Court Opinion

ID: 4265985
Source: CourtListenerOpinion
Date Created: 2018-04-20 13:52:09.093635+00
Date Added: 2024-06-11T14:31:03.358387
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Keystone ReLeaf LLC,                       :
                                           :
                        Petitioner         :
                                           :
                  v.                       : No. 399 M.D. 2017
                                           : Argued: February 7, 2018
Pennsylvania Department of Health,         :
Office of Medical Marijuana;               :
Prime Wellness of Pennsylvania, LLC;       :
Franklin Labs, LLC; Pennsylvania           :
Medical Solutions, LLC; Standard           :
Farms, LLC; Ilera Healthcare, LLC;         :
AES AES Compassionate Care, LLC;           :
Terrapin Investment Fund 1, LLC;           :
GTI Pennsylvania, LLC; Agrimed             :
Industries of PA, LLC; Purepenn, LLC;      :
Holistic Farms, LLC; Cresco                :
Yeltrah, LLC; Holistic Pharma, LLC;        :
Pharmacann Penn, LLC; SMPB                 :
Retail, LLC; Terra Vida Holistic           :
Centers, LLC; Chamounix Ventures,          :
LLC; Bay, LLC; Restore Integrative         :
Wellness Center, LLC; Franklin             :
Bioscience-Penn, LLC; Mission              :
Pennsylvania II, LLC; Columbia Care        :
Pennsylvania, LLC; Justice Grown           :
Pennsylvania, LLC; Guadco,                 :
LLC; Lebanon Wellness Center, LLC;         :
Organic Remedies, Inc.; KW Ventures        :
Holdings, LLC d/b/a Firefly                :
Dispensaries; Cansortium Pennsylvania,     :
LLC; PA Natural Medicine, LLC;             :
Keystone Center of Integrative Wellness,   :
LLC; Keystone Integrated Care, LLC;        :
The Healing Center, LLC; Maitri            :
Medicinials, LLC; Keystone Relief          :
Centers, LLC d/b/a Solevo Wellness;        :
Dubois Wellness Center, LLC,               :
                                           :
                        Respondents        :
BEFORE:       HONORABLE MARY HANNAH LEAVITT, President Judge
              HONORABLE P. KEVIN BROBSON, 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

OPINION BY JUDGE WOJCIK                                            FILED: April 20, 2018

              Before this Court are Respondents’1 preliminary objections (POs) and
the Department’s Application for Summary Relief2 to Petitioner Keystone ReLeaf

       1
         The named respondents are the Pennsylvania Department of Health, Office of Medical
Marijuana (Department), and 39 applicants awarded grower/processor permits and/or dispensary
permits (Permittees) (collectively, Respondents). The following Respondents filed preliminary
objections and briefs in support: (1) the Department; (2) Agrimed Industries of PA, LLC; Standard
Farms, LLC; Ilera Healthcare, LLC; Terrapin Investment Fund 1, LLC; GTI Pennsylvania, LLC;
Pennsylvania Medical Solutions, LLC; Holistic Farms, LLC; Franklin Bioscience-Penn, LLC;
Bay, LLC; SMPB Retail, LLC; Terra Vida Holistic Centers, LLC; Holistic Pharma, LLC; Mission
Pennsylvania II, LLC; Justice Grown Pennsylvania, LLC; Lebanon Wellness Center, LLC;
Organic Remedies, Inc.; KW Ventures Holdings, LLC d/b/a Firefly Dispensaries; Keystone Relief
Centers, LLC d/b/a Solevo Wellness; The Healing Center, LLC; and Dubois Wellness Center,
LLC (collectively, Agrimed); (3) Purepenn, LLC; (4) Franklin Labs, LLC; and (5) Chamounix
Ventures, LLC.

      The following Respondents joined Agrimed’s POs and brief in support: (1) AES
Compassionate Care, LLC; Keystone Center of Integrative Wellness, LLC; and Guadco, LLC; (2)
Pharmacann Penn, LLC; (3) Prime Wellness of Pennsylvania, LLC; (4) PA Natural Medicine,
LLC; (5) Keystone Integrated Care, LLC; (6) Cresco Yeltrah, LLC; and (7) Cansortium
Pennsylvania, LLC.

       The Court also received POs and brief in support from Intervenor Patients-First
Association of Companies (Intervenor). Intervenor’s POs and brief are identical to those filed by
Respondent Chamounix Ventures, LLC.

        For ease of discussion, this opinion refers to Respondents generally and does not
distinguish arguments made by specific Respondents or Intervenor unless otherwise noted.
       2
          Maitri Medicinals, LLC, joined the Department’s Application for Summary Relief and
brief in support.

                                               2
LLC’s Amended Petition for Review in the Nature of a Complaint in Equity Seeking
a Declaratory Judgment and Injunctive Relief (Amended Petition) in this Court’s
original jurisdiction. Respondents assert that this Court lacks jurisdiction over the
Amended Petition because Petitioner failed to exhaust administrative remedies and
lacks standing to bring this original jurisdiction action, among other reasons. Upon
review, we sustain Respondents’ POs in the nature of demurrer and grant the
Department’s Application for Summary Relief on the basis that Petitioner failed to
exhaust administrative remedies and dismiss the Amended Petition with prejudice.

