Green Analytics North, LLC d/b/a Steep Hill PA v. PA DOH ( 2023 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Green Analytics North, LLC d/b/a :
Steep Hill PA, Hanging Gardens, LLC, :
Pennsylvania Medical Solutions, LLC, :
Curaleaf PA, LLC, AES Compassionate :
Care, LLC, Standard Farms, LLC, and :
Parea BioSciences, LLC, :
Petitioners :
:
v. :
:
Pennsylvania Department of Health, : No. 104 M.D. 2023
Respondent : Argued: May 10, 2023
BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE STACY WALLACE, Judge
OPINION BY
JUDGE COVEY FILED: June 29, 2023
Before this Court are the Pennsylvania Department of Health’s
(Department) Application for Summary Relief, and Green Analytics North, LLC
d/b/a Steep Hill PA’s (Green Analytics), Hanging Gardens, LLC’s, Pennsylvania
Medical Solutions, LLC’s, Curaleaf PA, LLC’s, AES Compassionate Care, LLC’s,
Standard Farms, LLC’s, and Parea BioSciences, LLC’s (collectively, Petitioners)
Application for Partial Summary Relief (Cross-Applications). There are four issues
before this Court: (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) (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 Constitutions1 (Count III).2
Background
Pennsylvania’s medical marijuana program began in 2016 pursuant to
the Medical Marijuana Act (Act).3 Section 301(a)(3) of the Act states that the
Department 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). Section 103 of the Act defines a “[g]rower/processor” as “[a]
person, including a natural person, corporation, partnership, association, trust or
other entity, or any combination thereof, which holds a permit from the Department
under this [A]ct to grow and process medical marijuana.” 35 P.S. § 10231.103. The
1
The Contract Clause of the United States Constitution provides, in relevant part, that “[n]o
state shall enter into any . . . [l]aw impairing the [o]bligation of [c]ontracts.” U.S. CONST. art. I, §
10. The Contract Clause of the Pennsylvania Constitution similarly provides that “[n]o . . . law
impairing the obligation of contracts . . . shall be passed.” PA. CONST. art. I, § 17.
2
The parties’ first two issues are the same in the Cross-Applications. Issue three herein is
Petitioners’ third issue, and issue four herein is the Department’s third issue.
3
Act of April 17, 2016, P.L. 84, as amended, 35 P.S. §§ 10231.101-10231.2110.
2
Department has issued permits to growers/processors. Petitioners Hanging Gardens,
LLC, Pennsylvania Medical Solutions, LLC, Curaleaf PA, LLC, AES
Compassionate Care, LLC, Standard Farms, LLC, and Parea BioSciences, LLC
(collectively, Growers/Processors), have received such permits.
Former Section 704(a) of the Act required a grower/processor to
contract with “an independent laboratory to test the medical marijuana produced
by the grower/processor.” Former 35 P.S. §10231.704(a) (emphasis added). Green
Analytics is a Department-approved Lab for medical marijuana testing and has been
providing testing for both stages of growing and processing medical marijuana
(harvest and processing) for several growers/processors, including some of the
Growers/Processors. On June 30, 2021, the Act was amended by the Act of June
30, 2021, P.L. 210, No. 44 (Act 44). Act 44 revised Section 704(a) of the Act to
mandate:
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. . . .
35 P.S. § 10231.704(a) (emphasis added).
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, in order to create checks and balances in the
testing process. The 2-Lab Requirement was located at Section 1171a.29(c)(1)-(2)
of the Proposed Regulations.4
4
See http://www.irrc.state.pa.us/docs/3290/COMMENTS_FINAL/329007-13-22
CannabisLawPA.pdf (state.pa.us) (last visited June 28, 2023).
3
On June 9, 2021, Pennsylvania State Senator John M. DiSanto (Senator
DiSanto), by way of a formal letter to the IRRC, expressed his opposition to the
proposed 2-Lab Requirement. On or about September 19, 2022, after the new
Section 704(a) of the Act had been enacted, the Department submitted to the IRRC
its proposed Final Regulations. The IRRC discussed and approved the Department’s
Final Regulations, including the 2-Lab Requirement, at its October 20, 2022 public
meeting. The Regulations had an effective date of Saturday, March 4, 2023.
