MediGrow LLC v. Natalie M LaPrade Maryland Medical Cannabis Commission

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

MEDIGROW, LLC, *

Plaintiff, *

v. *

Civil Action No. RDB-20-0504

NATALIE M. LAPRADE *

MEDICAL CANNABIS

COMMISSION, et al., *

Defendants. *

* * * * * * * * * * * * *

MEMORANDUM OPINION

The Federal Controlled Substances Act (“CSA”), 21 U.S.C. § 801, et seq., prohibits the

possession and distribution of marijuana, which is defined to include “all parts of the plant

Cannabis sativa L.” 21 U.S.C. § 802(16). Notwithstanding the illegality of marijuana under

federal law, Maryland and several other states have recently permitted the possession and

distribution of cannabis for medical purposes.1 In 2013, the Maryland General Assembly

established the Natalie M. LaPrade Medical Cannabis Commission (the “Commission”) as an

independent commission within the Maryland Department of Health to study the use of

medical cannabis. Md. Code Ann., Health-Gen. § 13-3301, et seq. (2013). Ultimately, the

1 See John Vigorito, Creating Constitutional Cannabis: An Individual State’s Tenth Amendment Right to Legalize

Marijuana, 46 U. TOL. L. REV. 221 (2014). Although the states have exercised their authority to permit the

possession and distribution of medical cannabis, the Controlled Substances Act “contains no exception—

express or implied—for medically-prescribed marijuana.” United States v. Bey, 341 F. Supp. 3d 528 (E.D. Pa.

2018). This tension between state and federal law has been addressed by congressional action which prohibits

the Department of Justice from expending funds in a manner that would interfere with state medical cannabis

laws. United States v. Evans, 929 F.3d 1073, 1076 (9th Cir. 2019). Additionally, the Department of Justice “has

declined to enforce [the CSA] when a person or company buys or sells marijuana in accordance with state law.”

Green Solution Retail, Inc. v. United States, 855 F.3d 1111, 1114 (10th Cir. 2017).

Commission was tasked with issuing licenses for medical cannabis growers and processors.

Health-Gen §§ 13-3306 and 3309.

In conformity with the Maryland General Assembly’s legislative efforts to promote

diversity in the Maryland cannabis industry, the Commission established a race and gender-

conscious application process for medical cannabis grower and processor licenses. In this

lawsuit, Plaintiff MediGrow, LLC (“Plaintiff” or “MediGrow”), has filed an eight-count

Complaint alleging federal claims in the first three counts and state law claims in the remaining

five counts. Specifically, MediGrow alleges that the Commission’s application process unfairly

rewards non-minority applicants in violation of the Equal Protection Clause of the Fourteenth

Amendment to the U.S. Constitution. Furthermore, Plaintiff alleges violations of Maryland

common law and administrative law. MediGrow files suit against the Commission and all of

its members in their official capacities (collectively, the “Defendants”).2

Now pending is the Defendants’ Motion to Dismiss Plaintiff’s Amended Complaint

(ECF No. 21). The parties’ submissions have been reviewed and no hearing is necessary. See

Local Rule 105.6 (D. Md. 2018). As set forth below, the Eleventh Amendment to the U.S.

Constitution bars suit in federal court against state agencies and state officials acting in their

official capacity. The Defendants in this case are therefore shielded from Plaintiff’s federal

claims. Alternatively, MediGrow lacks standing to bring those claims. Pursuant to 28 U.S.C.