                                       I. Background
               The General Assembly enacted the Pennsylvania Medical Marijuana
Act (Act),3 which took effect on May 17, 2016, to establish a framework for the
legalization of medical marijuana in the Commonwealth for certain medical
conditions. The Act identified the Department as the Commonwealth agency
responsible for administering the Act and authorized the Department to promulgate
regulations, including temporary regulations, necessary to carry out the Act. Section
301 of the Act, 35 P.S. §10231.301; Section 1107 of the Act, 35 P.S. §10231.1107.
In accord with this authority, the Department promulgated temporary regulations.
See 28 Pa. Code §§1131.1-1191.33.
               The Department established six medical marijuana regions.           See
Section 603(d) of the Act, 35 P.S. §10231.603(d); 28 Pa. Code §1141.24(a).
Between February 20, 2017, and March 20, 2017, the Department accepted
applications from entities interested in obtaining a limited number of medical
marijuana grower/processor permits and/or dispensary permits.               During the

      3
          Act of April 17, 2017, P.L. 84, 35 P.S. §§10231.101-10231.2110.

                                               3
application period, the Department received 457 applications – 177 for
growers/processors and 280 for dispensaries. The criteria set forth in Section
603(a.1) of the Act, 35 P.S. §10231.603(a.1), and the factors listed in the temporary
regulations, 28 Pa. Code §§1141.27-1141.34, govern the application review.
               Petitioner submitted two dispensary permit applications in Region 2,4
both of which were denied after failing to score higher than other applicants in the
region. In addition, Petitioner attempted to submit a grower/processor permit
application, also in Region 2, but failed to comply with the submission requirements,
specifically failing to submit the application on a USB drive. The Department
rejected the application as incomplete and did not score it.
               Petitioner filed administrative appeals on all three unsuccessful permit
applications with the Department on June 29, 2017, and July 7, 2017.5
Notwithstanding the pendency of its appeals, Petitioner sought relief in this Court’s
original jurisdiction by filing a petition for review and an application for special
relief, which it subsequently amended.6
               In the Amended Petition, Petitioner challenges the Department’s
“permitting process” for (1) accepting, reviewing, and scoring medical marijuana

       4
         Region 2 is “comprised of the counties of the Department’s Northeast District, which
includes Carbon, Lackawanna, Lehigh, Luzerne, Monroe, Northampton, Pike, Susquehanna,
Wayne and Wyoming.” 28 Pa. Code §1141.24(a)(2).
       5
         More than 140 other unsuccessful applicants also filed administrative appeals challenging
the denials of their applications.
       6
          Petitioner originally filed its petition for review and application for special relief on
September 8, 2017, naming the Department as the only respondent. The Department filed POs
and an application for summary relief, asserting the same grounds now before this Court as well
as failure to join indispensable parties, i.e., the Permittees. Petitioner sought leave to amend to
join the Permittees as respondents, which this Court granted. Commonwealth Court Order,
10/26/17, at 1.

                                                4
grower/processor and dispensary permit applications, and (2) issuing permits to
selected applicants pursuant to the Act.              The Amended Petition names the
Department and the 39 applicants awarded grower/processor permits and/or
dispensary permits (Permittees) as Respondents.
                The Amended Petition raises five counts. In Count I, Petitioner asserts
that the Department scored the applications inconsistently and arbitrarily and refuses
to shed light on how it scored applications or awarded permits. By engaging in a
secretive permitting process, the Department has deprived Petitioner and all
applicants any fair and meaningful administrative review of their decisions in
violation of due process. In Count II, Petitioner contends that the Department acted
ultra vires in waiving certain statutory and regulatory requirements and strictly
enforcing other requirements. In Count III, Petitioner avers that the Department’s
permitting process violates the requirements of the Right-to-Know Law (RTKL)7
because the publicly-released applications contain unlawful redactions. In Count
IV, Petitioner claims that, by failing to disclose the identities and qualifications of
the scorers, the Department’s permitting process may be infected by favoritism or
bias in further violation of the due process rights of all applicants. In Count V,
Petitioner asserts that the Department’s permitting process should be invalidated in
its entirety and the previously awarded permits rescinded because they were awarded
pursuant to an unlawful process.
                In support of its claim that the Department has scored the applications
inconsistently and arbitrarily, Petitioner alleges the following. The Department has
not provided objective criteria for scoring necessary for meaningful administrative
challenge and review. For example, the scoring rubric made available to applicants

