The appeal could further delay the rollout of cannabis for the state
Utah’s decision to award a smaller number of medical marijuana grower licenses than allowed by law is being challenged by six companies that say the state granted licenses to unqualified cultivators and had inappropriate interactions with applicants, among other claims.
Chris Hughes, director of the state’s Division of Purchasing, confirmed that six rejected applicants met Friday’s appeal deadline.
The administrative appeal could further delay the rollout of medical marijuana for the state because state law says licenses cannot be finalized until protests are resolved.
Utah’s Department of Agriculture and Food selected eight companies to grow medical marijuana for its program set to open next year. Although the new law allows Utah to award up to 10 licenses at the start of the program, state officials say they chose to only hand out eight to avoid an oversupply of cannabis.
Marijuana advocates and experts say there is little to no evidence that oversupply of legal marijuana has been an issue. Oregon experienced oversupply problems due to a lush growing climate and a licensing process that permitted a large number of growers.
There were 81 applicants for the licenses.
In an appeals letter dated July 26, Utah-based research firm Tintic United Bioscience LLC says the Department of Agriculture violated a “blackout period” where state health officials were not to interact with applicants.
According to guidelines on the application portal, applicants are restricted from discussing their submissions with individuals involved in the selection process.
The letter includes a photo tweeted by the Department of Agriculture and Food on June 21 that shows commissioner Kerry Gibson smiling next to Mike Standlee, the registered business agent of True North of Utah LLC, one of the companies awarded a medical marijuana grower’s license.
Gibson was touring the Utah and Idaho facilities of Standlee’s company, Standlee Hay Company, the tweet notes.
Applications to grow Utah’s medical marijuana opened on May 31.
“It’s suspicious and suggests favoritism,” Tintic CEO Michael “Caddy” Cadwell said.
Bill Stevens, Standlee’s business partner at True North of Utah LLC, also attended the tour. He said they did not discuss the company’s license application during the visit.
“It had nothing to do with the marijuana program, my understanding was commissioner Gibson wanted to tour the facilities from an agricultural standpoint,” he said. “It was my first time visiting the Utah facilities, too.”
Jack Wilbur, a spokesman for the Department of Agriculture and Food, said state officials were not banned from speaking with companies about other agriculture issues not related to their medical marijuana application.
In a different appeals letter dated July 21, Colorado-based marijuana company North Star Holdings LLC said some license winners have no experience with cannabis or farming.
“The department has awarded a very valuable cultivation license to an industry beginner that has less experience, knowledge, and ability than the garden-variety home grower in Colorado,” Welby Evangelista, the company’s president, wrote in the appeal letter. “I asked how they’re going to learn cultivation, one of the owners said that ‘everything is on YouTube’ and they will ‘figure it out.'”
Evangelista refused to name the company he was referring to except that it is owned by entrepreneurs in northern Utah.
Some applicants are concerned eight growers will not be enough to meet patient demand in Utah. An undersupply of marijuana could inflate prices and create a black market, Evangelista said.
Winners include medical marijuana cultivators with businesses in other states and greenhouse growers in Utah. Half of the license recipients already have businesses in Utah, while the rest are headquartered in other states like Nevada, Arizona and Ohio.
Growers are not expected to start planting immediately. Licensees will need to pass background checks and finalize their contracts with the state.