§ 1367(c), this Court declines to exercise supplemental jurisdiction over the remaining state

2 The Commission members sued in their official capacities are Brian P. Lopez, Chairman; Jinlene

Chan, M.D., M.P.H.; Ehsan Abdeshahian, M.D.; Nancy Rosen-Cohen, Ph.D.; Phillip Cogan, R.Ph.; Konrad

Dawson, M.D.; Megan Dingus, M.S.N.; Elizabeth Q. Hines, M.D.; Charles P. Lodico, M.S., Ph.D.; C. Obi

Onyewu, M.D.; Tiffany D. Randolph, J.D.; Saundra O. Washington; and Scott Welsh.

law claims, both as a matter of discretion and because federal abstention principles require this

Court to refrain from disrupting Maryland’s medical cannabis regulatory scheme. Ultimately,

this court must avoid settling Maryland law disputes concerning the distribution of cannabis

for medicinal purposes, as federal law prohibits the possession and distribution of this

substance. See 21 U.S.C. § 801, et seq. For these reasons, and for the reasons set forth below,

Defendants’ Motion to Dismiss Plaintiff’s Complaint (ECF No. 21) is GRANTED. Plaintiff’s

Complaint is DISMISSED in its entirety. Counts I, II, and III are DISMISSED WITH

PREJUDICE because Plaintiff cannot overcome the Defendants’ Eleventh Amendment

immunity. The remaining Counts (Counts IV, V, VI, VII, and VIII) are DISMISSED

WITHOUT PREJUDICE.

BACKGROUND

In ruling on a motion to dismiss, this Court “accept[s] as true all well-pleaded facts in

a complaint and construe[s] them in the light most favorable to the plaintiff.” Wikimedia Found.

v. Nat’l Sec. Agency, 857 F.3d 193, 208 (4th Cir. 2017) (citing SD3, LLC v. Black & Decker (U.S.)

Inc., 801 F.3d 412, 422 (4th Cir. 2015)). In 2013, the Maryland General Assembly established

the Natalie M. LaPrade Medical Cannabis Commission as an independent commission within

the Maryland Department of Health to study the use of medical cannabis. (Compl. ¶ 10, ECF

No. 1.) Md. Code Ann., Health-Gen. § 13-3301, et seq. (2013). In 2014, the General Assembly

expanded the Commission’s purview by permitting it to set policies, procedures, and

regulations for a state-wide medical cannabis program. Health-Gen. § 13-3302 (2014). The

Commission’s statutory duties include awarding licenses to medical cannabis growers and

processors. Health-Gen. §§ 13-3306 and 3309.

On May 15, 2018, the General Assembly passed an emergency amendment to Health-

Gen. § 13-3301, et seq., designed to ameliorate inequality in the medical cannabis industry.

Under the amended statutes, the Commission was directed to “seek to achieve racial, ethnic,

gender, and geographic diversity when licensing” medical cannabis growers and processors

and to “encourage . . . minority business enterprise[s] . . . to apply for licenses” as medical

cannabis growers and processors. Health-Gen. § 13-3306, 13-3309.

Pursuant to the General Assembly’s statutory mandate, the Commission instituted a

gender and race-conscious grower and processor license application process. (ECF No. 1 ¶

25); COMAR 10.62.08.05; COMAR 10.62.19.04. Under this process, the Commission

conducts a preliminary review of the applications for purposes of awarding pre-approval

licenses. (ECF No. 1 ¶¶ 25, 42; ECF No. 1-17 at 114, 207.) Applicants are ranked based on a

100-point system that is designed to account for several weighted criteria, such as “Operational

Factors,” “Safety and Security Factors,” and the like. (Id.) Of the 100 points available for

allocation, 15 points may be awarded based on “Diversity & Social and Economic Equity

Factors” (the “equity points”). Applicants for grower and processor licenses could, at least

theoretically, receive equity points even if they had few “racial, ethnic, gender, or

geographically diverse owners, investors, managers, and employees.” (ECF No. 1 ¶ 29.) For

example, applicants could acquire equity points by demonstrating “minimal efforts to promote

diversity” even if they had “[n]o diverse owners, investors, and managers” and only “some

diverse employees.” (ECF No. 1-17 at 116, 209-210.)

