CURIO CULTIVATION, LLC,c/o Rifkin Weiner Livingston LLC225 Duke of Gloucester StreetAnnapolis, MD 21401,

Plaintiff,

v.

NATALIE M. LAPRADE MARYLAND MEDICAL CANNABIS COMM’N.,849 International Drive, 4th FloorLinthicum, MD 21090

Serve on:Brian E. Frosh, Attorney General200 Saint Paul Place Baltimore, Maryland 21202,

And

The Hon. Brian P. LopezChairNatalie M. Laprade Maryland Medical Cannabis Comm’n.,849 International Drive, 4th FloorLinthicum, MD 21090

Serve on:Brian E. Frosh, Attorney General200 Saint Paul Place Baltimore, Maryland 21202,

Defendants.

IN THE

CIRCUIT COURT

FOR BALTIMORE COUNTY

Case No. ________________

COMPLAINT AND PETITIONFOR DECLARATORY JUDGMENT, INJUNCTIVE RELIEF,

SPECIFIC PERFORMANCE, COMMON-LAW WRIT OF MANDAMUS, OR, IN THE ALTERNATIVE, EQUITABLE ADJUSTMENT

Plaintiff, Curio Cultivation, LLC, by its undersigned attorneys, files this Complaint and

Petition for declaratory judgment, injunctive relief, specific performance, a common-law writ of

E-FILED; Baltimore County Circuit CourtDocket: 3/25/2019 10:54 PM; Submission: 3/25/2019 10:54 PM

C-03-CV-19-000609

2

mandamus, or, in the alternative, for equitable adjustment, against the Natalie M. Laprade

Maryland Medical Cannabis Commission (“Commission”), and its Chair, and states as follows:

INTRODUCTION

1. This Complaint arises out of the mid-January 2019, and March 15, 2019, acts and

omissions of the Defendants in implementing a process to award up to four additional medical

cannabis grower licenses in derogation of Defendants’ statutory and regulatory promises, and in

contravention of binding and written promises to the Plaintiff, a licensed medical cannabis grower.

2. Defendants asked Plaintiff to expend millions of dollars to apply for and construct a

state-of-the art medical cannabis growing facility.

3. As an integral part of their request, Defendants promised in writing that, if Plaintiff did

so, they would award Plaintiff one of fifteen medical cannabis grower licenses.

4. Defendants further promised in writing that they would not issue any additional grower

licenses absent a study of the market, i.e., the demand and supply, and a demonstrated need that

additional cultivation capacity and additional grower licensees were needed to meet the demand

of qualified patients for medical cannabis.

5. Defendants structured their program as a public-private partnership. They sought to

attract and enlist the private sector’s capital and operating expertise without budgeting, expending,

or appropriating State funds to fulfill a need identified by the State.

6. To do so, the State enacted legislation that embodied the foregoing and other terms,

inducements, offers, and promises.

7. Defendants then promulgated Regulations doing the same, for the same reason, and

expressing the material terms establishing the program’s operation.

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8. Defendants then published applications and other documents reiterating those terms,

inducements, offers, and promises, and instructing Plaintiff to rely on them.

9. Defendants intended to induce Plaintiff’s reliance.

10. Plaintiff in fact relied, and that reliance was reasonable.

11. Plaintiff accepted Defendants’ offer in writing and in action.

12. Plaintiff thereupon expended in excess of $10 million, at great risk and in the face of

substantial uncertainty, and constructed the facility requested by Defendants.

13. Plaintiff, in reliance upon Defendants’ representations, additionally committed

millions of dollars more in operating capital to outfit, stock, staff, and operate the facility, including

without limitation, hiring specially-qualified employees, seeking and obtaining investors, and in

other ways accepting and acting upon Defendants’ representations.

14. The Commission has admitted that Curio has protectable “financial and other interests”

in licensure. Doe v. Alternative Med. Maryland, LLC, 455 Md. 377, 412 (2017). The Court of

Appeals agreed, stating “the Growers [i.e., Curio] plainly have an interest….” Id. at 421. One

interest that the Court identified was a threat by a litigant that would result in Curio “forfeit[ing]

the investments made as a result of the first pre-approval process.” Id. at 423.

15. In return, Defendants confirmed their agreement in writing by, among other things,

issuing a written license to Plaintiff for Plaintiff’s medical cannabis grower facility.

16. Now, however, Defendants attempt to repudiate their written promises to, and written

agreement with, Plaintiff.

17. Further, by letter dated March 14, 2019, Defendants stated that they refused to take

actions compelled by applicable regulations and promises.

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18. Defendants, beginning in January 2019, stated that they intend to award up to four

additional grower licenses.

19. However, Defendants also improperly and wrongfully stated in January 2019, that they

intend to award up to four additional grower licenses with absolutely no study of supply, demand,

need to meet the demand of qualified patients, or impact on the medical cannabis industry.

20. There is no needs study supporting, and no need – demonstrated or otherwise – for,

those additional medical cannabis grower licenses.

21. Based on Curio’s information and belief, and in reliance on the Commission’s response

to Curio’s Public Information Act request, no Commission document shows any undersupply of

medical cannabis.

22. For example, on December 31, 2018, Defendants submitted a “Report on the Number

of Medical Cannabis Providers, Amount of Medical Cannabis Sold, and Average Consumer Price,

Pursuant to Health-General § 13-3305” to the Governor, President of the Senate, and Speaker of

the House (the “2018 Report”).

23. Nowhere in the 2018 Report on the “Amount of Cannabis Sold” did the Defendants

suggest that there is any undersupply or need for additional grower capacity.

24. There is no present statutory or regulatory limit on the amount of medical cannabis that

any licensed grower is permitted to produce.

25. Curio, like all other licensed growers, is lawfully permitted to grow and produce as

much cannabis as it wishes to grow and produce.

26. There currently exists a sufficient supply of medical cannabis and the current

production and production capacity is more than sufficient to meet current and all reasonably

projected or anticipated needs for medical cannabis.

5

a. Sale of retail cannabis flower has increased from approximately 196 pounds in

January 2018, to approximately 1,809 pounds in October 2018, and current

licensees have met that demand.

b. Sale of infused cannabis products has increased from approximately 19,863 units

to 117,799 units and, again, current licensees have met that demand.

c. Market-pricing indicates that there is no undersupply and ample supply.

d. Curio is not aware of any allegation that demand does not meet supply.

e. Curio is not aware of any fact or allegation suggesting that reasonably foreseeable

demand cannot or will not be met by the current licensees.

27. Based on information and belief, many existing licensed growers are bringing

additional production capacity online.

28. For example and without limitation, Maryland Cultivation and Processing has been

pre-approved and is constructing a facility, and it is investing $2.5 million in its new facility in

Hagerstown, Maryland. This includes renovations to a 36,000 sq. foot warehouse and construction

of a 45,000 sq. foot greenhouse.1 Under current regulations, that production must come online

within a year. There is no limit on the amount of cannabis that the licensee can produce.

29. In reasonable reliance on Defendants’ promises, Curio has invested substantial sums

to bring additional growing capacity online in the near future.

30. Because cannabis is a substance for which there are significant medical benefits but the

potential for abuse, the public has a significant interest in making sure that there is neither an

1 C. J. Lovelace, “Permit filed for $2.5M renovation at planned Hagerstown medical-marijuana facility,” Herald Mail Media, https://www.heraldmailmedia.com/news/local/permit-filed-for-m-renovation-at-planned-hagerstown-medical-marijuana/article_c43d96a6-bdb4-5ed0-88a6-204b88ab260f.html (last visited Mar. 13, 2019).

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oversupply nor undersupply in the market, thus making the demand study, as provided in the

statute, regulations, and otherwise, a publicly beneficial predicate to further grower licenses.

31. If a Demand Study, as defined below, were to be conducted, it would show sufficient

present and future capacity and grower licenses, a sufficient and ample supply of medical cannabis,

and the detrimental impact on Curio and the industry of any expansion of grower licensure now or

in the foreseeable future.

32. Defendants cannot repudiate their promises and agreement. Defendants must follow

the law and they are not doing so.

33. As more particularly set forth herein, the Commission’s proposed actions in

implementing its plan to award additional medical cannabis grower licenses are proceeding

without a promised and necessary factual predicate, i.e., without a Demand Study.

34. Therefore, the Commissions proposed actions are arbitrary, capricious administrative

actions and, as such, adversely impact Curio in a manner that is contrary to the terms and

conditions of the initial governing statute, regulations, solicitation, promises, agreements and

contract upon which Curio reasonably relied.

35. The necessary, but absent, factual predicate of any solicitation of additional grower

license applications is a methodologically-sound demand and impact study. That study should

encompass the medical cannabis market, including without limitation the current production

capacity, any need for additional production, any need for additional grower licenses, and the

impact of an award of up to four additional grower licenses on the Plaintiff, Curio. Curio, a grower

licensee, has spent in excess of $10 million in reliance on an express promise and written contract

that there would be no additional grower licenses awarded absent a showing that such additional

licenses were needed to meet a quantifiable need.

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36. Issuance by Defendants of additional grower licenses under these conditions would be

unlawful and detrimental to Plaintiff, the medical cannabis industry as a whole, qualified patients,

caregivers, taxpayers, and the State.