Facts
On March 4, 2023, the Department’s Regulations were published in the
Pennsylvania Bulletin at 53 Pa. B. 1275 (March 4, 2023), including Section
1171a.29(c)(1)-(2) of the Department’s Regulations, which imposes the 2-Lab
Requirement, and stating therein that the new Regulations were effective
immediately. On the morning of March 4, 2023, Petitioners filed a Petition for
Review (Petition), an Application for Special Relief in the Nature of a Preliminary
Injunction (Application for Special Relief), an Application for Special Relief in the
Nature of an Ex Parte Preliminary Injunction, and a Brief in Support of Petitioners’
Application for Preliminary Injunction. Later that same day, this Court granted
Petitioners’ Application for Special Relief in the Nature of an Ex Parte Preliminary
Injunction and temporarily enjoined the Department from enforcing the 2-Lab
Requirement.
On March 6, 2023, this Court held a telephone conference with the
parties, during which the parties agreed that the Petitioners would withdraw their
Application for Special Relief and the Department would not enforce the 2-Lab
Requirement pending this Court’s final order on Petitioners’ Petition. On March 7,
2023, the parties filed a stipulation in this Court memorializing their agreement that
4
Petitioners would withdraw their Application for Special Relief, without prejudice,
in consideration for the Department’s agreement not to enforce the 2-Lab
Requirement pending final order of this Court on all counts and that Petitioners and
the Department would file cross-applications for summary relief in accordance with
this Court’s forthcoming scheduling order.
On March 20, 2023, the Department filed its Application for Summary
Relief seeking judgment in its favor and against Petitioners, with prejudice. Also on
March 20, 2023, Petitioners filed their Application for Partial Summary Relief
seeking judgment for Petitioners as to Counts I, II, and V of their Petition and for
this 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.
Discussion
Initially,
[t]his Court may grant an application for summary relief if
the moving party’s right to judgment is clear and no
material issues of fact are in dispute. See Pa.R.A.P.
1532(b); Eleven Eleven Pa., LLC v. State Bd. of
Cosmetology, 169 A.3d 141, 145 (Pa. Cmwlth. 2017). In
ruling on an application for summary relief, this Court
must “‘view the evidence of record in the light most
favorable to the non-moving party and enter judgment
only if there is no genuine issue as to any material facts
and the right to judgment is clear as a matter of law.’”
Eleven Eleven, 169 A.3d at 145 (citation omitted).
5
Cao v. Pa. State Police, 280 A.3d 1107, 1109 (Pa. Cmwlth. 2022).
Petitioners first argue that they have a clear right to relief on Count I
because the Department’s 2-Lab Requirement exceeds the scope of the Department’s
statutory authority since neither Section 704 of the Act, nor any other Act provision
authorizes the Department to mandate its 2-Lab Requirement. Petitioners contend
that the Act unambiguously provides growers/processors the right to contract with
one or more Labs for the two stages of required testing - at harvest and at final
processing. Petitioners further assert that, even if Section 704(a) of the Act is found
to be ambiguous (which Petitioners declare it is not), and a statutory construction
analysis is required to ascertain the General Assembly’s intent, the result remains
the same: the Department’s 2-Lab Requirement exceeds the scope of the
Department’s authority under the Act and does not track the language of Section 704
of the Act. In addition, Petitioners claim that the Department’s interpretation of the
Act yields an absurd result because the Act expressly states that growers/processors
shall contract with one or more Labs, and the insistence of two Labs makes the one
language superfluous.
The Department rejoins that Petitioners improperly focus on the first
sentence of Section 704(a) of the Act, which requires growers/processors to contract
with “one or more independent laboratories.” 35 P.S. §10231.704(a). The
Department retorts that Petitioners put great emphasis on the fact that independent
laboratory was singular in the previous version of Section 704 of the Act and it is
plural in the current version when in fact the Pennsylvania rules governing statutory
construction specifically state that “[t]he singular shall include the plural, and the
plural, the singular.” 1 Pa.C.S. § 1902. The Department further asserts that, to the
extent the change from singular to plural is considered, it actually undercuts
Petitioners’ position as it would indicate an intention to permit the 2-Lab
6
Requirement. The Department also emphasizes that Senator DiSanto had argued
shortly before the statutory language change that the prior version precluded the 2-
Lab Requirement because independent laboratory was in the singular. The
Department submits that a reasonable interpretation is that the reason, or at least one
of the reasons, the word was then pluralized was to allow for the 2-Lab Requirement.
