The Ohio Department of Commerce was ordered to accept or deny a permit to expand the size a medical marijuana cultivation facility.

The Ohio Department of Commerce was ordered to accept or deny a permit to expand the size a medical marijuana cultivation facility.

After more than a year of inaction, the Ohio Department of Commerce must decide whether to permit an Akron-based medical marijuana cultivator to expand its operations, the Ohio Supreme Court ruled today.

In a per curiam opinion, a Supreme Court majority ruled that the Commerce Department’s Medical Marijuana Control Program did not have the right to take no action on the cultivator’s application. The Court granted a writ of mandamus to Fire Rock Ltd., which asked the Court to instruct the department to make a ruling on its application.

The department argued that its director may request applications for expansion if it deems that the market requires an increased supply of medical marijuana. Since the director did not seek expansion applications, it was under no obligation to rule on Fire Rock’s request, the department stated.

But the Court’s opinion stated the “department’s argument does not square with the text” of the regulation.

Chief Justice Maureen O’Connor and Justices Patrick F. Fischer, R. Patrick DeWine, Michael P. Donnelly, Melody J. Stewart, and Jennifer Brunner joined the opinion. Justice Sharon L. Kennedy did not participate in the case.

Company Seeks Expansion
Fire Rock is licensed to operate a marijuana cultivation area of up to 3,000 square feet. In February 2020, it submitted a request to the commerce department to expand its facility, explaining that it lacked the ability to produce enough product to meet demand. The application included actual and projected sales data as well as a floor plan and proposed construction timeline. Fire Rock also sent along several letters from dispensaries that purchased its marijuana urging the department to approve the application.

More than four months after not receiving any response from the department, Fire Rock requested that the department respond to its application. In June 2020, the department explained that it had not solicited cultivation-area-expansion requests and was taking no action on Fire Rock’s application.

A month later, Fire Rock repeated its request, and then in September 2020, sought the writ from the Supreme Court to order the department to approve or deny the application.

Court Examines Regulation
At issue in the case is the department’s interpretation of Ohio Adm. Code 3796:2-1-09, which covers the process for expanding the size of cultivation operations, the opinion explained. The Court noted the Ohio General Assembly gave the department the authority to regulate a medical marijuana program and to issue licenses to those seeking to cultivate, process, and test medical marijuana.

Under the rule, the department’s director or the director’s designee may approve expansion of a cultivation area at his or her discretion. The rule permits a cultivator to submit an expansion application and gives the department “reasonable time to review and approve or deny” it.

The rule states “the director may request expansion plans from existing cultivators” if the department determines that additional cultivation capacity is necessary to meet demand for medical marijuana based on the population of this state, number of patients seeking to use medical marijuana, and data from the inventory tracking system regarding patient recommendations and patient usage of medical marijuana.

The department argued the rule indicates cultivation expansion requests will be considered when the department determines the need for expansion. The Court’s opinion stated the use of “may” implies the director has discretionary power to request expansion applications “if he or she so chooses; it does not prohibit a cultivator from submitting an expansion application on its own initiative.”

The Court noted the rule does not specify the availability of any administrative proceeding Fire Rock could use to compel the department to act on its application. The Court noted, in general, Ohio law allows any party adversely affected by a state agency to appeal the decision to a common pleas court. The Court ordered the department to rule on Fire Rock’s application.

2020-1147. State ex rel. Fire Rock Ltd. v. Ohio Dept. of Commerce, Slip Opinion No. 2021-Ohio-673.

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