PARTIES

37. Plaintiff, Curio Cultivation, LLC (“Curio”), is a Maryland limited liability company

doing business in Timonium, MD, and at other locations in the State of Maryland where its product

is distributed.

a. At all times pertinent hereto, Curio was and is properly and fully licensed to

perform all activities described herein.

b. Curio was initially licensed in 2017 by the State of Maryland, acting through the

Commission, under the predecessor to Md. Code Ann., Health Gen’l. Art. (“HG”)

§13-3306 (2015) and regulations promulgated thereunder.

c. Curio was – and remains – licensed to grow, sell, and distribute medical cannabis

through authorized dispensaries.2

d. At all times pertinent hereto, Curio has operated and continues to operate in full

conformity with all Maryland laws and regulations governing the growth, sale, and

distribution of medical cannabis including, without limitation, in conformity with

Title 13, Subtitle 33 of the Health General Article of the Maryland Code Ann. and

COMAR Title 10, Subtitle 62, Chap. 08.

2 https://mmcc.maryland.gov/Pages/industry.aspx (last visited Feb. 24, 2019). Another Curio entity also holds a dispensary license.

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38. Defendant, the Natalie M. Laprade Maryland Medical Cannabis Commission, is an

independent commission that functions within the Maryland Department of Health (HG §1-101(c))

pursuant to HG §13-3302(b) and associated Regulations.

a. Pursuant to HG §13-3302(c): “The purpose of the Commission is to develop

policies, procedures, guidelines, and regulations to implement programs to make

medical cannabis available to qualifying patients in a safe and effective manner.”

b. In a November 12, 2015, press release, the Commission stated: “The Commission

oversees all licensing, registration, inspection and testing measures pertaining to

Maryland’s medical cannabis program….”3

c. That press release accurately describes the Commission’s powers.

d. The Commission issues medical cannabis grower licenses, regulates the medical

cannabis industry, and it may, from time-to-time and under prescribed

circumstances, solicit applications for and award additional licenses, including in

pertinent part, grower licenses.

e. The Commission operates in every jurisdiction within the State of Maryland,

including Baltimore County.

f. The Commission’s web site lists its address as 849 International Drive, 4th Floor

Linthicum, MD 21090, which is in Anne Arundel County.

39. Defendant, Hon. Brian P. Lopez is Chair of the Commission and named solely under

the holding of Stern v. Bd. of Regents, Univ. Syst. of MD., 380 Md. 691 (2004). No claims for

monetary relief are asserted against Chairman Lopez.

3 https://mmcc.maryland.gov/Documents/Application_TotalsFNL.pdf (last visited Feb. 24, 2019).

9

40. At all times pertinent hereto, the Commission acted by and through its Commissioners

as a Commission.

a. Pursuant to HG §13-3303, the Commission consists of sixteen members.

b. Individual Commissioners are not necessary, indispensable, or appropriate parties

to this action, except for Chair Lopez under the holding of Stern v. Bd. of Regents,

Univ. Syst. of MD., 380 Md. 691 (2004).

c. Complete relief can be afforded without joinder of the other Commissioners.

d. If the Commission or any Defendant contends otherwise, and if it or they suggest(s)

that joinder is required, the Commissioners will be joined as Defendants.4

JURISDICTION AND VENUE

41. Subject-matter jurisdiction exists pursuant to Md. Cts. & Jud. Proc. Art. (“CJ”) §1-

501.

42. This is an action in equity and this Court is one of the “highest common-law and equity

courts of record exercising original jurisdiction within the State.” Id.

43. This Court “has full common-law and equity powers and jurisdiction in all civil …

cases within its county, and all the additional powers and jurisdiction conferred by the Constitution

and by law, except where by law jurisdiction has been limited or conferred exclusively upon

another tribunal.” Id.

44. Pursuant to CJ §3-403(a), the Declaratory Judgment Act, this Court has jurisdiction to

“declare rights, status, and other legal relations whether or not further relief is or could be claimed,”

4 The reasons for nonjoinder have been pleaded pursuant to Maryland Rule 2-211(b). It is not necessary to join as parties citizens who have volunteered to be Commissioners. Relief can be afforded by the present parties. To the extent, if any, to which a motion is filed challenging the absence of any Commissioner, the other Commissioners named on the Commission web site, incorporated herein. https://mmcc.maryland.gov/Pages/aboutus.aspx. (lastvisited March 13, 2019), are automatically joined as named defendants. This pleading constitutes notice to each of them of such claim, if necessary or appropriate.

10

and, pursuant to that provision: “An action or proceeding is not open to objection on the ground

that a declaratory judgment or decree is prayed for.” Id.

45. The Commission’s proposed actions and omissions described herein are arbitrary and

capricious, and this Court retains the inherent power to review agency decisions and omissions

that are arbitrary and capricious.

46. Pursuant to Md. Code Ann., State Gov’t. Art. (“SG”) §12-201(a), the State and its units,

including the Commission, may not raise the defense of sovereign immunity “in a contract action,

in a Court of the State, based on a written contract….” This is a Court of the State, and Plaintiff

relies on a written contract or contracts.

47. Under SG §10-125, this Court has subject-matter jurisdiction over a petition for

declaratory relief against a unit of State government if it appears to the Court that a regulation or

its threatened application interferes with or impairs or threatens to interfere with or impair a legal

right or privilege of the petitioner. This is an action for such acts and omissions.

48. Under common law, Stern v. Bd. of Regents, Univ. Syst. of MD., 380 Md. 691 (2004),

this Court has subject-matter jurisdiction over claims for declaratory, injunctive, and other

equitable relief against a State official, especially where the allegation is one of unlawful

implementation of a statute or regulation. This is an action for unlawful implementation of

statutory laws and regulations by State officials.

49. Pursuant to CJ §3-8B-01, this Court has jurisdiction in an action for mandamus.

50. Venue is proper in this Court.

a. Pursuant to SG §10-125 (a)(2), a petition for a declaratory judgment on the

implementation of any regulation “shall be filed in the circuit court for the county

where the petitioner resides or has principal place of business.”

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b. Curio resides in and has its principal place of business in Baltimore County.

c. The Commission carries on regular operations, i.e., “business,” in this County,

within the meaning of CJ §6-201(a).

d. The Commission regulates Curio in Baltimore County, inspected Curio in

Baltimore County, licensed Curio in Baltimore County, solicits applications in

Baltimore County, and licenses, regulates, and inspects many other cannabis

facilities, including numerous dispensaries, in Baltimore County.

e. The impact of the wrongdoing sought to be enjoined, declared unlawful, and

equitably adjusted would be in Baltimore County.

51. No statute, rule, or regulation provides an administrative remedy to Curio.

a. No administrative remedy is available.

b. Curio is, therefore, not required to exhaust any administrative remedy.

52. Alternatively, Curio presented its claims to the Commission on January 30, 2019.

a. On March 14, 2019, the Commission responded and denied Curio’s claims and

requests.

b. Curio has thus exhausted any administrative remedy.

FACTS COMMON TO ALL COUNTS

53. The allegations in ¶¶1-52 are incorporated herein.

54. As set forth in ¶¶58-103 the Commission made repeated legislative, statutory,

regulatory and administrative promises, all in writing, to Curio.

55. As set forth in ¶¶104-151 those promises were offers that Curio accepted in writing.

56. As set forth in ¶¶152-187 the Commission’s January 2019 acts and omissions violated

and breached agreements and a written contract with Curio.

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57. As set forth in ¶¶188-191 the Commission’s acts and omissions were final and

judicially reviewable agency action(s).

The 2013-2016 Statutory, Regulatory, and Other Promises Made to Curio

58. Between 2013 and 2016, legislative, statutory, regulatory, administrative, and other

promises were made to Curio.

59. The statutory promise to Curio was initially made in the 2015 Maryland Medical

Cannabis Act, 2015 Md. Laws Ch. 251 (the “2015 Act”).

60. The pertinent provisions were described by the Court of Appeals:

“Currently, “the Commission may license no more than [fifteen] medical cannabis growers.” HG § 13–3306(a)(2)(i). Starting on June 1, 2018, “the Commission may issue the number of licenses necessary to meet the demand for medical cannabis[.]” HG § 13–3306(a)(2)(ii).

Doe v. Alternative Med. Maryland, LLC, 455 Md. 377, 384 (2017).

61. In reliance upon the 2015 Act, Curio participated in a public-private partnership to

grow medical cannabis and expended in excess of $10 million to do so under the terms and

conditions set forth in the 2015 Act and corresponding regulations.

62. In the 2015 Act, the General Assembly imposed a limit of no more than fifteen grower

licenses until June 1, 2018, and thereafter permitted award of additional grower licenses only on a

showing that expansion is “necessary to meet the demand,” i.e., a Demand Study.

63. Specifically, Subsection 2(ii) of the 2015 Act stated: “Beginning June 1, 2018, the

Commission may issue the number of licenses necessary to meet the demand for medical cannabis

by qualifying patients and caregivers issued identification cards under this subtitle in an affordable,

accessible, secure, and efficient manner.” Id. (Emphasis added). Subsection 2(ii) was codified as

Md. Code, Health-Gen §13-3306(a)(2)(i).