The Department further proclaims that the current Act language gives
it the flexibility to implement testing requirements it deems appropriate in
furtherance of its obligation to regulate and enforce the growing and processing of
medical marijuana. The Department insists that the fact that the Act gives it this
discretion is the basis for its authority to act herein. The Department declares that,
if the General Assembly wanted to limit the Department’s options, the General
Assembly could have chosen to so state in the Act, yet it did not, despite being aware
that the Department had begun efforts to implement the 2-Lab Requirement when
the General Assembly passed Act 44.
This Court has explained:
It is axiomatic that all regulations “must be consistent with
the statute under which they were promulgated.” Slippery
Rock Area Sch[.] Dist[.] v. Unemployment Comp[.] [Bd.]
of Rev[.], . . . 983 A.2d 1231, 1241 ([Pa.] 2009). “A statute
is the law and trumps an administrative agency’s
regulations.” [Commonwealth v.] Kerstetter, 62 A.3d
[1065,] 1069 [(Pa. Cmwlth. 2013), aff’d, 94 A.3d 991 (Pa.
2014)]. Similarly, “[w]here there is a conflict between
the statute and a regulation purporting to implement
the provisions of that statute, the regulation must give
way.” Commonwealth v. Colonial Nissan, Inc., 691 A.2d
1005, 1009 (Pa. Cmwlth. 1997).
“[W]hen an agency adopts a regulation pursuant to its
legislative rule-making power, as opposed to its
interpretive rule-making power, it is valid and binding
upon courts as a statute so long as it is (a) adopted within
the agency’s granted power, (b) issued pursuant to proper
procedure, and (c) reasonable.” Tire Jockey Serv[.], Inc.
7
v. Dep[’t] of Env[’t] Prot[.], . . . 915 A.2d 1165, 1186
([Pa.] 2007). When analyzing whether a regulation is
adopted within an agency’s granted power, a court should
consider, inter alia, whether the regulation is “consistent
with the enabling statute” because “clearly, the [General
Assembly] would not authorize agencies to adopt
regulations inconsistent with the enabling statutes.”
Marcellus Shale Coal[.] v. Dep[’t] of Env[’t] Prot[.], 216
A.3d 448, 459 . . . (Pa. Cmwlth. 2019) (internal quotation
marks omitted). Thus, when “a regulation presents ‘an
actual conflict with the statute,’ we cannot reasonably
understand the regulation to be within the agency’s
ambit of authority, and the statute must prevail.” Id.(quoting AMP Inc. v. Commonwealth, 814 A.2d 782, 786
(Pa. Cmwlth. 2002), aff’d, . . . 852 A.2d 1161 (Pa. 2004)).
Victory Bank v. Commonwealth, 219 A.3d 1236, 1242 (Pa. Cmwlth. 2019), aff’d,
240 A.3d 95 (Pa. 2020) (emphasis added; footnote omitted).
Section 301(a) of the Act provides, in relevant part:
(a) Establishment.--A medical marijuana program for
patients suffering from serious medical conditions is
established. The program shall be implemented and
administered by the [D]epartment. The [D]epartment
shall:
(1) Issue permits to medical marijuana organizations to
authorize them to grow, process or dispense medical
marijuana and ensure their compliance with this [A]ct.
(2) Register practitioners and ensure their compliance with
this [A]ct.
(3) Have regulatory and enforcement authority over
the growing, processing, sale and use of medical
marijuana in this Commonwealth.
35 P.S. § 10231.301(a) (text emphasis added).
Section 704(a) of the Act mandates:
General testing.--A grower/processor shall contract with
one or more independent laboratories to test the
medical marijuana produced by the grower/processor.
8
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. The possession by a laboratory
of medical marijuana shall be a lawful use.
35 P.S. § 10231.704(a) (text emphasis added).
Section 1171a.29(c) of the Department’s Regulations requires:
Testing shall be performed as follows:
(1) An approved laboratory shall test samples from a
harvest batch or harvest lot prior to using the harvest batch
or harvest lot to produce a medical marijuana product.
(2) An approved laboratory other than the one that
tested the harvest batch or harvest lot shall test samples
from each process lot before the medical marijuana is sold
or offered for sale to another medical marijuana
organization.
(3) An approved laboratory may test other samples and test
samples at the request of a grower/processor or the
Department.