      7
          Act of February 14, 2008, P.L. 6, 65 P.S. §§67.101-67.3104.
                                                5
assigned 50 of 1000 points (or 5% of the available points) to a section called
“Attachment E Personal Identification.” This section required applicants to provide
two separate, objective items: (1) a photo identification, and (2) a resume for each
principal, employee, financial backer and operator. It is unclear how the Department
scored this information. No applicant scored fifty (50) points and no applicant
scored zero (0) points in this category. Moreover, applicants that submitted the same
information received different scores. Amended Petition at ¶¶76-80.
             Petitioner submitted two dispensary applications, which were identical
except for dispensary location. Yet, the applications received different scores.
Amended Petition at ¶¶96-105.
             The Act requires an applicant for a dispensary application to
demonstrate that it has at least $150,000 in capital deposited in a financial institution.
Section 607(2)(vi) of the Act, 35 P.S. §10231.607(2)(vi). Petitioner demonstrated
that it had $15,600,000 in capital, of which $7,287,500 was deposited with Wells
Fargo. Despite vastly exceeding the statutory requirement, Petitioner’s applications
scored 61.80 and 60.60 of 75 points available on the “Capital Requirements” section.
The applications were not scaled against each other because no applicant received a
score of 100%. Amended Petition ¶¶101, 106-16.
             The “Quality Control and Testing” section contained a “yes” or “no”
question, with no request for a narrative or documentation in support, worth a total
of 50 points. Inexplicably, published scores ranged from 5 to 41 points in this
category.
             In support of its claim that the Department waived certain statutory and
regulatory requirements, Petitioner alleges that the Department waived the
requirements for criminal background checks under Section 602(a)(4) of the Act,

                                            6
35 P.S. §10231.602(a)(4), and 28 Pa. Code §1141.31, and tax clearance certificates
under 28 Pa. Code §1141.27(c)(2). Yet, the Department strictly enforced submission
requirements. Amended Petition at ¶¶136-37, 151-71.
               Petitioner also avers that the Department did not fully release public
records subject to the RTKL as mandated by Section 302(b) of the Act, 35
P.S. §10231.302(b), further exacerbating the lack of transparency in the permitting
process and hindering meaningful administrative review. Amended Petition at ¶¶62-
63. The Department has not scheduled hearings or provided post-award debriefings
for Petitioner and other unsuccessful applicants. See 28 Pa. Code §1141.35(b).
               Petitioner seeks declaratory and injunctive relief under the Declaratory
Judgments Act.8 Specifically, Petitioner requests this Court to: (1) declare the
permitting process as arbitrary, capricious, unreasonable and ultra vires, and,
therefore, invalid, unconstitutional, ineffective and without force of law; (2) declare
that the Department has no authority to continue issuing permits under the current
scheme; (3) preliminarily and permanently enjoin the Department from continuing
the permitting process in violation of the Act; (4) preliminarily and permanently
enjoin the Permittees from acting on the issued permits pending the outcome of this
litigation; (5) rescind previously awarded permits; and (6) award costs and such
other relief as this Court deems appropriate.
               Respondents and Intervenor responded by filing POs. Respondents
demur to all counts on the primary grounds that Petitioner failed to exhaust
administrative remedies and lacks standing. In addition, some Respondents object
because the Amended Petition is legally insufficient to support a claim for injunctive

      8
          42 Pa. C.S. §§7531-7541.

                                           7
relief and is not sufficiently specific.9 The Department also filed an Application for
Summary Relief seeking dismissal of the Amended Petition with prejudice because
Petitioner failed to exhaust administrative remedies, lacks standing, and failed to
establish the essential elements required for the issuance of an injunction. After
briefing10 and oral argument, the POs and Application for Summary Relief are ready
for disposition.11

                                    II. Discussion
                   A. Failure to Exhaust Administrative Remedies
                                   1. Contentions
               First, Respondents contend that Petitioner failed to exhaust its
administrative remedies before invoking this Court’s original jurisdiction. Petitioner

       9
        One Respondent objected on the ground that Petitioner failed to properly join PurePenn,
LLC, as an indispensable party in the Amended Petition. However, this technical objection is
moot because PurePenn, LLC, filed POs to the Amended Petition.
       10
         This Court permitted Petitioner to file omnibus responses and briefs in opposition to all
POs and the Application for Summary Relief. Commonwealth Court Order, 12/6/17, at 1.

       11
           “In ruling on preliminary objections, the courts must accept as true all well-pled facts
that are material and all inferences reasonably deducible from the facts.” Pennsylvania
Independent Oil & Gas Association v. Department of Environmental Protection, 135 A.3d 1118,
1123 (Pa. Cmwlth. 2015), aff’d, 161 A.3d 949 (Pa. 2017) (quoting Guarrasi v. Scott, 25 A.3d 394,
400 n.5 (Pa. Cmwlth. 2011)). “However, we ‘are not required to accept as true any unwarranted
factual inferences, conclusions of law or expressions of opinion.’” Id. (quoting Guarrasi, 25 A.3d
at 400 n.5). “To sustain preliminary objections, ‘it must appear with certainty that the law will
permit no recovery’ and ‘[a]ny doubt must be resolved in favor of the non-moving party.’” Id.
(quoting Guarrasi, 25 A.3d at 400 n.5).