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64. Subsection 2(ii) means, conversely, that the Commission may not issue additional

grower licenses unless it first determines that such additional licenses are necessary to meet the

demand for medical cannabis by qualifying patients and caregivers in an affordable, accessible,

secure, and efficient manner.

65. The promise in Subsection 2(ii) of the 2015 Act contained no sunset provision.

66. The promise in Subsection 2(ii) of the 2015 Act remains in full force and effect.

67. The foregoing provisions of the 2015 Act were statutory promises.

68. The foregoing provisions of the 2015 Act were intended to induce reliance.

69. The foregoing statutory promises were in writing.

70. The foregoing statutory promises were made by the General Assembly.

71. The foregoing statutory promises were incorporated into the 2017 grower license

awarded to Curio.

a. That license states that Curio is licensed “in conformity with the Annotated Code

of Maryland Health General….”

b. The license does not state that Curio is licensed in conformity with the Code “as

amended from time-to-time.”

c. Instead, the license was issued in conformity with the Code as it then existed.

d. The license remains valid for six years.

72. The Commission then made a regulatory promise to Curio in COMAR.

73. In COMAR, the Commission reaffirmed and adopted the same restriction as Subsection

2(ii), making a promise of its own:

“Beginning June 1, 2018, the Commission may issue the number of pre-approvals of a license necessary to meet the demand for medical cannabis by qualifying patients in an affordable, accessible, secure and efficient manner.” COMAR 10.62.08.06.A(2) (emphasis added).

14

74. COMAR 10.62.08.06.A(2) means, conversely, that the Commission may not issue

additional grower licenses unless it first determines that such additional licenses are necessary to

meet the demand for medical cannabis by qualifying patients and caregivers in an affordable,

accessible, secure, and efficient manner.

75. The promise in COMAR 10.62.08.06.A(2) contains no sunset provision.

76. The promise in COMAR 10.62.08.06.A(2) remains in full force and effect.

77. The foregoing provision of COMAR was and is a regulatory promise.

78. COMAR 10.62.08.06.A(2) is reinforced by Subsection B, which clearly states that the

Commission will be limited to “the number of licenses available,” which was and is fifteen grower

licenses.

79. COMAR and the 2015 Act are collectively referred to as “the Act.”

80. The Act promised Curio that no additional pre-approvals, and therefore no additional

grower licenses, would issue unless and until the Commission first found, based on the facts, that

additional awards were necessary to meet the demand for medical cannabis by qualifying patients

in an affordable, accessible, secure and efficient manner. This was a significant promise to Curio

that it was being asked to invest substantial sums of money to enter a market that would be limited,

stable, and free of oversupply.

81. In addition to legislative, statutory, and regulatory promises, administrative promises

to the same effect were also made to Curio in the Commission’s written application process.5

5 The Commission’s application form, as completed by Curio and redacted, is posted at https://mmcc.maryland.gov/Documents/Redacted%20Growers%20Licenses%202015/Curio%20Cultivation_Stage%201_Grower%20(1).pdf (last visited Feb. 24, 2019). It is incorporated herein.

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82. The Commission’s application form stated that the Commission would not award more

than the number of licenses available.6 At that time, only fifteen grower licenses were available.

83. In fact, the Commission’s application form stated expressly:

“SECTION B: Number of Grower Licenses

In accordance with Md. Code, Health-Gen §13-3306(a)(2)(i), MMCC anticipates awarding pre-approval for a maximum of 15 Grower Licenses…. The Commission reserves the right to award fewer than 15 licenses.” [Emphasis in original].

84. Nowhere in the application did the Commission assert or reserve the right to award

more than fifteen grower licenses and, in fact, any such assertion or reservation would have been

ultra vires, prohibited, and unlawful.

85. Had the application included such an assertion or reservation, Curio could have, and

would have, taken measures to account for such risk and altered its plans accordingly.

86. Instead, the Commission’s application form stated that it was proceeding under the

October 1, 2013, enactment, Ch. 403, Laws of Maryland (2013), as amended by Ch. 240, 256,

Laws of Maryland (2014), and Ch. 251 Laws of Maryland (2015), i.e., the Commission was

proceeding to solicit and process applications under the 2015 Act, with its limit of fifteen grower

licenses absent a demonstrated need for more licenses.7

87. In short, the Commission’s application process proceeded under the 2015 Act and

regulations thereunder.

88. That is the application process in which Curio participated and through which Curio

was subsequently awarded a license.

6 Id. at ¶7 of page 19.7 Id. at page 5.

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89. The Commission did not state that the application was proceeding under such laws as

may be amended from-time-to-time.

90. Instead, in the application, the Commission stated: “It is recommended all potential

Applicants become familiar with Md. Code, Health-Gen §§13-3301-13-3316; COMAR

§§10.62.01-10.62.35.; Ch. 403, Laws of Maryland (2013); Ch. 240, 256, Laws of Maryland

(2014); and Ch. 251, Laws of Maryland (2015), governing grower operations for the Medical

Cannabis program…. Applicants should use the definitions and descriptive sections of those

documents to assist in interpreting this Application.”8

91. In that clause, the Commission instructed Curio to interpret the Commission’s acts

under the 2015 Act and Regulations, and nothing else.

92. That provision was expressly incorporated into the license awarded to Curio. That

license states that Curio is licensed “[t]o conduct the business specified in the application filed

with the Maryland Medical Cannabis Commission. This license is issued in conformity with the

Annotated Code of Maryland Health General and pursuant to the information set out in the

aforesaid application.” [Emphasis added].

93. The “information set out in the aforesaid application,” stated more fully above,

included the fact that the 2015 Act and Regulations governed, and nothing else.

94. In a September 28, 2015, press release, the Commission reiterated: “Upon completion

of a comprehensive review of applications, the Commission will award pre-approval or stage one

approval, for a maximum of 15 grower licenses….”

95. The Commission’s instruction was reiterated in the Commission’s November 12, 2015,

press release, when the Commission stated: “Upon completion of a comprehensive review of

8 Id. at 15.

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applications, the Commission will award pre-approval, or stage one approval, for a maximum of

15 grower licenses, an unlimited number of processor licenses and up to two dispensaries per each

of the state’s senatorial districts.” [Emphasis added].9

96. In a December 21, 2015, press release, the Commission reiterated: “Under applicable

state regulations, the Commission can award a maximum of 15 grower licenses….”

97. The foregoing representations were administrative promises.

98. The foregoing promises contain no sunset provision.

99. The foregoing promises remain in full force and effect.

100. In sum, severally and collectively, the Commission made multiple promises to Curio:

a. It made a legislative and statutory promise, with no sunset provision, in Subsection

2(ii);

b. It made a regulatory promise, with no sunset provision, in COMAR

10.62.08.06.A(2);

c. It made administrative promises in the grower license application form; and,

d. It made promises in other ways and methods.

101. All of those promises set forth in the preceding paragraph, referred to collectively

herein as the “Commission’s Promises,” stated that the Commission would award no more than

fifteen grower licenses absent a clear factual predicate that additional grower licenses were

necessary to meet the demand for medical cannabis by qualifying patients in an affordable,

accessible, secure and efficient manner.

9 https://mmcc.maryland.gov/Documents/Application_TotalsFNL.pdf (last visited Feb. 24, 2019).

18

102. The Commission reports there are currently only fourteen licensed growers, consistent

with the Commission Promises.10

103. If that information is correct, the Commission has promised that it may issue one, and

no more than one, new grower license.

Curio’s Acceptance of the Commission’s Promises and Detrimental Reliance:Facts Leading Up to Award of a Grower License to Curio

104. The purpose of the Commission’s Promises was to induce reliance by Curio and to

induce Curio and other applicants to spend substantial sums of money and take significant risks,

in order to obtain one of the up-to-fifteen medical cannabis grower licenses.

105. The purpose of the Commission’s Promise was to induce investors, persons, and

entities to apply for medical cannabis grower licenses and to induce them to expend money, prior

to licensure, to apply for, construct, and staff very expensive grower facilities in the hope of being

awarded one of only a strictly-limited number of grower licenses.

106. The strict limitation on the number of grower licenses was a material inducement to

applicants and a material representation on which Curio and other licensees reasonably relied in

drafting their applications, assessing their risks, and executing their plans.

107. The purpose of the Commission’s Promises was to generate production and

distribution of medical cannabis, to support a State program, without the expenditure of State

funds.

108. As such, the Commission formed a public-private partnership with awardees such as

Curio.

10 https://mmcc.maryland.gov/Pages/industry.aspx (last visited Feb. 24, 2019).

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109. The Commission has admitted the purpose of the Commission’s Promises. In a

November 12, 2015, press release, the Commission stated: “The number of applications received

ensures the Commission will have a strong pool of qualified candidates to consider as the review

process moves forward and that the state’s medical cannabis program will be self-funded as

intended by the General Assembly.” [Emphasis added].11

110. In other words, the purpose of the process was to induce Curio to spend funds in

reliance on the Commission’s Promises so that the General Assembly did not have to budget and

appropriate funds to accomplish the State’s goal of providing medical cannabis safely and

efficiently to qualified patients. Indeed, the State previously failed to accomplish its goals without

the Commission’s Promises and by use of academic institutions.

111. Defendants asked Plaintiff, as part of the public-private partnership, to construct a

medical cannabis growing facility at great risk and expense.