MediGrow, a Maryland LLC and alleged minority business,3 submitted timely grower

3 MediGrow alleges that it is a minority business within the definition of Md. Code Ann., State Fin. &

and processer applications via the Commission’s online platform and, as subsequently

required, by hand. (ECF No. 1 ¶¶ 46-62.) On September 24, 2019, the Commission notified

MediGrow by email that neither its grower license application nor its processor license

application was among the highest scoring applications. (Id. ¶ 80.) Accordingly, neither

application qualified to receive pre-approval for a license. (Id. ¶¶ 81-82.) Plaintiff alleges that

the highest-ranking grower and processor applicants are not minority owned businesses. (Id.

¶ 85.) The Commission has not yet awarded pre-approvals to any 2019 applicant. (Id. ¶ 87.)

On February 25, 2020, MediGrow initiated this lawsuit by filing an eight-count

Complaint, alleging violations of the Equal Protection Clause of the Fourteenth Amendment

and Maryland law. Counts I and II bring equal protection and race discrimination claims under

42 U.S.C. § 1983 and 42 U.S.C. § 1981, respectively. Counts III seeks a declaratory judgment

pursuant to 28 U.S.C. § 2201. The remaining Counts (Counts IV-VIII) bring various state law

claims. On June 11, 2020, Defendants moved to dismiss Plaintiff’s Complaint in its entirety

pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), 28 U.S.C. § 1367(c), and federal abstention

principles.

STANDARD OF REVIEW

I. Motion to Dismiss for Lack of Subject Matter Jurisdiction.

Defendants assert a facial challenge to this Court’s subject matter jurisdiction, arguing

that the allegations of the complaint establish their immunity to suit under the Eleventh

Amendment to the United States Constitution. See Cunningham v. Gen. Dynamics Info. Tech., Inc.,

Proc. § 14-301. It does not provide any details about the demographic composition of its ownership or

employees.

888 F.3d 640, 649 (4th Cir. 2018) (holding that sovereign immunity deprives the court of

subject matter jurisdiction). A motion to dismiss under Rule 12(b)(1) of the Federal Rules of

Civil Procedure for lack of subject matter jurisdiction challenges a court’s authority to hear the

matter brought by a complaint. See Davis v. Thompson, 367 F.Supp.2d 792, 799 (D. Md. 2005).

A challenge to jurisdiction under Rule 12(b)(1) may proceed either as a facial challenge,

asserting that the allegations in the complaint are insufficient to establish subject matter

jurisdiction, or a factual challenge, asserting “that the jurisdictional allegations of the complaint

[are] not true.” Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (citation omitted). The

Defendants in this case clearly present a facial challenge and accordingly “must show that [the]

complaint fails to allege facts upon which subject matter can be predicated.” Amador v.

Mnuchin, ELH-20-1102, 2020 WL 4547950, at *5 (D. Md. Aug. 5, 2020) (quoting Hutton v.

Nat’l Bd. of Exam’rs Inc., 892 F.3d 613, 620-21 (4th Cir. 2018)).

II. Motion to Dismiss for Failure to State a Claim.

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain

a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.

R. Civ. P. 8(a)(2). Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the

dismissal of a complaint if it fails to state a claim upon which relief can be granted. Fed. R.

Civ. P. 12(b)(6). The purpose of Rule 12(b)(6) is “to test the sufficiency of a complaint and

not to resolve contests surrounding the facts, the merits of a claim, or the applicability of

defenses.” Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). While a complaint

need not include “detailed factual allegations,” it must set forth “enough factual matter [taken

as true] to suggest” a cognizable cause of action, “even if . . . [the] actual proof of those facts

is improbable and . . . recovery is very remote and unlikely.” Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 555–56 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A plaintiff cannot rely on

bald accusations or mere speculation. Twombly, 550 U.S. at 555.

In reviewing a Rule 12(b)(6) motion, a court “‘must accept as true all of the factual

allegations contained in the complaint” and must “‘draw all reasonable inferences [from those

facts] in favor of the plaintiff.’” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435,

440 (4th Cir. 2011) (citations omitted); Hall v. DirectTV, LLC, 846 F.3d 757, 765 (4th Cir.