        An application for summary relief may be granted if a party’s right to judgment is clear
and no material issues of fact are in dispute. Pa. R.A.P. 1532(b); Jubelirer v. Rendell, 953 A.2d
514, 521 (Pa. 2008); Eleven Eleven Pennsylvania, LLC v. Commonwealth, 169 A.3d 141, 145 (Pa.
Cmwlth. 2017). When ruling on an application for summary relief, “we 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 (quoting Markham v. Wolf, 147 A.3d 1259, 1270 (Pa. Cmwlth.
2016) (citation omitted)).
                                                8
has a perfectly suited and adequate administrative remedy to address its complaints
regarding the denial and scoring of its dispensary permit applications, and rejection
of its grower/processor permit application and has availed itself of this remedy.
Indeed, Petitioner’s administrative appeals are presently pending before the
Department’s Secretary. The asserted grounds for the administrative appeals are the
same grounds asserted in this original jurisdiction action. There is nothing novel or
unique about Petitioner’s claims in this regard, as more than 140 other unsuccessful
applicants feel the same way, i.e., that the Department got it wrong and the
unsuccessful applicant should have been awarded the permit. Petitioner’s claims
amount to little more than a challenge of the Department’s proper application of the
Act and temporary regulations. Petitioner cannot establish any exception to the
exhaustion requirement to invoke this Court’s jurisdiction. Petitioner’s “as-applied”
constitutional challenge to the Department’s interpretation and implementation of
the Act and temporary regulations does not excuse its failure to exhaust the pending
administrative remedies before the Department. Petitioner has not shown that the
administrative review process is inadequate or that it will suffer any harm, let alone
irreparable harm, during the administrative appeal process. Therefore, Respondents
assert that this Court lacks jurisdiction over this action and Petitioner’s Amended
Petition should be dismissed with prejudice.
             Petitioner responds that its claims are exempt from the exhaustion
doctrine. Petitioner is not simply challenging its own unsuccessful applications, but
rather the constitutionality and validity of the entire permitting process as applied to
all permit applicants. Moreover, the administrative remedy is wholly inadequate.
The Department cannot grant the requested relief in that it cannot declare its
permitting process or review of that process unlawful or enjoin further

                                           9
administration of the permitting process. Only this Court has the authority to grant
the declaratory and injunctive relief requested. In addition, Petitioner asserts that
the administrative appeal process does not afford unsuccessful applicants a
meaningful opportunity to be heard in violation of due process. The Department has
refused to explain or defend its scoring decisions or articulate a rationale for
selecting winning applicants, asserting scoring is within its sole discretion.
Applicants are severely disadvantaged by the secretive process and undisclosed
criteria used by the Department in awarding permits. Because of the lack of
transparency and hidden standards, any applicant appealing a permit denial is
destined to fail. The Department has not afforded Petitioner the debriefing called
for by its own regulations, see 28 Pa. Code §1141.35(b), and it has delayed the
administrative hearings. Petitioner claims it will suffer irreparable harm if it is
required to first exhaust administrative remedies before seeking relief in this Court.
According to Petitioner, potentially less qualified applicants may have received
permits and it will become increasingly difficult to remedy once such permittees
enter into contracts with third parties. For these reasons, the exhaustion doctrine
does not apply and this Court should overrule Respondents’ POs in this regard.

                                     2. Analysis
             This Court’s original jurisdiction extends to “all civil actions or
proceedings . . . [a]gainst the Commonwealth government.” Section 761 of the
Judicial Code, 42 Pa. C.S. §761.        However, a party must first exhaust its
administrative remedies before invoking this Court’s jurisdiction in challenging a
final agency adjudication. See Canonsburg General Hospital v. Department of
Health, 422 A.2d 141, 144 (Pa. 1980). The courts must refrain from exercising
equity jurisdiction when there exists an adequate statutory remedy. Arsenal Coal

                                         10
Co. v. Department of Environmental Resources, 477 A.2d 1333, 1338 (Pa. 1984);
Funk v. Commonwealth, 71 A.3d 1097, 1101 (Pa. Cmwlth. 2012).
              The doctrine of exhaustion of administrative remedies is intended to
prevent the premature interruption of the administrative process, which would
restrict the agency’s opportunity to develop an adequate factual record, limit the
agency in the exercise of its expertise, and impede the development of a cohesive
body of law in that area. See Empire Sanitary Landfill, Inc. v. Department of
Environmental Resources, 684 A.2d 1047, 1054 (Pa. 1996); Shenango Valley
Osteopathic Hospital v. Department of Health, 451 A.2d 434, 438 (Pa. 1982); Bucks
County Services, Inc. v. Philadelphia Parking Authority, 71 A.3d 379, 388 (Pa.
Cmwlth. 2013). “The doctrine operates as a restraint on the exercise of a court’s
equitable powers and a recognition of the legislature’s direction to comply with
statutorily-prescribed remedies.” Empire Sanitary, 684 A.2d at 1054.
              Ordinarily, the failure to exhaust an administrative remedy “bars this
Court from hearing claims for declaratory or injunctive relief with respect to that
agency action.” Funk, 71 A.3d at 1101. However, the exhaustion doctrine is neither
inflexible nor absolute. Feingold v. Bell of Pennsylvania, 383 A.2d 791, 793 (Pa.
1977).     There are narrow circumstances where exhaustion of remedies is not
required. See Commonwealth ex rel. Nicholas v. Pennsylvania Labor Relations
Board, 681 A.2d 157, 161 (Pa. 1996). Indeed, our Supreme Court has recognized
three exceptions to the exhaustion of administrative remedies for constitutional
attacks:

              The first exception is where the jurisdiction of an agency
              is challenged. The second exception is where the
              constitutionality of a statutory scheme or its validity is
              challenged. The third exception is where the legal or
              equitable remedies are unavailable or inadequate, or the

                                         11
            administrative agency is unable to provide the requested
            relief.