112. Defendants offered to award a medical cannabis grower license to Plaintiff only if

Plaintiff timely constructed that facility.

113. In return, Defendants made written promises to Plaintiff that no more than fifteen

grower licenses would be awarded, absent a methodologically-sound study showing both the need

for such expansion – i.e., a “demand” study of present capacity, anticipated capacity of present

licensees, supply and market needs – and a study quantifying the negative impacts of such

expansion on existing licensees and the Maryland medical cannabis industry as a whole – i.e.,

processors, growers, caregivers, and qualified patients (hereinafter a “Demand Study”).

114. Curio provided what the Commission requested. As the Court of Appeals noted:

“Bronfein averred that Curio Cultivation has purchased and improved a building in Timonium,

11 https://mmcc.maryland.gov/Documents/Application_TotalsFNL.pdf (last visited Feb. 24, 2019).

20

Maryland, and ‘obtained costly and highly specialized architectural and engineering services

related to that building[.]’” Doe, 455 Md. at 398.

115. Curio reasonably relied on the Commission’s Promises, expending in excess of $10

million to plan, construct, and operate its fully-compliant and licensed medical cannabis grower

facility.

116. All of the funds expended by Curio benefit not only Curio, but also the State, the

Commission, licensed processors, licensed dispensaries, qualified patients, caregivers, and citizens

as a whole.

117. Pursuant to the Act, Curio submitted, inter alia, an application for a grower license

on or about November 12, 2015, the application closing date.

118. Curio’s redacted supplemental application is posted on the Commission’s web site

and incorporated herein.12

119. In its application, Curio proposed to build a 55,000 square foot state-of-the-art facility

utilizing the most modern environmental controls and building automation systems,13 combined

with a robust focus on science and product development to produce both artisanal flowers and

manufactured products pursuant to an articulated business plan.14

120. In its application, Curio represented that it had arranged all necessary financing.15

121. In its application, Curio made a number of other specific, costly, and articulated

promises to the State and Commission. They are too numerous to summarize here.

12 https://mmcc.maryland.gov/Documents/Redacted%20Growers%20Licenses%202015/Curio%20Cultivation_Stage%201_Grower%20(1).pdf (last visited Feb. 24, 2019).13 Id. at 34.14 Id. at 38.15 Id.

21

122. In its application, Curio specifically referred to “the regulatory regime, both state and

federal, under which the cultivation facility [will] operate[]….”16

123. That regulatory regime included the Commission’s Promises.

124. The Commission’s application form required that Curio attest that it would “adhere

to the statutory/regulatory requirements listed above” and that its attestation would “bind the

Applicant organization to the statutory requirements.”17

125. The statutory and regulatory requirements were the Act, including both the 2015 Act

and COMAR 10.62.08.06.A(2), and included the Commission’s Promises.

126. Curio signed the attestation demanded and required by the Commission on November

6, 2015.

127. In its application, Curio stated that it “is committed to the furtherance of the regulated

Cannabis industry….”18 One such regulation was the limitation to fifteen grower licenses absent

a Demand Study.

128. In submitting its application, Curio expressly and reasonably relied on the

Commission’s Promises.

129. In submitting its application, Curio expressly accepted the Commission’s Promises as

part of the terms of the application and any pre-award or award of a grower license.

130. As noted above, and incorporated herein, the Commission’s Promises were expressly

stated and contained in the Commission’s application form, which form was executed by Curio.

131. Pursuant to its application, Curio thereafter was granted a Stage 1 pre-award in or

about August 15, 2016.

16 Id. at 48-49.17 Id. at 24.18 Id. at 49.

22

132. The Stage 1 pre-award was made by an oral vote in a recorded, streamed, and/or

transcribed hearing and was in writing.

a. Curio was notified of the Stage 1 pre-award by written posting on the Commission

website and a letter from the Commission dated August 15, 2016.

b. That letter was intended to induce Curio to spend substantial sums of money by

constructing a fully-compliant facility in accordance with its application within one

year thereafter.

133. The minutes of that meeting reflect that the Commission referred directly to the

numerical limit on the number of grower licenses: “Executive Director Jameson interjected that

the Commission would revisit the number of applications in 2018.”

134. Under the terms of the Stage 1 pre-award and applicable COMAR provisions, Curio

was required to construct a fully-compliant facility in accordance with its application within one

year thereafter.

135. As admitted by the Commission in its filing in the Court of Appeals of Maryland and

elsewhere, if Curio constructed a fully-compliant facility in accordance with its application within

one year, it had a vested right to award and issuance of a grower license.

136. The Stage 1 award constituted a written contact and agreement between Curio and the

Commission.

137. The terms of the written contract were that:

a. Curio would construct a fully-compliant facility within one year.

b. Upon inspection of the completed facility and compliance with then-existing

regulatory mandates, Curio would be awarded one of up to fifteen grower licenses.

23

c. No additional grower licenses would be issued up until June 2018 and thereafter

only upon a showing of need for such facilities to meet patient demand.

d. The Commission’s Promises and every other term of the application and the Act

were incorporated into the written contract.

138. After receipt of the Stage 1 pre-award, and within the time required, Curio

constructed, at great cost and expense, a fully-compliant, state-of-the-art facility in Baltimore

County, MD.

139. Curio expended in excess of $10 million in reliance on the foregoing promises in the

Act.

140. Curio fully and timely performed and honored its obligations under the agreement

with the Defendants.

141. The Commission’s August 14, 2017, minutes partially describe what was required:

“August 14, 2017 was the final day of the Stage Two approval process for Growers and Processors. This process has included completing financing arrangements, zoning, construction, hiring and training, and being prepared to open. The Commission has investigated the applicants’ financial background for their principals, directors and investors of 5% or more. The applicants then notify the Commission when they are ready for inspection of the premises and operations, if they have provided all of the necessary information to the Commission and the Bureau of Enforcement and Compliance. The Bureau will then inspect the facility and review all of the SOP’s and training. The Commission has consistently reminded the industry applicants that it is incumbent upon them, the applicant, to have all occupancy and building permits and zoning approvals completed prior to requesting final inspection from the Commission.”

142. Thereafter, on or about August 14, 2017, the Commission awarded Curio a grower

license.

143. The aforesaid award was made on an oral vote in a recorded, streamed, and/or

transcribed meeting and is in writing.

24

144. The aforesaid award was confirmed in written Commission Meeting Minutes of the

August 14, 2017, meeting and vote.

145. Those minutes reflect and incorporate the public policy that successful operation of

the licensed growers is “bringing significant economic development to many parts” of the State.

The minutes stated:

“Commissioner Washington reported that the sixth review was on Curio Cultivation LLC (Grower) and Curio Manufacturing LLC (Processor) to consider the report provided by Senior Investigator Garrett Keene. The investigative summary, financial summary, and inspection summary were provided and no information was identified that would prohibit the applicant from being licensed. The Final Review Subcommittee, by a vote of 4-0, determined the applicant has met the requirements and recommends to the Commission to issue a grower and processor license to Curio Cultivation LLC and Curio Manufacturing LLC, respectively. Commissioner Rosen-Cohen offered a Motion to issue a Grower license to Curio Cultivation LLC. Commissioner Abdeshahian seconded this motion. The Commission voted unanimously to issue the Grower license. Commissioner Rosen-Cohen offered a Motion to issue a Processor license to Curio Manufacturing LLC. Commissioner Abdeshahian seconded this motion. The Commission voted unanimously to issue the Processor license.”

146. The minutes also stated:

“Chairman Lopez asked those attending if they had any new business to discuss. Commissioner Gontrum asked Mr. Jameson if the limit of 15 processors would be lifted. Mr. Jameson explained that it was never meant to be a permanent cap and if the Commission decides, it could be brought up in a couple of weeks. Chairman Lopez advised this issue would be tabled until the next meeting.” [Emphasis added].

147. No such statement was made, and no such explanation was given, as to grower

licenses. Instead, it was clear that no more than fifteen grower licenses would be awarded.

148. All persons casting the aforesaid votes were collectively authorized, and had the legal

power and authority, to execute written contracts on behalf of the Commission.

149. Cumulatively and alternatively, the grower license incorporated, implemented, and

reaffirmed the Commission’s Promises and consisted of a reaffirmed, continued, supplemented,

25

and amended written contract between Curio and the Commission, which contract contained,

among other terms, the Commission’s Promises in its entirety.

150. The Commission’s Promises and written contract preclude the dilution of Curio’s

share of the medical cannabis grower market to a point any lower than 1/15th of the numerical

grower licenses in the market, absent a demonstrated showing of the need for that dilution.

151. In fact, in its Position Paper regarding HB 2 (the “Position Paper”), the Commission

took precisely the same position before the General Assembly. It wrote:

“The Commission believes that the most effective way to achieve affordable access to medical cannabis is to permit the Commission to issue licenses to growers and processors based on the needs of the market. This is the single most effective way to provide high-quality medical cannabis at an affordable price so that Marylanders in need will have access to this important medicine. Not impeding market forces that encourage a balance between supply and demand would facilitate access to reasonably-priced medical cannabis for qualifying patients while still financially benefiting the licensees and the State economy. The Commission is committed to closely monitoring the supply and demand within the industry and is in the most suitable position to make the necessary licensing additions to assure patients have affordable access.” [Emphasis added.]