2017). A court, however, is not required to accept legal conclusions drawn from those

facts. Iqbal, 556 U.S. at 678. “A court decides whether [the pleading] standard is met by

separating the legal conclusions from the factual allegations, assuming the truth of only the

factual allegations, and then determining whether those allegations allow the court to

reasonably infer” that the plaintiff is entitled to the legal remedy sought. A Society Without A

Name v. Virginia, 655 F.3d 342, 346 (4th Cir. 2011), cert. denied, 566 U.S. 937 (2012).

ANALYSIS

MediGrow generally alleges that the Commission’s medical cannabis licensing

application process does not adequately protect the interest of minority businesses. In its

facial challenge to the regulations governing the application process, MediGrow alleges that

the Commission made a “sham” effort to promote diversity in the medical cannabis industry,

while nevertheless continuing to favor non-minority applicants. (See, e.g., ECF No. 1 ¶ 109.)

MediGrow brings claims under federal and state law. Defendants first move to dismiss the

federal claims on sovereign immunity and standing grounds, then urge this Court to abstain

from exercising supplemental jurisdiction over the state claims.

Defendants’ motion is GRANTED. Plaintiff’s federal claims asserted in Counts I and

II must be dismissed based on Eleventh Amendment sovereign immunity. Additionally, the

Complaint does not allege a plausible basis for MediGrow’s standing to bring those claims.

Count III, the declaratory judgment claim, fails because the Complaint does not establish the

existence of an “actual controversy” that warrants jurisdiction in federal court. Having

dismissed all of the federal claims, this Court declines to exercise supplemental jurisdiction

over the remaining state law claims both pursuant to the discretion afforded by 28 U.S.C. §

1367(c) and as a result of federal abstention principles.

I. Counts I and II

In Count I, MediGrow brings a claim under 42 U.S.C. § 1983, alleging that Defendants

violated the Equal Protection Clause of the Fourteenth Amendment by administering a

discriminatory application process. In Count II, MediGrow brings essentially the same claim

under 42 U.S.C. § 1981, alleging racial discrimination in the process. Defendants move to

dismiss these claims, arguing that they are entitled to Eleventh Amendment sovereign

immunity and that Plaintiff lacks standing. Those arguments are addressed in turn.

A. Defendants are entitled to Eleventh Amendment sovereign immunity.

Defendants argue that sovereign immunity shields them from Counts I and II because

MediGrow seeks retrospective, monetary relief from the State of Maryland in federal court.

While acknowledging that the Eleventh Amendment generally prohibits such actions,

MediGrow argues that Counts I and II may proceed under two recognized exceptions to

sovereign immunity, which permit actions against the state in federal court when the state has

waived its immunity and consented to suit or where the plaintiff seeks prospective, injunctive

relief against state officials. Specifically, Plaintiff argues that its claims may proceed because

(1) Maryland has waived its immunity to torts in federal court pursuant to the Maryland Tort

Claims Act, Md. Code Ann., State Gov’t § 12-101, et seq. and (2) because it seeks prospective

relief in the form of a declaratory judgment (Count III), an injunction (Count VIII), and “any

other remedy this Court finds appropriate” (Counts I and II).

The Eleventh Amendment provides that “[t]he judicial power of the United States

shall not be construed to extend to any suit in law or equity, commenced or prosecuted against

the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”

U.S. Const. amend. XI. “The Eleventh Amendment immunizes states, state agencies, state

instrumentalities, and state officials sued in their official capacities from suit by private parties

in federal court.” Windsor v. Bd. of Educ. of Prince George’s Cty., TDC-14-2287, 2016 WL 4939294,

at *10 (D. Md. Sept. 13, 2016). See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 98

(1984); Bland v. Roberts, 730 F.3d 368, 389-91 (4th Cir. 2013).