Empire Sanitary, 684 A.2d at 1054 (internal citations omitted). Because jurisdiction
of the Department is not at issue, we address the second and third exceptions.

                   a. Constitutionality of a Statutory Scheme
            A party seeking to avoid exhaustion must demonstrate a “substantial
question of constitutionality (and not a mere allegation) and the absence of an
adequate statutory remedy.” Kowenhoven v. County of Allegheny, 901 A.2d 1003,
1012 n.8 (Pa. 2006) (quoting Borough of Green Tree v. Board of Property
Assessments, Appeals and Review of Allegheny County, 328 A.2d 819, 822 (Pa.
1974) (plurality)) (emphasis added); accord Shenango, 451 A.2d at 428; Barsky v.
Department of Public Welfare, 464 A.2d 590, 593 (Pa. Cmwlth. 1983), aff’d, 475
A.2d 742 (Pa. 1984). The exception applies to facial challenges “made to the
constitutionality of the statute or regulation as a whole, and not merely to the
application of the statute or regulation in a particular case.”          Lehman v.
Pennsylvania State Police, 839 A.2d 265, 275 (Pa. 2003) (emphasis added); accord
Funk, 71 A.3d at 1102.
            “In a facial challenge, a party is not required to exhaust administrative
remedies because ‘the determination of the constitutionality of enabling legislation
is not a function of the administrative agencies thus enabled.’” Lehman, 839 A.2d
at 275 (quoting Green Tree, 328 A.2d at 825). “In contrast, substantial policy
reasons require exhaustion of administrative remedies where the constitutional
claims challenge only the application of the statute.” Funk, 71 A.3d at 1102
(emphasis added). As our Supreme Court explained:

                                        12
             It is both sensible and efficient to permit administrative
             agencies to address constitutional challenges to a statute’s
             application. First, the agency is given an opportunity to
             interpret the statute it is charged with administering to
             avoid an unconstitutional application. Second, agencies
             currently decide challenges to the constitutionality of
             regulations; administrative competency is not an issue.
             Third, agencies are better situated than the courts to
             develop agency-specific issues, and to find facts. Fourth,
             refusing to consider constitutional challenges to a statute’s
             application allows litigants to circumvent the exhaustion
             of administrative remedies doctrine before seeking
             judicial review.
Lehman, 839 A.2d at 276 (emphasis added); accord Funk, 71 A.3d at 1102.
             The exception encompasses pre-enforcement challenges.             Arsenal
Coal, 477 A.2d at 1339; see Empire Sanitary, 684 A.2d at 1054. “Where the effect
of the challenged regulations upon the industry regulated is direct and immediate,
the hardship thus presented suffices to establish the justiciability of the challenge in
advance of enforcement.” Arsenal Coal, 477 A.2d at 1339.
             Relying on Pennsylvania Independent Oil & Gas Association v.
Department of Environmental Protection, 135 A.3d 1118, 1123 (Pa. Cmwlth. 2015)
(PIOGA), aff’d, 161 A.3d 949 (Pa. 2017), Petitioner maintains that this Court has
original jurisdiction to resolve a facial challenge concerning the overall validity and
constitutionality of an agency’s as-applied permitting process as a whole. In PIOGA,
a trade association filed a petition for review in the nature of a complaint for
declaratory relief pursuant to the Declaratory Judgments Act challenging the
systemic validity of the Department of Environmental Protection’s (DEP) permitting
process. PIOGA, 135 A.3d at 1120. The association sought a declaration from this
Court that DEP was prohibited from applying and enforcing the requirements of
Section 3215(c) of the act commonly known as the Pennsylvania Oil and Gas Act,
58 Pa. C.S. §3215(c), on well permit applicants because the Pennsylvania Supreme
                                          13
Court enjoined the application and enforcement of that provision. Id. See Robinson
Township v. Commonwealth, 83 A.3d 901, 999 (Pa. 2013) (plurality).
             In response, DEP filed POs on the basis that the association failed to
exhaust administrative remedies. PIOGA, 135 A.3d at 1123. Specifically, DEP
argued that the association and its members have an adequate remedy at law – an
administrative appeal to the Environmental Hearing Board (EHB) from the denial of
a permit application. Id. at 1128. DEP argued that the petition was merely an “as-
applied challenge to the permitting process, not a facial challenge to a statute or
regulation.” Id. at 1129.
             The association responded that it could not pursue a facial challenge to
the underlying statutory support for the allegedly invalid permitting process because
the Supreme Court already declared Section 3215(c) unconstitutional. PIOGA, 135
A.3d at 1129. Further, the association argued that an appeal to the EHB was not
adequate because the association was challenging the “process” as a whole, not just
the denial of a particular permit or license, and it was seeking declaratory relief,
which the EHB did not have authority to grant. Id.
             We ultimately agreed with the association, opining:

             Although DEP asserts that this is an as-applied challenge
             to the permitting process, it is apparent from the Petition
             for Review that [the association] is challenging the facial
             validity of DEP’s permitting process, to the extent based
             on Section 3215(c), as applied to every oil and gas permit
             application submitted to DEP. [The association] seeks an
             order from this Court declaring that the process presently
             used by DEP, which DEP acknowledges is the same as
             before the Supreme Court found Section 3215(c)
             unconstitutional in Robinson Township, is contrary to law,
             and enjoining DEP from continuing to enforce and apply
             those unconstitutional provisions.