28 Pa. Code § 1171a.29(c) (emphasis added).
The issue before this Court is whether the Department’s Regulation that
mandates growers/processors to contract with one Lab for testing the harvest batch
or harvest lot, and another Lab to test the medical marijuana before sale is in conflict
with the Act which mandates that growers/processors contract with one or more Labs
for testing.
The Pennsylvania Supreme Court has explained:
In construing a statute, a court’s duty is to give effect to
the legislature’s intent and to give effect to all of the
statute’s provisions. 1 Pa.C.S. § 1921(a). The plain
language of the statute is the best indicator of the
legislature’s intent. Crown Castle NG E. LLC v. Pa. Pub.
Util. Comm’n, . . . 234 A.3d 665, 673-74 ([Pa.] 2020). To
ascertain the plain meaning, we consider the operative
9
statutory language in context and give words and
phrases their common and approved usage. Id. Courts
must give effect to a clear and unambiguous statute and
cannot disregard the statute’s plain meaning to implement
its objectives. Id. “Only if the statute is ambiguous, and
not explicit, do we resort to other means of discerning
legislative intent.” Matter of Priv[.] Sale of Prop. by
Millcreek Twp. Sch. Dist., . . . 185 A.3d 282, 291 ([Pa.]
2018).
Commonwealth v. Chesapeake Energy Corp., 247 A.3d 934, 942 (Pa. 2021)
(emphasis added).
It is well settled that “[o]ne way to ascertain the plain
meaning and ordinary usage of terms is by reference to a
dictionary definition.” In re Beyer, . . . 115 A.3d 835, 839
([Pa.] 2015) (citing Commonwealth v. Hart, . . . 28 A.3d
898, 909 ([Pa.] 2011) (explaining that “common and
approved usage [of term undefined by legislature] may be
ascertained by examining its dictionary definition”)).
Commonwealth v. Coleman, 285 A.3d 599, 608 n.4 (Pa. 2022). The word “or” is
“used as a function word to indicate an alternative[.]”5 Merriam-Webster.com.
(emphasis added). Further, “alternative” is defined as “offering or expressing a
choice[.]”6 Id. (emphasis added). Thus, 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.
Consequently, there is a conflict between the Act and the Regulation. Accordingly,
because “when ‘a regulation presents ‘an actual conflict with the statute,’ . . . [] the
statute must prevail[,]’” this Court must conclude that the Department lacked the
authority under the Act to enact Section 1171a.29(c)(1)-(2) of the Department’s
5
See https://www.merriam-webster.com/dictionary/or (last visited June 28, 2023).
6
See https://www.merriam-webster.com/dictionary/alternative (last visited June 28, 2023).
10
Regulations. Victory Bank, 219 A.3d at 1242 (quoting Marcellus Shale, 216 A.3d
at 459).
Moreover,
[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.[7]
Hommrich v. Pa. Pub. Utils. Comm’n, 231 A.3d 1027, 1040 (Pa. Cmwlth. 2020).
Conclusion
“[V]iew[ing] the evidence of record in the light most favorable to the
[Department],” as we must, Cao, 280 A.3d at 1109 (quoting Eleven Eleven, 169 A.3d
at 145), this Court holds that “[Petitioners’] right to judgment is clear and no material
issues of fact are in dispute.” Id. Accordingly, Petitioners’ Cross-Application is
granted as to Count I, and this Court declares that Section 1171a.29(c)(1)-(2) of the
7
The Dissent similarly maintains that because the Act grants the Department authority to
promulgate regulations with respect to growing and processing medical marijuana, and the Act
repeatedly refers to patient safety, the Department has the authority to enact the 2-Lab
Requirement. However, said authority cannot authorize the Department to enact regulations
inconsistent with its enabling statute. See Victory Bank, 219 A.3d at 1242; Marcellus Shale Coal.,
216 A.3d at 459. Here, because Section 1171a.29(c)(1)-(2) of the Department’s Regulations
clearly conflicts with the plain language of Section 704(a) of the Act, the Act “must prevail.”
Victory Bank, 219 A.3d at 1242 (quoting Marcellus Shale Coal., 216 A.3d at 459).
11
Department’s Regulations is invalid and unenforceable.8 The Department’s Cross-
Application is denied.
For the foregoing reasons, Judgment is entered in Petitioners’ favor.
_________________________________
ANNE E. COVEY, Judge
8
Given this Court’s disposition of Count I of Petitioners’ Petition, it need not reach the
additional claims in either Cross-Application.
