Three companies push ahead with complaints of errors, unfairness in Utah’s selection of cannabis growers

(AP Photo/Gerald Herbert) Marijuana plants growing under special grow lights, at GB Sciences Louisiana, in Baton Rouge, La., Tuesday, Aug. 6, 2019.

Three companies that lost out on potentially lucrative cannabis growing licenses in Utah are pressing forward with appeals based on allegations of unfairness and inconsistency in the state’s selection process.

After considering 81 applications from would-be marijuana farmers, the state last month chose eight companies to receive the cultivation licenses. Six of the companies that lost out — Pure UT, North Star Holdings, Total Health Sciences, Wild West Holding, JLPR and Tintic United Bioscience — protested the decision, but the state’s director of purchasing and general services last week dismissed the complaints.

Now, Pure UT, Total Health Sciences and JLPR have decided to take the next step in the appeal process by asking for a review by the state’s Procurement Policy Board.

Pure UT has complained about the possibility that some of the eight license awardees have not secured zoning approval for growing cannabis at their proposed locations.

"It is my understanding that zoning compliance — which I sought and verified prior to submission — was a requirement for eligibility to receive a license," Jordan Lams, Pure UT manager, wrote in the company's protest letter. "If awardees failed to meet this provision of the solicitation and the procurement unit failed to uphold this requirement, then I contend that the award process was flawed."

Companies also complained that the the state’s evaluation committee had made grading errors, with Total Health Sciences arguing that two of the six evaluators deviated significantly from those of their peers in their scoring patterns. The company called for an investigation into whether those two committee members had a bias.

JLPR also protested that non-Utah applicants had an edge over local companies in the evaluation process.

"Out-of-state applicants who have legally been allowed to cultivate cannabis for several years are going to hold a clear and unfair advantage over the in-state applicants for whom gaining 'experience' would have been illegal," Salt Lake City attorney Steven Tingey wrote on behalf of JLPR.

Four of the eight cultivation licenses went to existing Utah businesses, while the other four companies are based out of state but have Utah connections, according to the Utah Department of Agriculture and Food. The agency was authorized to award up to 10 licenses but chose to hand out eight to avoid an overabundance of cannabis, the statement said.

In an email, Christopher Hughes, the state’s director of purchasing and general services, explained the process that the procurement board will follow in considering the three company protests: After a review to weed out appeals that don’t meet the minimum legal requirements, an appointed panel will consider the merits of the protests and could hold an informal hearing. The panel then will issue its decision, a process that could take more than 50 days, Hughes said.

The three companies have each had to post a $20,000 bond to file the appeal and will lose the money if the complaint is dismissed and found to be frivolous or intended to harass or cause delay, said Hughes said.