                                         14
PIOGA, 135 A.3d at 1130 (emphasis added). We concluded that the administrative
remedy was not adequate because the EHB did not have jurisdiction to consider the
association’s pre-enforcement challenge or the authority to grant the relief requested.
Id. (citing Empire Sanitary, 684 A.2d at 1054-55).
             Here, although Petitioner is challenging the permitting process as a
whole, a key distinction between this case and PIOGA is that, in PIOGA, the
provision that DEP was applying and enforcing in its permitting process was already
declared unconstitutional. We determined the association in PIOGA was in essence
making a facial challenge to the implementation of a judicially-declared
unconstitutional provision of the law. Such is not the case here. Petitioner is not
challenging the constitutionality or validity of the Act or temporary regulations, nor
is Petitioner seeking pre-enforcement review of the implementation of the Act or
temporary regulations.     See Arsenal Coal; PIOGA.          Rather, the essence of
Petitioner’s claim is that the permitting process, i.e., the manner in which the
Department interpreted and applied the Act and temporary regulations, is invalid and
unconstitutional. Petitioner presents a post-enforcement, “as-applied” constitutional
challenge to the Department’s application denials.
             Our precedent has not recognized an exception to exhaustion for as-
applied constitutional claims, but rather requires the disposition of “as-applied”
challenges at the administrative level. See Lehman, 839 A.2d at 275; PIOGA, 135
A.3d at 1130. This “permits the agency to exercise its expertise and develop the
factual record necessary to resolve the claim.” Lehman, 839 A.2d at 275.
             Because Petitioner challenges only the application of the law and not
the law itself, the constitutional exception to the exhaustion of administrative
remedies does not apply. Petitioner’s claims regarding the application of the law

                                          15
must be directed to the administrative agency for disposition in the first instance,
unless the remedy is unavailable or inadequate. See Empire Sanitary, 684 A.2d at
1054. To conclude otherwise, would permit an end-run of the administrative appeal
process that the doctrine of exhaustion of administrative remedies is designed to
prevent. See Lehman, 839 A.2d at 276.

                        b. Adequacy of Administrative Remedy
               The Department’s temporary regulations, the Administrative Agency
Law12 and the General Rules of Administrative Practice and Procedure (GRAPP)13
establish remedies to challenge administrative actions taken by the Department,
including permit denials. Pursuant to the Department’s temporary regulations, the
Department will provide written notice of the permit denial to an applicant. 28 Pa.
Code §1141.35(a). The applicant may request a debriefing from the Department
within 30 days from the date of the notice of denial. 28 Pa. Code §1141.35(b).
Notably, it does not include a time limitation within which the Department must
provide a debriefing. See id.
               An applicant may appeal a notice of permit denial. 28 Pa. Code
§1141.35(d). The appeal process is governed by the Administrative Agency Law
and GRAPP. 1 Pa. Code §31.1(a); 28 Pa. Code §1141.35(d). Pursuant to Section
504 of the Administrative Agency Law:

               No adjudication of a Commonwealth agency shall be valid
               as to any party unless he shall have been afforded
               reasonable notice of a hearing and an opportunity to be
               heard. All testimony shall be stenographically recorded

      12
           2 Pa. C.S. §§501-508.

      13
           1 Pa. Code §§31.1-35.251.
                                         16
             and a full and complete record shall be kept of the
             proceedings.
2 Pa. C.S. §504 (emphasis added). “Commonwealth agencies shall not be bound by
technical rules of evidence at agency hearings, and all relevant evidence of
reasonably probative value may be received. Reasonable examination and cross-
examination shall be permitted.” 2 Pa. C.S. §505 (emphasis added). In addition,
“[a]ll parties shall be afforded opportunity to submit briefs prior to adjudication by
a Commonwealth agency.” 2 Pa. C.S. §506. “All adjudications of a Commonwealth
agency shall be in writing, shall contain findings and the reasons for the adjudication,
and shall be served upon all parties or their counsel personally, or by mail.”
2 Pa. C.S. §507.
             Under GRAPP, Commonwealth agencies may issue subpoenas when a
party makes an application for evidence that is relevant and material to the
proceedings. Section 35.142(a) of GRAPP, 1 Pa. Code §35.142(a); KC Equities v.
Department of Public Welfare, 95 A.3d 918, 933 (Pa. Cmwlth. 2014), appeal denied,
106 A.3d 727 (Pa. 2015). The application must specify the relevancy, materiality,
and scope of the testimony sought. 1 Pa. Code §35.142(a); KC Equities, 95 A.3d at
933. GRAPP procedures comport with the general principles of due process because
they “sufficiently provide notice, and permit review of any evidence an agency will
introduce at hearing.” KC Equities, 95 A.3d at 933. Upon review, the Department’s
temporary regulations, the Administrative Agency Law, and GRAPP provide
unsuccessful applicants with an administrative remedy by which to seek redress for
action that they believe violates the statutory scheme and/or their constitutional
rights.
             Notwithstanding, “the mere existence of a remedy does not dispose of
the question of its adequacy; the administrative remedy must be ‘adequate and