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Green Analytics North, LLC d/b/a :
Steep Hill PA, Hanging Gardens, LLC, :
Pennsylvania Medical Solutions, LLC, :
Curaleaf PA, LLC, AES Compassionate :
Care, LLC, Standard Farms, LLC, and :
Parea BioSciences, LLC, :
Petitioners :
:
v. :
:
Pennsylvania Department of Health, : No. 104 M.D. 2023
Respondent :
ORDER
AND NOW, this 29th day of June, 2023, Green Analytics North, LLC
d/b/a Steep Hill PA’s, Hanging Gardens, LLC’s, Pennsylvania Medical Solutions,
LLC’s, Curaleaf PA, LLC’s, AES Compassionate Care, LLC’s, Standard Farms,
LLC’s, and Parea BioSciences, LLC’s (collectively, Petitioners) Application for
Partial Summary Relief is GRANTED as to Count I, and Section 1171a.29(c)(1)-(2)
of the Pennsylvania Department of Health’s (Department) Regulations, 28 Pa. Code
§ 1171a.29(c)(1)-(2), is declared invalid and unenforceable. The Department’s
Application for Summary Relief is DENIED.
Judgment is entered in Petitioners’ favor.
_________________________________
ANNE E. COVEY, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Green Analytics North, LLC d/b/a :
Steep Hill PA, Hanging Gardens, :
LLC, Pennsylvania Medical :
Solutions, LLC, Curaleaf PA, LLC, :
AES Compassionate Care, LLC, :
Standard Farms, LLC, and Parea :
BioSciences, LLC, :
Petitioners :
:
v. : No. 104 M.D. 2023
: Argued: May 10, 2023
Pennsylvania Department of Health, :
Respondent :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE STACY WALLACE, Judge
DISSENTING OPINION BY
PRESIDENT JUDGE COHN JUBELIRER FILED: June 29, 2023
Respectfully, because I would find the Pennsylvania Department of Health
(the Department) has the statutory authority pursuant to the Medical Marijuana Act
(the Act)1 to enact Section 1171a.29(c) of the Department’s Regulations, 28 Pa.
Code § 1171a.29(c) (Regulation), and, specifically, the provision found in
Subsection (2) thereof (“2-Lab Requirement”), mandating that each process lot
sample must be tested by a different laboratory (Lab) than that which tested the
1
Act of April 17, 2016, P.L. 84, as amended, 35 P.S.§§ 10231.101-10231.2110.
samples from the harvest batch or harvest lot before medical marijuana may be sold
or offered for sale, I must dissent from the thoughtful Majority opinion.
The salient question before us is whether the Department acted within its grant
of statutory authority under the Act when it included the 2-Lab Requirement within
its Regulation. To answer this question, we must begin with an analysis of the Act,
mindful that “[w]hen the words of a statute are clear and free from all ambiguity, the
letter of it is not to be disregarded under the pretext of pursuing its spirit.” Section
1921(b) of the Statutory Construction Act of 1972, 1 Pa.C.S. § 1921(b).
“To determine whether a regulation is adopted within an agency’s granted
power, we look for statutory language authorizing the agency to promulgate the
legislative rule and examine that language to determine whether the rule falls within
the grant of authority.” Hommrich v. Pa. Pub. Utils. Comm’n, 231 A.3d 1027, 1034
(Pa. Cmwlth. 2020) (citation omitted). As part of our analysis, we consider a
statute’s purpose, “its reasonable effect[,] and whether the regulation is consistent”
therewith. Id. (internal quotation marks and citation omitted). The General
Assembly would not authorize an agency to adopt a binding regulation that is
“inconsistent with the applicable enabling statute.” Id. (internal quotation marks and
citation omitted).
In some instances, the General Assembly confers broad regulatory power
upon an agency. Id. at 1035. “If the statute makes a clear grant of authority, then
neither a court nor the agency can disregard the clearly expressed intent of the
General Assembly.” Marcellus Shale Coal. v. Dep’t of Env’t Prot., 292 A.3d 921,
936 (Pa. 2023). Notably, legislative rules that are properly enacted are presumed to
be reasonable, and reviewing courts will accord them a “particularly high measure
of deference.” Id. at 927 (citation omitted). While this Court cannot substitute its
RCJ - 2
own judgment for that of an agency, we will defer to a regulation an agency has
promulgated pursuant to its interpretative powers where the regulation is reasonable
and “genuinely tracks the meaning of the underlying statute.” Id. at 929 (citation
omitted). “[N]o deference is due where an agency exceeds its legal authority or its
interpretation is clearly erroneous.” Id. (citations omitted).