Eleventh Amendment sovereign immunity is not absolute. The state may waive its

sovereign immunity and consent to suit in federal court. Additionally, pursuant to an

exception established by the Supreme Court in Ex Parte Young, 209 U.S. 123, 28 S. Ct. 441

(1908), private citizens may “petition a federal court to enjoin State officials in their official

capacities from engaging in future conduct that would violate the Constitution or a federal

statute.” Antrican v. Odom, 290 F.3d 178, 184 (4th Cir. 2002). Under the Ex Parte Young

exception, private litigants may sue state officials for injunctive relief or seek a declaratory

judgment, so long as the relief sought is prospective in nature and remedies an ongoing harm.

See Just Puppies, Inc. v. Frosh, 438 F. Supp. 3d 448, 483-84 (D. Md. Feb. 7, 2020) (citing Verizon

Md., Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 645, 122 S. Ct. 1753 (2002). Ultimately, it is

the Defendants’ burden to demonstrate that they are entitled to sovereign immunity because

it is “akin to an affirmative defense.” Hutto v. S.C. Ret. Sys., 773 F.3d 536, 543 (4th Cir. 2014).

In Counts I and II, MediGrow sues an instrumentality of the State of Maryland (the

Commission) and several state officials in their official capacities (the Commission members)

for monetary relief. Those claims are barred by sovereign immunity, and neither the waiver

nor the Ex Parte Young exceptions apply. First, Maryland has not waived its sovereign

immunity in federal court. As this Court has previously noted, while the Maryland Tort Claims

Act, Md. Code Ann., State Gov’t § 12-101, et seq., effectuates a limited waiver of sovereign

immunity to actions brought in state court, it “has no effect on the immunity afforded by the

Eleventh Amendment for suits in federal courts.” Taylor v. Somerset Cty. Comm’rs, RDB-16-

0336, 2016 WL 3906641, at *5 (D. Md. July 19, 2016).

Second, Plaintiff’s pursuit of declaratory relief (in Count III), an injunction (in Count

VIII) and “any other remedy this Court finds appropriate” (in Counts I and II), do not trigger

the Ex Parte Young exception. In Counts I and II, Plaintiffs allege that the Commission—not

the Commissioners—have engaged in wrongdoing. (See, e.g., ECF No. 1 ¶¶ 101, 115 (“[The

Commission] acted with an intentionally discriminatory purpose.”) The requested declaratory

judgment only seeks relief against the Commission. (ECF No. 1 at 25 (seeking a declaratory

judgment stating that “[the Commission’s] applications are unconstitutional.”) The Ex Parte

Young exception only permits actions against state officials, not the State itself or its

instrumentalities. As the Plaintiff seeks relief to remedy alleged constitutional violations of

the Commission, and not its members, the Ex Parte Young exception does not apply.

Even if the Complaint could be construed otherwise, so as to allege that the individual

Commissioners committed constitutional violations and to seek remedies against those

officials, it would not fit the Ex Parte Young exception. The declaratory relief sought in Count

III is not prospective in nature, as Ex Parte Young requires. As the United States Court of

Appeals for the Fourth Circuit has explained, “[N]o federal court may issue a declaratory

judgment on past state action, where the action complained of is past and no other relief [i.e.,

injunctive relief] is available.” Int’l Coal. for Religious Freedom v. Maryland, 3 F. App’x 46 (4th Cir.

2001) (citing Green v. Mansour, 474 U.S. 64, 71-74, 106 S. Ct. 423 (1982)). Count III seeks a

declaration that the Commission “acted with a discriminatory purpose” when it designed the

license applications and scored them; it does not seek to right an ongoing wrong. The

requested declaratory relief is therefore retrospective in nature, as it will only declare that a

past action violated the constitution. Accordingly, the declaratory judgment in Count III does

not permit application of the Ex Parte Young exception.

The injunction sought in Count VIII does not save Counts I and II, either, because the

requested injunction does not relate to the federal law claims identified in Counts I and II.