                                          17
complete.’” Feingold, 383 A.2d at 794 (citing Philadelphia Life Insurance Co. v.
Commonwealth, 190 A.2d 111, 116 (Pa. 1963)). “[A]n administrative remedy is
inadequate if it either: (1) does not allow for adjudication of the issues raised . . . or
(2) allows irreparable harm to occur to the plaintiffs during the pursuit of the
statutory remedy.” Nicholas, 681 A.2d at 161. A party claiming this exception must
make a “clear showing that the remedy is inadequate.” Commonwealth v. Eisenberg,
454 A.2d 513, 515 (Pa. 1982).
               Relying on Empire Sanitary, Petitioner contends that the remedy is
inadequate because the Department cannot provide the requested relief because only
the courts have the power to grant declaratory judgment and injunctive relief, not
administrative agencies. In Empire Sanitary, a landfill operator and trash hauler
(petitioners) filed a pre-enforcement action seeking declaratory and injunctive relief,
in which they challenged the Municipal Waste Planning, Recycling and Waste
Reduction Act (Waste Act)14 and provisions of the county’s solid waste flow control
ordinance as unconstitutional. The petitioners’ available administrative remedy was
to appeal the approval of the county plan to the EHB, which they did not do. Empire
Sanitary, 684 A.2d at 1051.
               Although the petitioners failed to exhaust available administrative
remedies, the Supreme Court held that failure did not foreclose their challenge to the
constitutionality of the Waste Act and the county’s ordinance in court because the
remedy was not adequate. Empire Sanitary, 684 A.2d at 1054. Only the courts of
the Commonwealth have “the power to grant declarations and injunctive relief
pursuant to the Declaratory Judgments Act . . . .” Id. at 1055. Because EHB lacked
power to grant declaratory judgment and injunctive relief, the exhaustion of

      14
           Act of July 28, 1988, P.L. 556, 53 P.S. §§4000.101-4000.1904.
                                               18
administrative remedies was not required with regard to petitioners’ facial
constitutional challenge of the law. The Court held that “an action for declaratory
judgment with respect to the constitutionality of the Ordinance or the [Waste] Act is
appropriate in court since the available statutory remedy is inadequate.” Id. The
Supreme Court reasoned that allowing a declaratory judgment action to address a
facial constitutional challenge to a law would not cause “the court to prejudge issues
that are committed for initial resolution to an administrative forum” or establish “in
advance the merits of any determination regarding a permit application.” Id. at 1055.
             Petitioner’s reliance on Empire Sanitary is misplaced because, as
discussed above, Petitioner has not presented a facial constitutional challenge to the
Act or temporary regulations. Absent a facial constitutional challenge, there is no
aspect of its claims that is not suitable for disposition by the administrative tribunal.
             As previously discussed, “requiring ‘as applied’ challenges to be heard
at the administrative level permits the agency to exercise its expertise and develop
the factual record necessary to resolve the claim.” Lehman, 839 A.2d at 275; see St.
Clair v. Pennsylvania Board of Probation and Parole, 493 A.2d 146, 152
(Pa. Cmwlth. 1985). “This is particularly important where the ultimate decision
rests upon factual determinations lying within the expertise of the agency or where
agency interpretations of relevant statutes or regulations are desireable [sic].” St.
Clair, 493 A.2d at 152. To the extent that the administrative agency has made a
mistake, it should be presumed that, given the chance, it will recognize its errors and
correct them. Canonsburg, 422 A.2d at 145; St. Clair, 493 A.2d at 152; Chubb
Group of Insurance Companies v. Department of Labor and Industry, Bureau of
Worker’s Compensation, 655 A.2d 205, 206 (Pa. Cmwlth. 1995).

                                           19
             The issues at hand involve both the Department’s interpretation and
application of the Act and temporary regulations. The General Assembly designated
the Department as the agency responsible for administering the Act.
35 P.S. §10231.301. The Department has expertise in administering the medical
marijuana program, including the issuance of grower/processor permits and/or
dispensary permits.
             Petitioner’s challenges regarding the criteria applied to scoring
applications in the permitting process fall squarely within the Department’s
expertise. Petitioner is asking this Court to prejudge issues that are committed for
initial resolution to an administrative forum.      Because the issues involve the
Department’s expertise, such challenges must be brought before the Department
before resorting to judicial review.     See Lehman, 839 A.2d at 276; see also
Pennsylvania Independent Oil & Gas Association v. Department of Environmental
Protection, 146 A.3d 820, 830 (Pa. Cmwlth. 2016), aff’d, 161 A.3d 949 (Pa. 2017)
(concerns over how an agency exercises its authority under the law with respect to
permit applications are better left to the administrative agency process, followed by
review in our appellate jurisdiction).
             Although Petitioner filed administrative appeals from its denials,
Petitioner has not meaningfully participated in the administrative appeal process.
During the pendency of its administrative appeals, Petitioner filed its original
jurisdiction action in this Court. Petitioner diverted course because it fears it will
not get the answers that it seeks regarding the scoring or an opportunity to prove that
the permitting process was invalid. However, having failed to go through the
administrative appeal process, Petitioner’s allegations regarding the process are
speculative at best. The appropriate way to advance Petitioner’s arguments in this