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. “The Legislature knows to speak in plain terms when it wishes to
circumscribe, and in capacious terms when it wishes to enlarge, agency discretion. .
. . Here, the General Assembly spoke capaciously.” Marcellus Shale, 292 A.3d at
944 (internal quotation marks and citation omitted).
RCJ - 3
Moreover, in Section 102(2) and (3), the “Declaration of Policy” of the Act,
the General Assembly repeatedly references its concern for patient safety:
(2) The Commonwealth is committed to patient safety. Carefully
regulating the program which allows access to medical marijuana
will enhance patient safety while research into its effectiveness
continues.
(3) It is the intent of the General Assembly to:
(i) Provide a program of access to medical marijuana which
balances the need of patients to have access to the latest
treatments with the need to promote patient safety.
(ii) Provide a safe and effective method of delivery of medical
marijuana to patients.
....
35 P.S. § 10231.102(2), (3) (emphasis added). Of particular import herein, Section
704(a) of the Act provides:
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. . . . .
35 P.S. § 10231.704(a) (emphasis added). Significantly, the prior version of the first
sentence of this provision required only that a grower/processor “contract with an
independent laboratory to test the medical marijuana produced by the
grower/processor.” Former 35 P.S. § 10231.704(a) (effective May 17, 2016, to June
29, 2021) (emphasis added).
RCJ - 4
The Majority narrowly focuses 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. Green Analytics N., LLC v. Pa. Dep’t of Health, __ A.3d __, __ (Pa. Cmwlth.,
No. 104 M.D. 2023, filed June 29, 2023), slip op. at 10. However, 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
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Commissioners discussed the 2-Lab Requirement and the impetus behind it.
(Meeting Minutes at 3-8, Department’s Br. at Exhibit R-1.)
It is well established that “when an agency adopts a regulation pursuant to its
legislative rule-making power . . . it is valid and binding upon courts as a statute so
long as it is (a) adopted within the agency’s granted power, (b) issued pursuant to
proper procedure, and (c) reasonable.” Tire Jockey Serv., Inc. v. Dep’t of Env’t Prot.,
915 A.2d 1165, 1186 (Pa. 2007) (Tire Jockey test). At the public meeting, in its
appellate brief, and at oral argument, the Department explained that in implementing
the 2-Lab Requirement, it sought to be proactive and, in accordance with the General
Assembly’s interest in protecting patients, provide for a system of checks and
balances in the testing process to ensure the safety of the medical marijuana that is
distributed to the public.2 The plain language of the Act granted the Department the
authority to do so. Thus, in light of the plain language of the Act, the Department
was authorized to promulgate the 2-Lab Requirement, for the current version clearly
allows the Department to enable the implementation of contracts between
growers/processors and more than one independent Lab.
As there is no dispute herein that the Department promulgated the challenged
Regulation pursuant to the proper procedure, it is only necessary to next consider the
third prong of the applicable Tire Jockey test regarding whether the 2-Lab
Requirement is reasonable, for where an agency is authorized to promulgate a
regulation and issues the same according to proper procedure, that regulation is valid
2
For instance, Denise Johnson, M.D., Acting Secretary of Health and Physician General,
spoke of the “[D]epartment’s commitment to effectively treat patients while ensuring they are not
exposed to harmful contaminants” and “reaffirmed [that] the Department’s focus is on keeping
patients safe and ensuring contaminated products are not sold.” (Meeting Minutes at 4, 7, the
Department’s Br. at Exhibit R-1.)
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if it is deemed to be reasonable. Marcellus Shale, 292 A.3d at 937; Tire Jockey, 915
A.2d at 1186.
In deciding whether an agency action, such as promulgation of a
legislative regulation, is reasonable, we are not at liberty to substitute
[our] own discretion for that of administrative officers who have kept
within the bounds of their administrative powers. To show that these
have been exceeded in the field of action involved, it is not enough that
[the agency’s regulation] shall appear to be unwise or burdensome or
inferior to another. Error or unwisdom is not equivalent to abuse. What
has been ordered must appear to be so entirely at odds with fundamental
principles as to be the expression of a whim rather than an exercise of
judgment.