Count VIII complains of a “flawed administrative process” and seeks to hold the

“Commission accountable to fulfill its statutory responsibilities.” (Id. ¶ 210.) As such, Count

VIII requests an injunction prohibiting state law violations. This form of injunctive relief is

not tailored to any purported constitutional violation and therefore cannot salvage Counts I

and II from the Defendants’ claim of sovereign immunity. Finally, as Plaintiff has sought

specific forms of injunctive and declaratory relief in Counts III and VIII, this Court cannot

re-write its plea for “any other remedy” (presented in Counts I and II) as requesting some

other form of prospective relief permissible under Ex Parte Young. Accordingly, Counts I and

II are DISMISSED WITH PREJUDICE on sovereign immunity grounds.

B. The Complaint does not allege a plausible basis for Plaintiff’s standing.

Apart from the defense of sovereign immunity, Defendants also contend that

MediGrow does not have standing to bring Counts I and II. Specifically, Defendants argue

that Counts I and II do not identify a concrete “injury in fact,” as is required for Article III

standing. Defendants characterize Counts I and II as “scattershot attacks on the general idea

of the Commission’s regulations . . . without ever pleading that the Commission’s regulations

applied to cause some harm to Plaintiff.” (ECF No. 21-1 at 21.) Plaintiff responds that its

alleged “inability to compete for a grower and or processor license on an equal footing”

suffices for Article III purposes. (ECF No. 22-1 at 16.) Specifically, Plaintiff complains that

the license application process permits the allocation of equity points to businesses which do

not have many minority members, thereby permitting the Commission to quell public

concerns about discrimination while maintaining the status quo. (ECF No. 1 ¶¶ 26-38, 95, 109;

ECF No. 22-1 at 16-17.)

“Standing is an ‘essential and unchanging part’ of Article III’s case or controversy

requirement.” James M. Wagstaffe, Federal Civil Procedure Before Trial § 24-III (2019)

(quoting Vt. Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 771, 120 S. Ct. 1858,

146 L.Ed.2d 836 (2000)). To establish Article III standing, a plaintiff must (1) show an injury

in fact, (2) demonstrate a causal connection between the defendants’ actions and the alleged

injury, and (3) show that the injury will likely be redressed by a favorable outcome. Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 119 L.Ed.2d 351 (1992). An injury

in fact must be “concrete, particularized, and actual or imminent.” Monsanto Co. v. Geertson Seed

Farms, 561 U.S. 139, 149, 130 S. Ct. 2743, 177 L.Ed.2d 461 (2010). Where a government

program awards benefits in a gender or race-conscious manner, an aggrieved individual

satisfies the injury in fact requirement by alleging “the inability to compete [with other

applicants] on an equal footing.” Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. City of

Jacksonville, Fla., 508 U.S. 656, 666 (1993).

In this case, the Complaint fails to allege that MediGrow was unable to compete for

grower and processor licenses “on an equal footing” with other applicants. The mere fact that

equity points may, at least in theory, be awarded to businesses with few minority members

does not support the conclusion that the entire process places minority businesses, or even

MediGrow specifically, on an unequal footing. Plaintiff does not allege that it was treated

unfavorably in the application process, or that it did not receive the full number of equity

points to which it was entitled, or even that “non-minority” businesses received an undue

amount of equity points. In fact, the Complaint contains no information whatsoever

concerning the number of equity points it received or should have received. Instead, the

Complaint launches a general challenge to the equity points system without explaining how

that system produces discriminatory results. Plaintiff may disagree with the precise manner in

which equity points are allocated, but that disagreement does not indicate that it has been

placed on unequal footing in the application process. Without providing sufficient factual

content to support that conclusion, MediGrow has failed to allege a plausible basis for

standing. Accordingly, Counts I and II may be DISMISSED for failure to allege standing,

even if there was no Eleventh Amendment sovereign immunity.

II. Count III.

In Count III, MediGrow seeks a declaratory judgment pursuant to the Declaratory

Judgment Act, 28 U.S.C. § 2201. Specifically, as to its federal claims, MediGrow requests a

declaration that the Commission’s “applications are unconstitutional.” (ECF No. 1 at 25.)