                                          20
regard is to actually participate in the administrative appeal process, examine the
Department’s exhibits and cross-examine the witnesses who will testify about the
permitting process, including the evaluation and scoring of permit applications. If
the Department refuses to provide information, such matters are appropriate to raise
to this Court on appeal. By not participating in the administrative appeal process in
a meaningful way, there is no basis upon which this Court can conclude that the
process is wholly inadequate. See Canonsburg, 422 A.2d at 145 (“courts should not
presume futility in the administrative appeal”).
             Finally, Petitioner fails to demonstrate that the administrative appeal
process “allows irreparable harm to occur during the administrative process.”
Nicholas, 681 A.2d at 161. Petitioner admits that it “cannot, at this early stage of
this litigation, assert more specific harm because the [Department] arbitrarily and
unreasonably refuses to provide the information necessary to definitely determine
whether that harm exists by way of administrative review.” Petitioner’s Omnibus
Brief in Opposition to the Department’s Application for Summary Relief, at 28.
Petitioner’s admission underscores the need to develop a record at the administrative
level. There are material factual dynamics involved in evaluating the criteria for
scoring permit applications that must be developed in an administrative forum for
this Court to determine whether the permitting process violates the Act or temporary
regulations. Without a proper record, judicial review would constitute a “premature
interruption of the administrative process.” Canonsburg, 422 A.2d at 144.
             As for Petitioner’s claim that it is harmed by the award of permits to
potentially unqualified or potentially less qualified applicants, such harm is
speculative and not irreparable. If Petitioner’s administrative appeal succeeds, or if
a permittee is deemed unqualified, the Department is authorized to grant and revoke

                                         21
permits. Section 603 of the Act, 35 P.S. §10231.603; Section 613 of the Act, 35
P.S. §10231.613. At this juncture, we conclude that the administrative review
process is not inadequate.15

                                       III. Conclusion
               In sum, Petitioner has not made a clear showing that an exception to the
doctrine of administrative remedies applies. Petitioner has not presented a facial
constitutional challenge to the Act or temporary regulations nor shown how the
administrative remedy before the Department is inadequate. Our review of the
Department’s administrative review process satisfies us that it offers unsuccessful
applicants an adequate remedy to challenge their permit denials and the permitting
process. Because Petitioner’s administrative appeal is ongoing, a judgment here
would be inappropriate. See Barsky, 464 A.2d at 594.
               For these reasons, we sustain Respondents’ POs relating to Petitioner’s
failure to exhaust administrative remedies, grant the Department’s Application for
Summary Relief on the same basis, and dismiss the Amended Petition with
prejudice.16

                                             MICHAEL H. WOJCIK, Judge

       15
          If the administrative review fails to provide meaningful administrative review or relief,
such is a matter to be raised on appeal.

       16
         In light of this determination, we need not address the remaining POs. Notwithstanding,
we note that Petitioner has raised some troubling allegations regarding the permitting process,
which this Court takes very seriously. Although Petitioner has failed to exhaust its administrative
remedies, we may have the opportunity to address these issues in the near future in our appellate
role.
                                                22
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Keystone ReLeaf LLC,                       :
                                           :
                        Petitioner         :
                                           :
                  v.                       : No. 399 M.D. 2017
                                           :
Pennsylvania Department of Health,         :
Office of Medical Marijuana;               :
Prime Wellness of Pennsylvania, LLC;       :
Franklin Labs, LLC; Pennsylvania           :
Medical Solutions, LLC; Standard           :
Farms, LLC; Ilera Healthcare, LLC;         :
AES AES Compassionate Care, LLC;           :
Terrapin Investment Fund 1, LLC;           :
GTI Pennsylvania, LLC; Agrimed             :
Industries of PA, LLC; Purepenn, LLC;      :
Holistic Farms, LLC; Cresco                :
Yeltrah, LLC; Holistic Pharma, LLC;        :
Pharmacann Penn, LLC; SMPB                 :
Retail, LLC; Terra Vida Holistic           :
Centers, LLC; Chamounix Ventures,          :
LLC; Bay, LLC; Restore Integrative         :
Wellness Center, LLC; Franklin             :
Bioscience-Penn, LLC; Mission              :
Pennsylvania II, LLC; Columbia Care        :
Pennsylvania, LLC; Justice Grown           :
Pennsylvania, LLC; Guadco,                 :
LLC; Lebanon Wellness Center, LLC;         :
Organic Remedies, Inc.; KW Ventures        :
Holdings, LLC d/b/a Firefly                :
Dispensaries; Cansortium Pennsylvania,     :
LLC; PA Natural Medicine, LLC;             :
Keystone Center of Integrative Wellness,   :
LLC; Keystone Integrated Care, LLC;        :
The Healing Center, LLC; Maitri            :
Medicinials, LLC; Keystone Relief          :
Centers, LLC d/b/a Solevo Wellness;        :
Dubois Wellness Center, LLC,               :
                                           :
                        Respondents        :
                                     ORDER

             AND NOW, this 20th day of April, 2018, Respondents’ preliminary
objections in the nature of demurrer on the basis that Petitioner has failed to exhaust
administrative remedies are SUSTAINED; Respondent Pennsylvania Department of
Health, Office of Medical Marijuana’s Application for Summary Relief is
GRANTED on the same basis; and Petitioner’s Amended Petition is hereby
DISMISSED WITH PREJUDICE.

                                        __________________________________
                                        MICHAEL H. WOJCIK, Judge

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