The Commission’s Implementation:Acts and Omissions in January, February, and March 2019

152. Effective May 15, 2018, the General Assembly passed HB 2 that amended the 2015

Act (the “2018 Act”).

153. In the 2018 Act, the General Assembly authorized the Commission to begin the

process of considering and perhaps awarding additional grower licenses. That statute stated that

the Commission “shall accept new applications for licensure” and “shall resume reviewing,

evaluating, and ranking applications for licensure.” It did so in the context of testimony presented

by the Commission while the 2018 Act was before the General Assembly and the existing

regulatory and application framework.

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154. Notably, before the General Assembly enacted the 2018 Act, it considered - - and

presumably relied upon - - the testimony of the Commission, including the Position Paper:

a. The Commission made pre-enactment statements to the General Assembly in

support of the 2018 Act that are fully consistent with Curio’s claims in this lawsuit.

b. For example, the Commission told the General Assembly:

“The Commission believes that the most effective way to achieve affordable access to medical cannabis is to permit the Commission to issue licenses to growers and processors based on the needs of the market. This is the single most effective way to provide high-quality medical cannabis at an affordable price…. Not impeding market forces that encourage a balance between supply and demand would facilitate access to reasonably-priced medical cannabis for qualifying patientswhile still financially benefiting the licensees and the State economy.” [Emphasis added].

c. That is what Curio now seeks and the Commission now refuses to do.

d. The Commission told the General Assembly:

“The Commission should be permitted to issue licenses to growers and processors based on the needs of the market to provide high-quality medical cannabis at an affordable price so that Marylanders in need will have access to this important medicine.” [Emphasis added].

e. That is what Curio now seeks and the Commission now refuses to do.

f. The Commission told the General Assembly:

“The Commission is committed to closely monitoring the supply and demand within in the industry and is in the most suitable position to make the necessarylicensing additions to assure patients have affordable access.” [Emphasis added].

g. That is what Curio now seeks and the Commission now refuses to do.

h. The Commission separately reiterated to the General Assembly:

“The Commission is committed to closely monitoring the supply and demand within the industry and making the necessary licensing additions to assure patients have affordable access.” [Emphasis added].

i. That is what Curio now seeks and the Commission now refuses to do.

j. The Commission told the General Assembly:

27

“Not impeding market forces that encourage a balance between supply and demand is the better way to facilitate access to reasonably-priced medical cannabis for qualifying patients while still financially benefiting the licensees and Stateeconomy.”

k. That is what Curio now seeks and the Commission now refuses to do.

l. The Commission also separately told the General Assembly:

“Amendment #3 seeks to address this ambiguity by adding language to clarify that the Commission may issue additional licenses if the required supply/demand study demonstrates that the number of licenses does not meet the demand for medical cannabis for qualifying patients. Further, the Commission believes that the most ideal way to address this feature of HB 2 would be to eliminate the moratorium, delete all of the time frames for the supply/demand study and the permission of the Legislative Policy Committee, and replace it with a requirement that the Commission perform a supply/demand study bi-annually, and submit a report to the general assembly with the findings … The Commission should then be permitted to issue licenses to growers, processors, and dispensaries based on the needs of themarket to provide high-quality medical cannabis at an affordable price so that Marylanders in need will have access to this important medicine.” [Emphasis added].

m. That is what Curio now seeks and the Commission now refuses to do.

155. Notably, before the General Assembly enacted the 2018 Act, it also considered - - and

also presumably relied upon - - the testimony of the Commission’s executive director, Ms. Joy A.

Strand, who stated:

“Amendment # 3 is one of the most important amendments offered by the Commission. The amendment clarifies the intent of HB 2 in regard to the Commission's authority on issuing new licenses in response to market studies of supply and demand…. The Commission should then be permitted to issue licenses to growers, processors, and dispensaries based on the needs of the market to provide high-quality medical cannabis at an affordable price….” [Emphasis added].

156. That same process is what Curio now seeks and the Commission now refuses to do.

157. In the 2018 Act, the General Assembly did not mandate, require, order, or compel the

issuance of any additional grower licenses. It did no more than authorize them.

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158. When the General Assembly directed the Commission to accept new applications and

resume reviewing them, it did so after having been expressly told by the Commission that a

demand study was a predicate to those acts.

159. In the 2018 Act, the General Assembly neither mandated the Commission to perform,

nor prohibited the Commission from performing, a pre-application needs and impact study of the

Maryland medical cannabis market, i.e., a Demand Study.

160. The Commission’s Promises thus remained in full force and effect before and after

the 2018 Act and remain in effect at this time.

161. In fact, COMAR 10.62.08.06.A(2) states: “Beginning June 1, 2018, the Commission

may issue the number of pre-approvals of a license necessary to meet the demand for medical

cannabis by qualifying patients in an affordable, accessible, secure and efficient manner.”

[Emphasis added].

162. As set forth in the Commission’s January 2019 Medical Cannabis Grower License

Application General Instructions, the 2018 Act permits up to four additional grower licenses to be

awarded. The Commission wrote:

“Effective May 15, 2018, the Health-General Article § 13-3306(a)(2)(i) authorizes the Commission to award up to four (4) additional medical cannabis grower licenses. Neither the statute nor this Application require the Commission to award a Stage One Pre-Approval or final approval of a license to any Applicant. Furthermore, the Commission expressly reserves the right to award fewer than four (4) Pre-Approvals or licenses.” [Emphasis in original.]

163. Prior to mid-January 2019, it might have been possible for the Commission to

implement the 2018 Act without violating the Commission’s Promises or the written contract with

Curio.

a. The 2018 Act does not compel the Commission to solicit or accept applications for

any additional grower licenses on these facts;

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b. The 2018 Act does not compel the Commission to award any additional grower

licenses;

c. The 2018 Act does not preclude the Commission from conducting a Demand Study;

d. The 2018 Act does not authorize the Commission to solicit applications or award

additional grower licenses without conducting a Demand Study, especially where

doing so would contradict the statutory purposes and intent of the General

Assembly;

e. The Commission could have conducted a Demand Study prior to soliciting or

accepting applications for additional grower licenses under the 2018 Act.

164. However, on or about mid-January 2019, the Commission abrogated the

Commission’s Promises and departed from the course charted in its Position Paper and the Act.

165. On or about mid-January 2019, the Commission commenced an unlawful process to

implement the 2018 Act (hereinafter the “Challenged Application Implementation Process”).

166. The commencement of that Challenged Application Implementation Process was the

Commission’s decision to solicit and review applications without the required Demand Study, and

perhaps award more than one and up to four additional grower licenses with no requirement that

the decision be based on a Demand Study, and actual needs, supply, and impacts.

a. Curio challenges the unlawful implementation process including the Commission’s

actions, omissions, and proposed actions and omissions, pursuant to that

Challenged Application Implementation Process.

b. Based on information and belief, the Commission acted and continues to implement

the Challenged Application Implementation Process by and through Defendant

Chair Lopez.

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167. The Commission published the Challenged Application Information Process on its

web site in mid-January 2019.

168. Curio first learned of the Challenged Application Implementation Process when the

Commission commenced wrongful implementation by posting a “License Information” notice on

its web site in or about mid-January 2019. The term “License Information” notice includes the

miscellaneous other papers posted with that notice.

169. Prior to that mid-January 2019, the Defendants could have acted in a way that

conformed to the [2015] Act, the Commission’s Promises, and the 2018 Act.

170. The fact that the process was not concrete and final was demonstrated when the

Commission withdrew the proposed application on February 28, 2019.19 On that date, the

Commission stated that, due to questions received, it would “update the applications and

accompanying guidance materials, which MMCC anticipates posting soon.” Thus, there was no

concrete or final decision as of February 28, 2019.

171. The License Information notice solicited questions, established a thirty-day “Draft

Application Question Period,” and stated that responses would be posted during the thirty-day

question period prior to release of final application materials.

172. On or about January 30, 2019, shortly after first learning of the Challenged

Application Implementation Process, Curio submitted questions in accord with the License

Information notice.

173. The Commission has not fully answered Curio’s questions.

19 https://mmcc.maryland.gov/Documents/02.28.2019%20Draft%20Application%20Delay%20Notice.pdf (last visited Mar. 13, 2019).

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174. Additionally, prior to the commencement of this action, Curio presented its claims,

requests, and demands to the Commission in writing.

175. The Commission did not answer Curio’s questions nor respond to Curio’s claims,

requests, or demands until March 14, 2019, when the Commission delivered Curio a letter in

response, rejecting Curio’s claims, requests and demands and in part responding to Curio’s

questions.20

176. The License Information notice and Commission Application Information Process

stated that the Commission is authorized to issue up to four additional medical cannabis grower

licenses.

177. Curio asked the Commission if it had studied the medical cannabis market and impact

of such a potential award or awards on Curio, a licensed grower, i.e., if it had conducted a Demand

Study.