Slippery Rock Area Sch. Dist. v. Unemployment Comp. Bd. of Rev., 983 A.2d 1231,
1242 (Pa. 2009) (citation omitted) (bracketed text in original). In Tire Jockey, the
Pennsylvania Supreme Court explained that “[r]egarding the reasonableness prong,
appellate courts accord deference to agencies and reverse agency determinations
only if they were made in bad faith or if they constituted a manifest or flagrant abuse
of discretion or a purely arbitrary execution of the agency’s duties or functions.”
915 A.2d at 1186 (internal quotation marks and citation omitted).
The Regulation reads in its entirety:
(c) Testing shall be performed as follows:
(1) An approved laboratory shall test samples from a harvest batch
or harvest lot prior to using the harvest batch or harvest lot to
produce a medical marijuana product.
(2) An approved laboratory other than the one that tested the
harvest batch or harvest lot shall test samples from each
process lot before the medical marijuana is sold or offered
for sale to another medical marijuana organization.
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(3) An approved laboratory may test other samples and test samples
at the request of a grower/processor or the Department.
28 Pa. Code § 1171a.29(c) (emphasis added).
In light of the broad conferment of authority granted to the Department under
Section 301(a)(3) of the Act to implement and administer the medical marijuana
program, the 2-Lab Requirement is reasonable. The plain terms of the Act set forth
the General Assembly’s concern for patients’ safety and, as Petitioners admit, “[t]he
General Assembly tasked [the Department] with implementing the medical
marijuana program and regulating the entities within it to ensure the medicines are
safe for patients.” (Petitioners’ Br. at 8-9.) The Department posited the 2-Lab
Requirement will achieve this goal by allowing it to “flag and investigate potential
issues with a particular Lab or grower/processor, such as trends in discrepancies
between the two states of testing” and will “decrease the ability for a Lab to enter
false data without detection.” (Department’s Br. at 18.) It will also eliminate the
Department’s current concern regarding “having one Lab control almost all testing
in the Commonwealth.” (Id. at 23.) This checks-and-balances approach is in line
with the Department’s commitment to carefully regulate the medical marijuana
program to enhance patient safety expressed in Section 102(2) of the Act. As Justice
Wecht has eloquently observed:
A balance must be struck. A court reviewing the validity of regulations
necessarily must engage in its own statutory interpretation analysis in
order to determine whether the regulations are “consistent with the
statute under which they were promulgated.”[] Yet, an agency
empowered to implement a statute through its legislative rulemaking
prerogative must be allowed the flexibility to do so without fear that a
court may strike down its properly promulgated regulations merely
because the court differs with the agency on some minor point of
statutory interpretation.[] As we previously have explained,
“substantive rulemaking is a widely used administrative practice, and
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its use should be upheld whenever the statutory delegation can
reasonably be construed to authorize it.”[] This does not mean that we
must afford unqualified “deference” to an agency’s statutory
interpretation—a jurisprudential shortcut of which I continue to
disapprove.[] But it does mean that, in conducting our own statutory
construction, we must maintain a “healthy judicial respect” for the
intent of the General Assembly to imbue the agency with rulemaking
authority, as expressed in the enabling statute.[] In practice, when a
statute is equally amenable to two constructions—one that would
permit the agency’s regulation and one that would not—any
“deference” to the agency effectively should take the form of a
“tiebreaker,” rather than any substantive limitation upon the court’s
duty and prerogative to independently interpret the statute.[]
Marcellus Shale, 292 A.3d at 960 (Wecht, J., concurring and dissenting) (footnotes
omitted).
In light of the foregoing, I believe 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. As I would
hold the Department had the authority to adopt the 2-Lab Requirement as a binding
legislative regulation, I would grant the Department’s Cross-Application for
Summary Relief seeking judgment in its favor and against Petitioners with prejudice.
Consequently, I would deny Petitioners’ Cross-Application for Partial Summary
Relief as to Count I, and I would proceed to a consideration of the merits of the
additional claims presented in the Cross-Applications, namely, whether the 2-Lab
Requirement constitutes an improper delegation of the Department’s authority under
the Act to private entities and whether it violates the Contract Clause of the
Pennsylvania Constitution.3
3
Providing “[n]o . . . law impairing the obligation of contracts . . . shall be passed.” Pa.
Const. art. I, § 17.
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For these reasons, I respectfully dissent.
__________________________________________
RENÉE COHN JUBELIRER, President Judge
Judge McCullough joins in this dissent.
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