Pa. Court Strikes Two-Lab Requirement For Medical Cannabis

Pennsylvania's Department of Health overstepped its authority when it required that medical marijuana providers test their products at two separate laboratories, since the state's Medical Marijuana Act only requires testing by "one or more" labs, the Pennsylvania Commonwealth Court ruled Thursday.

A 5-2 majority of the appellate court said the enabling law gave growers and processors a choice to pick more than one lab to test their products — or to stick with just one — so regulations the Department of Health enacted to mandate testing by two separate labs went beyond what the state's regulators were allowed to do.

"The word 'or' is 'used as a function word to indicate an alternative.' … Thus, the plain meaning of section 704(a) of the act is that growers/processors may contract with only one lab if they so choose," wrote Judge Ann E. Covey for the majority opinion. "Notwithstanding, Section 1171a.29(c)(1)-(2) of the department's regulations mandates growers/processors to contract with at least two separate labs. Consequently, there is a conflict between the act and the regulation."

The majority found that since it was in conflict with the law, the two-lab requirement was invalid, and the court granted a request from six grower/processors and one lab to throw the requirement out.

According to the opinion, the state's Medical Marijuana Act had originally just required "an independent laboratory" do testing, but it was amended in June 2021 to say "one or more" labs should be involved.

At the same time the amendment was being considered by the state legislature, the health department was weighing new regulations that would require two separate labs do the testing for each provider, reasoning that it would provide "checks and balances," prevent monopolies, and avoid mistakes or corruption, the opinion said.

The regulation was supposed to take effect on March 4, 2023, but the medical marijuana companies filed their lawsuit that day, first getting a temporary halt to the rule, then striking an agreement with the health department not to enforce the requirement while the suit was pending.

"The issue before this court is whether the department's regulation that mandates growers/processors to contract with one lab for testing the harvest batch or harvest lot, and another lab to test the medical marijuana before sale is in conflict with the act which mandates that growers/processors contract with one or more labs for testing," Judge Covey wrote for the majority opinion.

The growers had argued that the regulation mandating two labs made the language in the law allowing one lab superfluous. The department had countered that the broad authority the law gave it to regulate medical cannabis products — and to ensure their safety for patients — let them go beyond the minimum testing requirement in the law.

While the legislative amendment to the law was being considered, the Department of Health held public hearings, published a draft of the regulation and took comments, which lawmakers were presumably aware of when they passed the final language of the amendment, the department had argued. That language could have more clearly limited the number of labs or the department's authority, but it did not, the regulators said.

Judge Covey, joined by judges Michael H. Wojcik, Christine Fizzano Cannon, Ellen Ceisler and Stacy Wallace for the en banc Commonwealth Court, agreed with the petitioners that the law was a limit, not a starting point.

But President Judge Renee Cohn Jubelirer wrote a dissenting opinion, joined by Judge Patricia A. McCullough, that sided with the Department of Health on its authority under the law.

"The plain language of Section 704(a) allows for both a singular laboratory and, in the alternative, multiple laboratories to be utilized in the testing process," the dissent said. "This language evinces that the General Assembly authorized the department to implement testing requirements through more than one lab as the department may deem appropriate in furtherance of the stated obligation and broad authority the act grants to the department to regulate and enforce the cultivating and processing of marijuana in the Commonwealth."

Judge Cohn Jubelirer said she would have ruled in favor of the health department on whether it had the authority to require two labs, then would have gone on to consider other questions the rest of the court did not, such as whether the two-lab requirement ceded the health department's regulatory authority to the private labs, or whether it violated the Contract Clause of the Pennsylvania and U.S. Constitutions.

Judith Cassel of Hawke McKeon & Sniscak, representing the grower/processors and the lab, said she and her clients were "thrilled" with the decision.

"We think this is a win for the whole industry," she told Law360 Thursday.

Representatives for the Department of Health did not immediately respond to requests for comment.

The petitioners are represented by Micah R. Bucy, Dennis A. Whitaker, Judith D. Cassel and Aaron D. Rosengarten of Hawke McKeon & Sniscak LLP.

The Pennsylvania Department of Health is represented by Kevin R. Bradford of the Pennsylvania Attorney General's Office.

The case is Green Analytics North LLC et al. v. Pennsylvania Department of Health, case number 104 MD 2023, in the Commonwealth Court of Pennsylvania.