178. In its response to Curio’s PIA request, the Commission said that no such study had

been conducted. Exhibit 1.

a. Specifically, in Exhibit 1, Curio stated:

“Curio hereby makes an additional request under the Maryland Public Information Act (‘PIA’). As noted above, Curio is not aware of any study by the Commission of supply and demand under the configuration established by the 2015 Act. Curio is also unaware of any study of the impact of the newly-proposed additional licensure will have on existing licensees. Therefore, Curio hereby requests that the Commission provide, under the PIA, a copy of any and all public records, studies, or reports that refer or relate to the supply or demand for medical cannabis and any public records that refer to either a surplus or shortage of supply. Further, Curio hereby requests that the Commission provide, under the PIA, any and all public records, studies, and reports that refer to the impact of HB 2 on existing grower licensees or the medicinal cannabis market.”

20 The Commission responded to Curio’s Maryland Public Information Act requests.

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b. The Commission responded on February 22, 2019: “There are no such responsive

documents.”

179. The License Information notice stated that the Commission may issue up to four

additional grower licenses.

180. Curio asked the Commission what guidance would be used to make those decisions.

In other words, Curio asked the Commission how it would decide how many pre-awards to make.

a. Specifically, Curio inquired what factual predicate existed, in the absence of a

Demand Study, and what factors would be used to determine whether to issue four,

three, two, one, or no additional grower licenses.

b. The Commission has not answered nor has it published any such guidance.

c. Absent guidance and a factual predicate, especially in light of the Commission’s

Promise, the Act, the 2015 Act, and COMAR 10.62.08.06.A(2), any decision would

be ad hoc, unguided, arbitrary, and capricious.

181. The License Information notice stated that the Commission’s final application form

would be posted on March 1, 2019, and the application submittal period would be March 1 to April

30, 2019.

182. Thereafter, on February 28, 2019, the Commission withdrew the application and

stated that it would be revised.

183. The Challenged Application Implementation Process is contrary to the intent of the

General Assembly.

184. Pursuant to HG §13-3301.1: “The General Assembly intends that the programs

implemented in accordance with this subtitle yield a successful but consumer-friendly medical

33

cannabis industry in the State to provide patients affordable and adequate access to medical

cannabis.”

185. The Challenged Application Implementation Process to award up to four additional

grower licenses with uncapped productivity limits in the absence of the mandated Demand Study

would seriously and irreparably damage Curio and the medical cannabis industry as a whole.

a. As noted in the Commission’s “FAQ”: “Maryland law requires an entity to be

operationalized and licensed within 12 months of receiving a Stage One Pre-

Approval. See Health-General Article § 13-3311.1.”

b. The Commission’s “FAQ” No. 257 states:

“How much medical cannabis does the Commission anticipate the new grower/processor licensees will provide to the market in Maryland? The Commission does not have an estimate on the amount of medical cannabis any new medical cannabis growers and processors may provide to the Maryland program.” [Emphasis in original].

c. In short, the Commission admits that, as of March 22, 2019, it has absolutely no

quantification of the additional production capacity it would be adding by

additional licensure.

d. Acting in this manner would be contrary to a “successful but consumer-friendly

medical cannabis industry in the State….”

e. It would not “provide patients affordable and adequate access to medical cannabis.”

f. It would disrupt and harm the market under the present conditions, in large part due

to the existing ample supply.

g. It would threaten to cause and would cause oversupply of product on the market,

which in turn would destabilize the market, and drive the price of the product so

low that growers cannot afford to remain in business.

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186. Late on the afternoon of Friday, March 22, 2019, the Commission responded to some

questions and amended in small part the Challenged Application Implementation Process.

a. The Commission posted FAQs; and,

b. The Commission stated that the application process would commence on Monday,

March 25, 2019.

c. The term “Challenged Application Implementation Process” includes all actions

and omissions described in the Commission’s March 22, 2019, posting.

187. If implemented, the Challenged Application Implementation Process will deprive

Curio of the benefit of the bargain, violate the Act, breach the written contract and agreement with

Curio, threaten the entire State medical cannabis program and irreparably damage Curio.

Finality

188. On the facts presented, the Commission’s Challenged Administrative Implementation

Process did not become a final administrative agency decision March 15 or 22, 2019, and it became

a final administrative agency decision on March 15 or 22, 2019.

189. If the January 2019 Challenged Administrative Implementation Process, as amended

after February 28, 2019, and on March 22, 2019, is not challenged at this time, and if a challenge

is presented later, there will be subsequent prejudice to the Commission, taxpayers, and others,

and any later challenge may be precluded.

190. The Challenged Administrative Implementation Process became final and reviewable

on March 15 or 22, 2019.

191. The Court of Appeals has described the process of pre-approving and licensing

medical cannabis growers as “unique.” Doe v. Alternative Medicine Maryland, LLC, 455 Md.

35

377, 382 (2017). One way it is unique is that, while most State licensing programs license

everyone who is qualified, this program established a limited number of licenses. Id. at 392.

COUNT IRelief from Administrative Action

in Violation of a Regulation

192. The foregoing allegations are incorporated herein.

193. Pursuant to HG §13-3316: “The Commission shall adopt regulations to implement

the provisions of this subtitle.” [Emphasis added].

194. HG §13-3316 is mandatory.

195. Pursuant to the 2015 Act, including without limitation HG §13-3316, the Commission

adopted COMAR 10.62.08.06.A(2), which provides:

“Beginning June 1, 2018, the Commission may issue the number of pre-approvals of a license necessary to meet the demand for medical cannabis by qualifying patients in an affordable, accessible, secure and efficient manner.” [Emphasis added].21

196. The Office of the Attorney General has stated that the Commission’s regulations were

adopted to fulfill the Commission’s “statutory mandate….” Commission Br., John and Jane Doe,

et al. v. Alternative Medicine, Maryland, LLC, et al., 2017 WL 3314506 (Md.), 6.

197. COMAR 10.62.08.06.A(2) was adopted to fulfill a statutory mandate.

198. Nothing contained in that Regulation conflicts with the 2018 Act.

199. Subsequently, the Commission adopted emergency regulations, 46 Md. Reg. 6 (Mar.

5, 2019); however, COMAR 10.62.08.06.A(2) was not modified and remains in full force and

21 In prior litigation, the Office of the Attorney General wrote: “The Commission published revised draft regulations in the Maryland Register on June 26, 2015, 42 Md. Register 812-45 (June 26, 2015), and published final regulations on September 4, 2015, 42 Md. Register 1176-79 (Sept. 4, 2015); COMAR 10.62.08.05, 10.62.08.06, 10.62.08.07.” Commission Br., John and Jane Doe, et al., v. Alternative Medicine, Maryland, LLC, et al., 2017 WL 3314506 (Md.), 6.

36

effect. See, e.g., Maryland Register (Mar. 20, 2019), and the website referenced in the

Commission’s application process.22

200. The Commission is an agency of the State of Maryland.

201. The Commission is a “non-APA agency” in that the Administrative Procedure Act is

not directly applicable to the Challenged Application Implementation Process.

202. The Commission must observe and follow the rules, regulations, and procedures that

is has established.

203. The Commission must observe and follow the rules, regulations, and procedures that

it has established even if they are stricter or more rigorous than required by statute.

204. Where the rights of individuals are affected, it is incumbent on agencies to abide by

their own procedures and regulations.

205. The Commission has no power to waive or refuse to follow its regulations under the

conditions set forth herein.

206. The Commission has established a rule, regulation, and procedure, COMAR

10.62.08.06.A(2).

207. The Commission must observe and follow COMAR 10.62.08.06.A(2).

208. When an agency fails to follow its rule, regulation, or procedure, and when prejudice

follows, the agency action should be vacated.

209. When an agency fails to follow its rule, regulation, or procedure, and when prejudice

follows, the agency action is arbitrary and capricious.

210. COMAR 10.62.08.06.A(2) was promulgated to benefit grower licensees.

22 http://www.dsd.state.md.us/comar/comarhtml/10/10.62.08.06.htm (last visited 3/23/2019) (“Beginning June 1, 2018, the Commission may issue the number of pre-approvals of a license necessary to meet the demand for medical cannabis by qualifying patients in an affordable, accessible, secure and efficient manner.”).

37

211. COMAR 10.62.08.06.A(2) was promulgated to benefit Curio.

212. COMAR 10.62.08.06.A(2) affects individual rights and obligations.

213. COMAR 10.62.08.06.A(2) affects Curio’s rights and obligations.

214. COMAR 10.62.08.06.A(2) confers important procedural benefits on grower

licensees.

215. COMAR 10.62.08.06.A(2) confers important procedural benefits on Curio.

216. COMAR 10.62.08.06.A(2) is not a procedural rule adopted for the orderly transaction

of agency business.

217. Instead, COMAR 10.62.08.06.A(2) confers fundamental, important, valuable, and

substantial substantive rights on Curio.

218. The Commission has failed to follow, failed to comply with, refused to comply with,

violated, and deviated from the conduct mandated by COMAR 10.62.08.06.A(2).

219. The foregoing failures, refusals, and deviations invade fundamental, important,

valuable, and substantial rights of Curio.

220. Prejudice occurs when there is anything that places an affected person or entity in a

more unfavorable or disadvantageous position than he, she, or it would otherwise have occupied

in the absence of that act or omission.

221. Curio has been prejudiced by the Defendants’ foregoing failures, refusals, and

deviations from COMAR 10.62.08.06.A(2).

222. Curio has been substantially prejudiced by the Defendants’ foregoing failures,

refusals, and deviations from COMAR 10.62.08.06.A(2).

