Innovations-Magazine-June-July-2022 - 4

POLICY PERSPECTIVES
Ohio Board of Pharmacy Successfully Withstands
Challenge to Its Request for Applications Process
Boards of pharmacy may be tasked with
engaging in a request for applications (RFA)
process and setting rules for reviewing eligible
applicants and applications. When this
happens, what are the potential consequences
if the board fails to adhere to the evaluation
criteria or the scoring system established for
the program? What if an applicant challenges
the board's final decision? These issues were
explored in a case brought against the State
of Ohio Board of Pharmacy (the " Board " ).
In JG City LLC v State Bd of Pharmacy,
appellant JG City, LLC, appealed the
judgment of the Franklin County Court of
Common Pleas affirming an order issued by
the Board denying JG City's application for a
license to operate a retail medical marijuana
dispensary, pursuant to its RFA process.
Background
The Ohio General Assembly enacted House
Bill 523 in 2016, which established the Ohio
Medical Marijuana Control Program (the
" program " ). Under the program, the Board
was delegated the responsibility of licensing
retail medical marijuana dispensaries and
promulgating rules to govern their licensing
and operation. Pursuant to the program
rules, the Board could authorize up to 60
dispensary licenses in the initial licensure
period. To determine which establishments
should be licensed, the state was divided into
31 dispensary districts with the limitation
that no owner could be issued more than five
dispensary licenses statewide or more than
66% of the licenses available in a multilicense
district. The Board issued an RFA in
September 2017 with instructions explaining
how it would evaluate and score applications.
JG City applied for a license to operate a
dispensary in the Northwest-3 district. Only
two licenses were available to be issued in that
district, and JG City's application received the
third-highest score. The Board issued a notice
of intent to deny JG City's application, and
JG City requested an administrative hearing.
JG City argued that the scoring system
could not reliably distinguish between
2 | JUNE/JULY 2022
Jonathan A. Keller, PharmD, JD, RPh
Faegre Drinker Biddle & Reath LLP
Genevieve M. Razick, JD
Faegre Drinker Biddle & Reath LLP
applications receiving scores as close as
those given to JG City and the next closest
competitor, and that the Board failed to
adhere to the RFA instructions by allowing
evaluators to give scores for which there
was no published guidance. The hearing
examiner's report and recommendation
found the following: (1) the Board met
its burden of proof in showing substantial
compliance with the RFA; (2) JG City did
not score high enough to receive a license;
and (3) JG City did not meet its burden in
putting forth proof of bad faith or abuse of
discretion by the Board. The hearing examiner
recommended that the Board affirm the notice
of intent and deny JG City's application.
JG City filed objections to the report and
argued unconstitutional discrimination based
on a statutory provision requiring at least
15% of dispensary licenses to be issued to
entities owned and controlled by members of
certain economically disadvantaged groups.
On March 11, 2020, the Board issued an
order confirming and approving the hearing
examiner's report and denying JG City's
application for a dispensary license. JG City
appealed the Board's order to the Franklin
County Court of Common Pleas, arguing that
the Board failed to adhere to the scoring system
outlined in the RFA instructions. JG City also
put forth its constitutional rights argument.
The Franklin County Court of Common
Pleas affirmed the Board's order denying
JG City's application, concluding there was
" overwhelming evidence that the Board
complied with its application process " and
that JG City failed to show it was prejudiced
by the scoring system. In response to the
constitutional claim, the trial court held that
JG City waived an as-applied challenge to the
statute by failing to raise that argument before
the hearing examiner. The Franklin County
Court of Common Pleas also determined
that the challenged statutory provision was
not unconstitutional. JG City appealed,
arguing that the Common Pleas Court:
* erred in ruling that the Board met its
burden to show reliable evidence for its
order denying the appellant's application
for a marijuana license where the
application graders failed to follow the
Board's published grading procedure
and failed to provide evidence that the
ad hoc system they used could reliably
distinguish a 1.6% difference between
the appellant and the next highest scorer,
to whom the Board awarded the license;
* erred in ruling that the Board met
its burden to show that its order
conformed to the law, where the
graders violated the Board's published
rules and used ad hoc scores for
which no criteria were provided;
* erred in requiring JG City to
demonstrate prejudice from the use
of an ad hoc grading process that was
not in accordance with the law;
Innovations-Magazine-June-July-2022

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