Defendant seeks dismissal of this Count, arguing that Plaintiff has not satisfied the Declaratory

Judgment Act’s “actual controversy” requirement.

The Declaratory Judgment Act provides that “[i]n a case of actual controversy within

its jurisdiction . . . any court of the United States . . . may declare the rights and other legal

relations of any interested party seeking such declaration, whether or not further relief is or

could be sought.” 28 U.S.C. § 2201. To take jurisdiction over a declaratory judgment

proceeding, the district court must ensure that three “essentials” are present:

(1) the complaint alleges an “actual controversy” between the parties “of

sufficient immediacy and reality to warrant issuance of a declaratory judgment;”

(2) the court possesses an independent basis for jurisdiction over the parties

(e.g., federal question or diversity jurisdiction); and (3) the court does not abuse

its discretion in its exercise of jurisdiction.

Volvo Const. Equip. N. Am., Inc. v. CLM Equip. Co., Inc., 386 F.3d 581, 592 (4th Cir. 2004)

(citations omitted). For an actual controversy to exist, a plaintiff must present a dispute that

is “real and substantial” and “definite and concrete, touching the legal relations of parties

having adverse legal interests.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S. Ct.

764 (2007) (citation omitted).

In this case, the Complaint brings only a general challenge to the Commission’s

application procedures and fails to allege the existence of a “definite and concrete” dispute.

Additionally, having determined that MediGrow’s federal claims must be dismissed, there is

no longer an independent basis for this Court to assert jurisdiction over this matter.

Accordingly, Count III is DISMISSED WITH PREJUDICE.

III. Counts IV, V, VI, VII, and VIII.

In Counts IV through VIII, Plaintiff asserts a variety of state law claims concerning the

Commission’s licensing regulations. Defendants argue that, having dismissed the federal

claims, this Court should to decline to exercise supplemental jurisdiction over the state law

claims. Alternatively, they argue that dismissal is warranted under abstention principles.

Defendants are correct on both accounts.

Pursuant to 28 U.S.C. § 1367, a federal court may exercise supplemental jurisdiction

over claims that otherwise would not be within federal jurisdiction. Under 28 U.S.C. §

1367(c)(3), a federal court has the discretion to decline to exercise supplemental jurisdiction

over a claim if it has dismissed all claims over which it has original jurisdiction. Hilliard v. Kaiser

Found. Health Plan of the Mid–Atlantic States, 169 F. Supp. 2d 416, 418–19 (D. Md. 2001). The

Supreme Court has cautioned against the use of supplemental jurisdiction and suggested that

in cases where the federal claims are dismissed before trial, “the state claims should be

dismissed as well.” United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 16 L.Ed.2d

218 (1966); see also Walker v. City of Salisbury, 170 F. Supp. 2d 541, 552 (D. Md. 2001) (declining

to exercise pendent jurisdiction over plaintiffs’ remaining state law claims when the court

granted defendants’ motion to dismiss all of plaintiffs’ federal claims against the defendant).

Having dismissed the federal claims set forth in Counts I, II, and III with prejudice,

this Court exercises its discretion to dismiss the pending state law claims. Dismissal is

especially warranted here because the state law claims concern the intricacies of a new state

regulatory scheme. Principles of comity dictate that the Plaintiff’s novel state law claims

should be reserved to the Maryland courts. Additionally, as further discussed below, it would

not be appropriate for this federal court to wade into the murky regulatory world of medical

cannabis distribution as marijuana remains prohibited under federal law.

Federal abstention principles also counsel against exercising jurisdiction over Plaintiff’s

state claims. Under Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098 (1943), a federal district

court may abstain from exercising its jurisdiction “when federal adjudication would unduly

intrude upon complex state administrative processes because . . . federal review would disrupt

state efforts to establish a coherent policy with respect to a matter of substantial public

concern.” Martin v. Stewart, 499 F.3d 360, 364 (4th Cir. 2007). There is no “formulaic test for

determining when dismissal under Burford is appropriate.” First Penn–Pacific Life Ins. Co. v.