WHEREFORE, Curio Cultivation, LLC, requests that: the Court vacate all past actions in

violation of COMAR 10.62.08.06.A(2), including without limitation the Challenged Application

38

Implementation Process, acts and omissions in mid-January 2019, denial of Curio’s requests for

relief, and acts and omissions of March 22, 2019, and enjoin all further and future actions in

violation of COMAR 10.62.08.06.A(2); and, the equitable relief set forth in the

Request/Demand/Prayer for Relief set forth below and incorporated herein, including issuance of

a writ of mandamus to command a Demand Study before the solicitation and consideration of

additional grower license applications.

COUNT IIDeclaratory Judgment Pursuant to CJ §3-401, et seq.

223. The foregoing allegations are incorporated herein.

224. Under the Declaratory Judgment Act (“DJA”), CJ §3-403, this Court has the power

to declare the rights of a party, regardless of whether further relief is or could be claimed.

225. Under CJ §3-402, the DJA is a remedial statute and is designed to settle and afford

relief from uncertainty and insecurity with respect to rights, status, and other legal relations.

226. Under CJ §3-407, a “contract may be construed before or after a breach of the

contract.”

227. Under CJ §3-409, the Court may grant a declaratory judgment if it will serve to

terminate the uncertainty or controversy giving rise to the proceeding and if: an actual controversy

exists between contending parties; antagonistic claims are present between the parties which

indicate imminent and inevitable litigation; or, a party asserts a legal relation status, right or

privilege and this is challenged or denied by an adversary party who also has or asserts a concrete

interest in it.

228. Under CJ §3-401, the State and its units are persons under the statute.

229. A state of uncertainty and insecurity with respect to rights, status, and other legal

relations exists.

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230. Curio asserts that, on the facts presented, the Commission cannot proceed with the

Challenged Application Implementation Process, and the Commission asserts that it can, and will,

proceed.

231. As of March 22, 2019, the Commission has announced that it is in fact proceeding

over Curio’s objections.

232. Curio asserts that, on the facts presented, the Commission must conduct a Demand

Study before soliciting, accepting, and processing applications for additional grower licenses, and

the Commission has stated that it need not and will not do so.

233. Curio asserts that, on the facts presented, the Commission must explain the factual

predicate and factors it will employ in deciding how many, if any, additional grower licenses will

be awarded, and Curio further asserts that the Commission must do so before soliciting license

applications. The Commission, while refusing to respond in its March 15, 2019, letter, apparently

asserts that it need not and will not do either.

234. A declaratory judgment will settle and afford relief from that uncertainty and

insecurity.

235. Curio asserts that a written contractual agreement precludes the Commission from

taking certain actions that it proposes to take, and Curio further asserts that it has no remedy other

than a declaratory judgment precluding such action by interpreting that contract.

236. Curio asserts that a written contractual agreement precludes the Commission from

failing and refusing to take certain actions that it fails and refuses to take, and Curio further asserts

that it has no remedy other than a declaratory judgment precluding such action by interpreting that

contract.

40

237. Curio contends that the Commission has anticipatorily breached the written contract

or contracts.

238. An actual controversy exists between contending parties.

239. Antagonistic claims are present between the parties that indicate imminent and

inevitable litigation.

240. Curio asserts a legal relation status, right, or privilege, which is challenged or denied

by Defendants. Defendants also assert a concrete interest in the controversy.

241. Under CJ §3-411, Curio requests a declaration in both an affirmative and negative

form.

WHEREFORE, Curio Cultivation, LLC, requests a declaration that follows the form of the

Request/Demand/Prayer for Relief set forth below, incorporated herein, for such further relief as

may be necessary or proper under CJ 3-412(a), and for costs under CJ §3-401.

COUNT IIIPetition23 for Declaratory Judgment Pursuant to SG § 10-125

242. The foregoing allegations are incorporated herein.

243. COMAR 10.62.08.06.A(2) states: “Beginning June 1, 2018, the Commission may

issue the number of pre-approvals of a license necessary to meet the demand for medical cannabis

by qualifying patients in an affordable, accessible, secure and efficient manner.”

244. COMAR 10.62.08.06.A(2) means that the Commission may not issue any pre-

approvals of a grower license absent a Demand Study and a finding that additional licensure is

23 SG §10-125 provides for a “petition” for declaratory judgment. Rules 2-101(a) provides for a “complaint” and Rule 2-302 appears to prohibit a “petition.” This Count is denominated as a “petition” in a “complaint” and the terminology makes no substantive difference.

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necessary to meet the demand for medical cannabis by qualifying patients in an affordable,

accessible, secure and efficient manner.

245. Under SG §10-125, this Court “may determine the validity of any regulation if it

appears to the court that the regulation or its threatened application interferes with or impairs or

threatens to interfere with or impair a legal right or privilege of the petitioner.” [Emphasis added].

246. Pursuant to SG §10-125(c): “The unit that adopted the regulation shall be made a party

to the proceeding under this section.”

247. For this reason, the Natalie M. Laprade Maryland Medical Cannabis Commission has

been named as a Defendant in this Count.

248. While Curio has petitioned Defendants for relief, there is no exhaustion of remedy

requirement under SG §10-125(a)(1). The Defendants’ March 14, 2019, letter denied Curio’s

requests.

249. Defendants threaten to violate COMAR 10.62.08.06.A(2) by soliciting and evaluating

applications for up to four additional grower licenses with absolutely no Demand Study, facts, or

basis showing that any additional license is “necessary to meet the demand for medical cannabis

by qualifying patients in an affordable, accessible, secure and efficient manner.”

250. Defendants cannot proceed or apply COMAR absent a Demand Study showing that

additional grower licenses are “necessary to meet the demand for medical cannabis by qualifying

patients in an affordable, accessible, secure and efficient manner.”

251. Defendants’ threatened application of the Regulation will interfere with and impair

the legal rights and privileges of Curio.

252. Under SG §10-125, Curio requests a declaration in both an affirmative and negative

form.

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WHEREFORE, Curio Cultivation, LLC, requests a declaration that follows the form of the

Request/Demand/Prayer for Relief set forth below, incorporated herein, for such further relief as

may be necessary or proper under SG § 10-125, and for costs.

COUNT IVBreach of Written Contract

253. The foregoing allegations are incorporated herein.

254. In their letter of March 15, 2019, Defendants stated and confirmed that they do not

presently intend to conduct a Demand Study.

255. Defendants therefore intend to proceed with soliciting and accepting applications, and

awarding up to four additional and grower licenses, in the absence of a Demand Study, and in

violation of the promises made to, and offer accepted by, Plaintiff.

256. Defendants have no guidelines explaining how they will decide how many new

grower licenses to award, or what facts or factors they will consider in deciding whether to award

no additional licenses, one additional license, two additional licenses, three additional licenses, or

four such licenses.

257. Further, Defendants do not intend to either place any limit or “cap” on the production

capacity of any new licensee(s) or conduct any study of the need, if any, for such additional

unlimited production or the impact of such additional unlimited production on existing processors,

growers, caregivers, or qualified patients.

258. In fact, Defendants have admitted in their FAQs that they do not know how much

product will be produced by any additional awardees.

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259. Defendants intend to proceed with soliciting and accepting applications, and

awarding up to four additional and unlimited, uncapped, grower licenses, with no analysis of the

impact of such awards on the market and on Plaintiff, i.e., no Demand Study.

260. Further, not only is each applicant uncapped, applicants are not even required to

disclose their anticipated production capacity in their applications.

261. For example, the Commission’s March 22, 2019, “FAQ” No. 257 admits this fact,

stating:

How much medical cannabis does the Commission anticipate the new grower/processor licensees will provide to the market in Maryland? The Commission does not have an estimate on the amount of medical cannabis any new medical cannabis growers and processors may provide to the Maryland program. [Emphasis in original].24

262. It would be arbitrary and capricious, as well as contrary to statutory intent,

administrative regulations, and the public interest in success of the medical cannabis program, for

the Commission to proceed to solicit, accept, and process such applications for additional grower

licenses given that admission and in the absence of a prior Demand Study.

263. Defendants’ acts and omissions threaten the viability of the medical cannabis market

and Plaintiff.

264. Curio has a written contract or contracts with the Commission.

265. On March 15 and/or 22, 2019, the Commission breached the written contract or

contracts.

266. Alternatively, on that date or those dates, the Commission anticipatorily breached the

written contract or contracts.

24 Certain very limited capacity-related metrics and operational factors, such as size and number of plants to be grown, must be disclosed in an application; however, capacity or maximum capacity is a different metric, and it need not be disclosed by an applicant. That fact is admitted by the Commission’s answer quoted above.

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267. The Commission’s breach of contract has injured and damaged Curio.

268. Under the written contract, the Commission cannot solicit applications for additional

grower licenses, process such applications, issue pre-awards of such licenses, or award such

licenses in the absence of a Demand Study that shows that such additional grower licenses are

necessary to meet the demand of qualified patients.

269. Additional grower licenses are not needed to meet current or reasonably anticipated

future demand.

270. A Demand Study has not been conducted.

WHEREFORE, Curio Cultivation, LLC, requests the equitable relief set forth in the

Request/Demand/Prayer for Relief set forth below and incorporated herein.

