Keystone ReLeaf, LLC v. Pennsylvania Department of Health, Office of Medical Marijuana
186 A.3d 505
| Pa. Commw. Ct. | 2018Background
- Pennsylvania enacted the Medical Marijuana Act, delegating implementation and permit issuance to the Department of Health, which promulgated temporary regulations and created six regions for permit allocation.
- Department received 457 applications in the initial round; Keystone ReLeaf submitted two dispensary applications (both denied) and one grower/processor application (rejected as incomplete for failure to submit via USB).
- Keystone filed administrative appeals with the Department challenging scoring, alleged inconsistent application of requirements, redactions in public records, and lack of debriefings; appeals remain pending.
- While those appeals were pending, Keystone filed an original-jurisdiction Amended Petition seeking declaratory and injunctive relief against the Department and 39 awarded permittees, alleging arbitrary scoring, ultra vires waivers/enforcement, RTKL violations, and due process defects.
- Respondents filed preliminary objections and the Department moved for summary relief arguing Keystone failed to exhaust administrative remedies and lacked standing; the court sustained the preliminary objections and granted summary relief, dismissing the Amended Petition with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Keystone may invoke original jurisdiction without exhausting administrative appeals | Keystone contends exhaustion is excused because it challenges the permitting process broadly, alleges systemic constitutional/RTKL defects, and seeks relief that only courts can grant | Department argues Keystone has an adequate administrative remedy (debriefing, appeal governed by Administrative Agency Law/GRAPP) and failed to meaningfully pursue it | Court: Dismissed — exhaustion required; Keystone’s claims are as-applied and must proceed administratively first |
| Whether Keystone’s challenge is a facial constitutional attack that excuses exhaustion | Keystone claims it challenges the permitting process as a whole and raises substantial constitutional issues | Department says Keystone’s claims are post-enforcement, as-applied challenges, not a facial attack on the statute/regulations | Court: Keystone made as-applied, not facial, claims; the facial exception does not apply |
| Whether administrative remedies are inadequate because only courts can grant declaratory/injunctive relief | Keystone relies on cases permitting injunctive/declaratory relief in court where agency lacks authority to grant requested relief | Department notes administrative appellate procedures permit evidentiary development, subpoenas, hearings, and written adjudications under the Administrative Agency Law and GRAPP | Court: Administrative remedies are adequate here; agency can adjudicate the factual and legal issues; declaratory/injunctive relief may follow appellate review if needed |
| Whether Keystone showed irreparable harm justifying bypassing administrative process | Keystone alleges speculative harm from potentially unqualified permittees and denied transparency | Department and court find harm speculative and that permits can be revoked or remedied through agency action and later judicial review | Court: No clear showing of imminent, irreparable harm; exception not met |
Key Cases Cited
- Canonsburg Gen. Hosp. v. Dep’t of Health, 422 A.2d 141 (Pa. 1980) (courts should not intervene prematurely where administrative remedy exists)
- Empire Sanitary Landfill, Inc. v. Dep’t of Env’tal Resources, 684 A.2d 1047 (Pa. 1996) (facial constitutional challenges may be heard in court when administrative tribunal cannot grant requested relief)
- Lehman v. Pa. State Police, 839 A.2d 265 (Pa. 2003) (distinguishes facial vs. as-applied challenges; as-applied requires exhaustion)
- Pennsylvania Indep. Oil & Gas Ass’n v. Dep’t of Envtl. Prot., 135 A.3d 1118 (Pa. Cmwlth. 2015) (agency-level remedy inadequate for certain facial challenges tied to laws already declared unconstitutional)
- Arsenal Coal Co. v. Dep’t of Envtl. Resources, 477 A.2d 1333 (Pa. 1984) (courts should refrain from equity jurisdiction where adequate statutory remedy exists)
- Nicholas v. Pa. Labor Rels. Bd., 681 A.2d 157 (Pa. 1996) (administrative remedy inadequate only in narrow circumstances)
- Funk v. Commonwealth, 71 A.3d 1097 (Pa. Cmwlth. 2012) (failure to exhaust ordinarily bars declaratory or injunctive claims against agencies)