Evans, 304 F.3d 345, 348 (4th Cir. 2002). However, after weighing “the federal interests in

retaining jurisdiction over the dispute and the competing concern for the independence of

state action,” a district court may abstain where “the State’s interests are paramount and . . . a

dispute would best be adjudicated in a state forum.” Id. (quoting Quackenbush v. Allstate Ins. Co.,

517 U.S. 706, 728 (1996) (internal quotation marks omitted)).

The federal interests in resolving Plaintiff’s claims are extremely weak. As discussed

supra, Plaintiff’s federal claims run afoul of sovereign immunity and the Complaint fails to

articulate a basis for standing. Plaintiff’s only remaining claims are matters of state law, and

exclusively concern a regulatory apparatus designed to safely and efficiently distribute

cannabis. The federal government has virtually no interest in the efficacy of this regulatory

scheme because the Controlled Substances Act (“CSA”), 21 U.S.C. § 801, et seq., outlaws the

possession and distribution of marijuana. Under Burford, this Court must decline to

MediGrow’s invitation to “evaluate state law claims that are in direct conflict with the CSA.”

Left Coast Ventures Inc. v. Bill's Nursery Inc., No. MJP-19-1297, 2019 WL 6683518, at *2 (W.D.

Wash. Dec. 6, 2019). It is the Maryland courts, not the federal courts, who have an interest in

ensuring that Maryland’s medical cannabis licensing procedures operate in accordance with

Maryland law. Accordingly, Counts IV, V, VI, VII, and VIII are DISMISSED WITHOUT

PREJUDICE.

IV. Leave to Amend is DENIED.

Plaintiff seeks leave to amend its Complaint to address the deficiencies discussed

above. While Fed. R. Civ. P. 15(a) requires that leave to amend “shall be freely given when

justice so requires,” a district court may deny leave to amend “when the amendment would be

prejudicial to the opposing party, the moving party has acted in bad faith, or the amendment

would be futile.” Equal Rights Center v. Niles Bolton Assocs., 602 F.3d 597, 603 (4th Cir. 2010).

As this Court has repeatedly explained, an amendment is futile if it would not survive a motion

to dismiss. See, e.g., Whitaker v. Ciena Corp., RDB-18-0044, 2018 WL 3608777, at *3 (D. Md.

July 27, 2018) (citing Tawaab v. Virginia Linen Service, Inc., 729 F. Supp. 2d 757, 770 (D. Md.

2010)). In some cases, immunity to suit may render further amendment futile. See Usiak v.

Brown, RDB-10-2374, 2011 WL 3705349, at *6 (D. Md. Aug. 23, 2011) (rejecting amendment

as futile because qualified immunity shielded defendants).

The pleading deficiencies associated with Counts I and II cannot be corrected because

they are barred by sovereign immunity. Count III is dependent upon Counts I and II.

Accordingly, Counts I, II, and III are DISMISSED WITH PREJUDICE. This Court’s

jurisdiction over all remaining Counts are premised on the viability of the federal claims;

therefore, no amendment can render those counts amenable to adjudication in federal court.

Accordingly, Plaintiff’s request for leave to amend is DENIED.

CONCLUSION

For the reasons stated above, Defendants’ Motion to Dismiss Plaintiff’s Complaint

(ECF No. 21) is GRANTED. Plaintiff’s Complaint is DISMISSED in its entirety. Counts I,

II, and III are DISMISSED WITH PREJUDICE because Plaintiff cannot overcome the

Defendants’ Eleventh Amendment immunity. The remaining Counts (Counts IV, V, VI, VII,

and VIII) are DISMISSED WITHOUT PREJUDICE.

A separate Order follows.

Dated: September 16, 2020

___/s/________________

Richard D. Bennett

United States District Judge