COUNT VCommon-Law Writ of Mandamus25

271. The foregoing allegations are incorporated herein.

272. Under the Act, and specifically and without limitation, the 2015 Act and COMAR

10.62.08.06.A(2), as well as under the Commission’s Promises as a whole, the Commission had a

ministerial, non-discretionary duty to conduct a Demand Study before soliciting, accepting, or

processing grower license applications, and also before issuing any pre-award or award of any

such licenses.

273. While the interpretation and implementation of a Demand Study, after it has been

conducted, might involve discretion, the requirement to conduct a Demand Study is ministerial,

non-discretionary, affirmative, and mandatory.

25 As used herein, the term “writ of mandamus” includes a writ of prohibition to direct cessation of acts which transcend the parameters of duty.

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274. If the Commission is permitted to proceed without a Demand Study, it will have failed

to perform its ministerial duty, and Curio will be irreparably prejudiced as a direct and proximate

result.

275. Absent declaratory or injunctive relief, as alternatively requested herein, Curio has no

other remedy, and there would be a failure of justice.

276. Alternatively, mandamus is proper to remedy arbitrary abuses of discretion by public

officials or agencies.

277. If the Commission Application Implementation Process proceeds without a demand

study, any and all the proposed implementation acts will be arbitrary and capricious.

278. For reasons set forth above, Defendants have a clear duty to conduct a Demand Study

prior to engaging in the Commission Application Implementation Process.

279. For reasons set forth above, Curio, as a damaged licensee and contractual party, has a

clear right to have a Demand Study conducted before the Commission engages in the Commission

Application Implementation Process.

280. Absent declaratory or injunctive relief, as alternatively requested herein, Curio has no

other remedy and there would be a failure of justice.

WHEREFORE, Curio Cultivation, LLC, requests the equitable relief set forth in the

Request/Demand/Prayer for Relief set forth below and incorporated herein, including issuance of

a writ of mandamus to command a Demand Study before the solicitation and consideration of

additional grower license applications.

COUNT VIDetrimental Reliance and

Promissory Estoppel of Denial of Written Contract

281. The foregoing allegations are incorporated herein.

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282. The Commission’s Promises constituted, and are, clear and definite promises and

offers that the Commission’s Application Implementation Program will not proceed unless and

until a Demand Study has been conducted and unless that Demand Study shows that additional

grower capacity is necessary to meet patient needs.

283. The promisors, the Defendants, at all times pertinent hereto had the actual expectation

that the Defendants’ offer would in fact induce action or forbearance on the part of the promisee,

Curio.

284. The Commission’s Promises did, in fact, induce actual and reasonable action or

forbearance by the promisee, Curio.

285. Curio’s reliance on written promises made by the Commission and the Act were

reasonable.

286. The persons making the Commission’s Promises had actual authority to bind the

Commission.

287. Breach or anticipatory breach of the Commission’s Promises caused, causes, and

continues to cause a detriment which can only be avoided by the enforcement of the Commission’s

Promises.

288. The Commission is estopped from denying the existence of a written contract signed

by the Commission.

289. Curio does not seek monetary damages and instead seeks prospective equitable relief.

WHEREFORE, Curio Cultivation, LLC, requests the equitable relief set forth in the

Request/Demand/Prayer for Relief set forth below and incorporated herein.

COUNT VIIFailure to Enact Regulations

290. The foregoing allegations are incorporated herein.

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291. Pursuant to HG §13-3316: “The Commission shall adopt regulations to implement the

provisions of this subtitle.”

292. HG §13-3316 is mandatory.

293. The Office of the Attorney General has suggested that the Commission has a

“statutory mandate” to adopt regulations. Commission Br., John and Jane Doe, et al., v.

Alternative Medicine, Maryland, LLC, et al., 2017 WL 3314506 (Md.), 6.

294. In the Commission Application Implementation Process the Commission has stated

that it may award no, or up to four additional, grower licenses.

295. Curio has asked in writing that the Commission set forth the criteria that will guide

that decision.

296. The Commission has failed and refused to set forth any criteria to guide its decision.

The Commission did not respond to that question in the Commission’s March 15, 2019, letter to

Curio. That failure to respond, combined with the lack of any response in the March 22, 2019,

FAQs, constitutes a statement by the Commission that it will not promulgate any guidance to

constrain unfettered discretion in making that decision.

297. Curio is prejudiced by the Commission’s failures.

298. Instead of promulgating a regulation, the Commission is proceeding with either no

guidance or under ad hoc oral rules.

299. The Commission is acting arbitrarily and capriciously.

300. The Commission has failed to comply with the statutory mandate set forth in HG §13-

3316.

301. Any decision made under these circumstances will be arbitrary and capricious.

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WHEREFORE, Curio Cultivation, LLC, requests the equitable relief set forth in the

Request/Demand/Prayer for Relief set forth below and incorporated herein.

REQUEST/DEMAND/PRAYER FOR RELIEF

WHEREFORE, Plaintiff, Curio Cultivation, LLC, respectfully requests that this Court

enter an order against Defendants, Natalie M. Laprade Maryland Medical Cannabis Commission,

and Commissioner Brian P. Lopez:

A. Declaring that:

1. All of the Commission’s past actions in violation of COMAR 10.62.08.06.A(2),

including without limitation the Challenged Application Implementation Process, the

Commission’s acts and omissions in mid-January 2019, as described above, the denial of

Curio’s requests for relief in March 2019, and the Commission’s acts of March 2019,

including March 22, 2019, are invalid, null, and void;

2. No grower license applications shall be solicited, accepted, reviewed, pre-

awarded, or awarded absent a prior demand study showing that they are necessary to meet

the need of qualified patients for medical cannabis;

3. The written contract between Plaintiff, Curio Cultivation, LLC, and Defendant,

Natalie M. Laprade Maryland Medical Cannabis Commission provides that the

Commission may not solicit, accept, receive, process, or consider additional applications

for medical cannabis grower licenses unless and until the Commission conducts a

methodologically-sound study of the supply and demand in the Maryland medical cannabis

market and the cultivation capacity of existing licensees, and makes a determination that

additional grower licensure is required so that the supply can meet the demand;

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4. The current plan of the Commission to solicit, accept, receive, process, and

consider additional applications for medical cannabis grower licenses would, if

implemented, breach the Commission’s written contract with Curio because the

Commission has failed to conduct a Demand Study.

5. The Commission’s acts, omissions, and proposed acts and omissions are

arbitrary and capricious and that any decision made pursuant thereto will be vacated,

reversed, and remanded.

6. Before it solicits, accepts, or reviews applications for grower licenses, the

Commission is required to adopt regulations that provide specific guidance as to how it

will determine how many, if any, additional grower licenses are to be awarded.

B. Enjoining Commissioner Brian P. Lopez from:

1. All further and future actions in violation of COMAR 10.62.08.06.A(2).

2. Proceeding with the Commission’s Application Implementation Process in the

absence of a methodologically-sound Demand Study that demonstrates that additional

grower licenses are necessary to meet the demand of qualified patients for medical

cannabis;

3. Soliciting, accepting, receiving, processing or considering additional

applications for medical cannabis grower licenses in the absence of a methodologically-

sound Demand Study that demonstrates that additional grower licenses are necessary to

meet the demand of qualified patients for medical cannabis;

4. Failing or refusing to specifically perform the written contract with Curio by

soliciting, accepting, receiving, processing or considering additional applications for

medical cannabis grower licenses in the absence of a methodologically-sound Demand

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Study that demonstrates that additional grower licenses are necessary to meet the demand

of qualified patients for medical cannabis.

C. Issuing a writ of mandamus directing Commissioner Brian P. Lopez to conduct a

methodologically-sound Demand Study before soliciting, accepting, receiving, processing or

considering additional applications for medical cannabis grower licenses.

D. Equitably adjusting the rights of the parties by ordering that:

1. As part of any current and future application process, the Commission and

Commissioner Lopez be ordered to amend all applications as follows.

2. As part of any current and future application process, each applicant for a grower

license be required to disclose its anticipated production capacity;

3. As part of any current and future application process, each applicant for a grower

license be required to analyze the impact of that additional production on the existing and

anticipated demand for medical cannabis and explain how and why it will not create an

oversupply or other detriment to existing grower licensees;

4. As part of any current and future application process, production limits be placed

on each new applicant, pre-awardee and awardee in an amount factually established to

ensure that the award will not create an oversupply or other detriment to existing grower

licensees;

5. As part of any current and future application process, the Commission publish a

list of the facts and factors it will considering in determining how many, if any, grower

licenses will be issued as a result of that process;

E. And for such other and further relief as may be necessary or appropriate, and for

costs.

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Respectfully Submitted,

______________/S/_______________Arnold M. Weiner (CSTF # 5710010033)Michael D. Berman (CSTF # 8011010032)Barry L. Gogel (CSTF # 9712160288)Alan M. Rifkin (CSTF # 8212010385)RIFKIN WEINER LIVINGSTON, LLC2002 Clipper Park Road, Suite 108Baltimore, MD 21211Cell Phone: 410-206-5049Phone: 410-769-8080Aweiner@rwllaw.comMberman@rwllaw.comBgogel@rwllaw.comArifkin@rwllaw.com

Attorneys for Plaintiff