see fit to include, the [Department] has stepped beyond its appropriate legislative mandate and into the realm of making law. Such changes amount to policy decisions that require legislative review. For these reasons, [this Court] conclude[s] that the [Department’s] [2-Lab Requirement] is unenforceable because [it] … conflict[s] with the [ ] Act.
Slip op. at 11, quoting Hommrich, 231 A.3d at 1040 (modified by Commonwealth Court).
In dissent, President Judge Cohn Jubelirer, joined by Judge McCullough, would find that the Medical Marijuana Act empowers the Department of Health to enact the 2-Lab Requirement. The dissent explained:
Section 301(a)(1) of the Act establishes a medical marijuana program in the Commonwealth and requires the Department to implement and administer the program. 35 P.S. § 10231.301(a)(1). Section 301(a)(3) of the Act states, in pertinent part, that “[t]he program shall be implemented and administered by the [D]epartment,” which “shall [h]ave regulatory and enforcement authority over the growing, processing, sale and use of medical marijuana in this Commonwealth.” 35 P.S. § 10231.301(a)(3) (emphasis added). Section 301(b) states “Regulations.–The [D]epartment shall promulgate all regulations necessary to carry out the provisions of th[e] [A]ct.” 35 P.S. § 10231.301(b) (emphasis added).
In discerning the legislative intent behind the Act, it is significant that when conferring legislative power upon the Department, the General Assembly broadly charged the Department with regulating and enforcing the Act’s provisions and required the Department to adopt “all regulations necessary to carry out” its responsibility. Id. Had the General Assembly wished to limit the terms by which the Department was to regulate and enforce the provisions of the Act, it could have done so.
Slip op. at RCJ-3 (emphasis added in opinion). The dissent further disagreed with the majority’s focus on “the term ‘one’ in the ‘one or more independent laboratories’ language in Section 704(a) in determining that its plain meaning permits growers/processors to contract with only one Lab if they choose to do so,” reasoning that:
…the plain text thereof requires growers/processors to “contract with one or more independent laboratories” and dictates that the Department shall approve of the Lab as well as determine the procedure for reporting testing results “including requiring a test at harvest and a test at final processing.” 35 P.S. § 10231.704(a) (emphasis added). The plain language of Section 704(a) allows for both a singular laboratory and, in the alternative, multiple laboratories to be utilized in the testing process. The plain language also gives the Department the authority to approve a Lab, determine the reporting procedure, and require a test at both harvest and final processing of the medical marijuana. This language evinces that the General Assembly authorized the Department to implement testing requirements through more than one Lab as the Department may deem appropriate in furtherance of the stated obligation and broad authority the Act grants to the Department to regulate and enforce the cultivating and processing of marijuana in the Commonwealth. See 35 P.S. § 10231.301(a). As the Department points out, the General Assembly was aware that the Department intended to promulgate regulations requiring testing through multiple laboratories, as the Department had taken steps to implement the 2-Lab Requirement when the Act was passed. (Department’s Memorandum of Law in Support of [its] Application for Summary Relief (Department’s Br.) at 16-17.) Indeed, the record reflects a public meeting was held on the final regulation before the Independent Regulatory Review Commission (IRRC) on October 20, 2022, at which time the IRRC Commissioners discussed the 2-Lab Requirement and the impetus behind it. (Meeting Minutes at 3-8, Department’s Br. at Exhibit R-1.)
Slip op. at RCJ-5 (emphasis added in opinion). Thus, based on the plain language of the Medical Marijuana Act, the dissent would conclude that “the 2-Lab Requirement is a proper exercise of the Department’s authority under the Act, which gives the Department the authority to closely regulate the testing process in furtherance of the General Assembly’s concern for the safety of consumers of medical marijuana.” Dissent slip op. at RCJ-9.
The Department appealed to the Pennsylvania Supreme Court. By order dated March 21, 2024, the Supreme Court granted oral argument on the following issue, as stated by the Department:
Did Commonwealth Court err in concluding that the Department of Health lacks the authority under the Medical Marijuana Act to implement a regulation requiring that each grower/processor utilize a different laboratory to test its marijuana as the processing stage from the laboratory used at the harvest stage?
Docket Sheet at 5.