Alan Engelbart

Alan Engelbart, operations manager and compliance officer for Lionheart Caregiving, testifies in Missoula District Court on Wednesday.

The state health department's recent compliance concerns involving the largest medical marijuana provider in Montana include 27 pounds of unaccounted marijuana, more than 300 unaccounted plants, and what was termed Wednesday as "the secret room," a space behind a bookshelf alleged to have hidden additional product from inspectors.

So it's easy to forget that Lionheart Caregiving is actually the plaintiff in its civil lawsuit against the Montana Department of Public Health and Human Services, one of its three separate actions in Missoula District Court.

A hearing Wednesday addressed Lionheart's most recent lawsuit against the health department, filed on May 30, requesting a judge to override the department's rejection of licenses for its five new facilities.

The health department contends it rejected licenses for those facilities because Lionheart's product is not fully in sync with the state's seed-to-sale tracking system, which regulators believe is the gold standard in spotlighting marijuana that may be slipping into the black market or into the pockets of customers without a medicinal marijuana card. 

If Lionheart is selling untracked product, that's in violation of state law, DPHHS attorney Andrew Huff said Wednesday. Such sales were taking place as recently as three weeks ago, Travis Green, who runs the retail operations for Lionheart, testified.

Missoula Judge Robert "Dusty" Deschamps last month issued a temporary order allowing Lionheart to proceed with its new facilities until he makes a ruling in the case. At the end of the hearing Wednesday, Deschamps said he was leaning toward a ruling against Lionheart and sending the matter to an administrative hearing process, which is more of a one-on-one mediation between Lionheart and the health department. However, he granted both parties until July 15 to file additional briefs and allow Lionheart to respond to new allegations flying in court on Wednesday.

"They probably ought to be spanked for their misconduct," Deschamps said of Lionheart after its first witness testified. He added later, "there's quite a bit of evidence to support their [the health department's] exercise in discretion [to reject Lionheart's new licenses]."

Inspectors described that evidence as several red flags noted in visits to Lionheart facilities in recent weeks and months. Among them was the allegation of the "secret room," which a former Lionheart employee disclosed to the health department, triggering an unannounced inspection. 

Behind the bookshelf, inspectors found marijuana plant matter and masking tape used to label different strains, but nothing that amounts to a product that could be sold. Jamin Grantham, one of those inspectors, said that he noted "a number of violations" around the facility.

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Other inspections, Medical Marijuana Program Bureau Chief Darci Wiebe testified, found marijuana that was labeled as if it had been entered into the tracking system, but hadn't. 

"I believe it degrades the transparency of the relationship between providers and the department," DPHHS inspector Amanda Hartsell testified.

At the basis of the lawsuit is Lionheart's access to this tracking system. After an agreement in December, the state allowed Lionheart into the tracking system but says the provider faulted on getting fully aboard; up until Saturday, Lionheart had not uploaded any of its 4,000 patients into that system, Wiebe said Wednesday. Compliance issues like this led DPHHS to reject licenses for the new facilities.

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Attorneys for Lionheart argue the state has no authority to deny the licensed provider access to the system, even if compliance issues are found. Additionally, they've argued that by tracking its own products and sales in its own system in lieu of access to the state tracking system, that it is, in fact, compliant. 

"It's keeping track," Lionheart operations manager and compliance officer Alan Engelbart testified Wednesday. "We have all the sales tied to each package, and we can verify that each package has been tested."

Engelbart also contended that he previously showed inspectors "the secret room," while those inspectors dispute that.

Other providers in Montana have previously voiced their frustrations with Lionheart's cavalier approach to the health department, claiming they've worked hard and spent a lot of money to stay in compliance, while Lionheart has the resources to challenge the department's rules.

Lionheart attorney Josh Van de Wetering previously told the Missoulian that his client is pushing back against rule making that's unfair to all providers.

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