THE CIRCUIT COURT OF HENRICO COUNTY L. A. Harris, Jr., Judge
Gregory J. DuBoff (Stanley A. Roberts; McGuire Woods LLP, on
briefs), for appellant.
E. Rutkowski, Assistant Attorney General (Mark R. Herring,
Attorney General; Cynthia V. Bailey, Deputy Attorney General;
Allyson K. Tysinger, Senior Assistant Attorney General, on
brief), for appellee Caroline Juran, Executive Director,
Virginia Board of Pharmacy.
Scott Sexton (Scott A. Stephenson; Gentry Locke, on brief),
for appellee Dharma Pharmaceuticals, LLC.
Present: Judges O'Brien, Malveaux and Senior Judge
Clements Argued at Richmond, Virginia
GRACE O'BRIEN, JUDGE
case involves an appeal pursuant to the Virginia
Administrative Process Act ("the VAPA"), Code
§§ 2.2-4000 to -4031. New Age Care, LLC ("New
Age") and Dharma Pharmaceuticals, LLC
("Dharma") applied to the Virginia Board of
Pharmacy ("the Board") for a pharmaceutical
processor permit to operate a facility for producing and
dispensing cannabidiol and THC-A oils. Code §
54.1-3442.6(B) limits the Board to issuing one permit for
each of the five Health Services Areas ("HSAs") in
Virginia. The parties applied for the single permit available
in HSA III located in southwest Virginia. The Board denied
New Age's application and granted conditional approval
for the permit to Dharma.
appealed to Henrico County Circuit Court. Dharma moved to
dismiss the appeal, and the circuit court granted
Dharma's motion. New Age appeals the dismissal and argues
the circuit court erred by (1) "considering Dharma's
unilateral motion to dismiss;" (2) "granting
Dharma's motion to dismiss on invalid grounds;" and
(3) "prematurely ruling on the merits of New Age's
appeal." For the following reasons, we affirm the
circuit court's decision.
as here, 'no evidence [has been] taken with regard to [a]
motion to dismiss[, ] [appellate courts] treat the factual
allegations in the petition as we do on review of a
demurrer.'" Bragg v. Bd. of Supervisors,
295 Va. 416, 423 (2018) (quoting Va. Marine Res.
Comm'n v. Clark, 281 Va. 679, 686 (2011),
overruled in part on other grounds by Woolford v. Va.
Dep't of Taxation, 294 Va. 377, 390 n.4 (2017)).
"We accept 'the truth of all material facts that are
. . . expressly alleged, impliedly alleged, and those that
may be fairly and justly inferred from the facts
alleged.'" Id. (quoting Harris v.
Kreutzer, 271 Va. 188, 195-96 (2006)). This
"inquiry encompasses 'not only the substantive
allegations of the pleading attacked but also any
accompanying exhibit mentioned in the pleading.'"
Id. (quoting Flippo v. F & L Land Co.,
241 Va. 15, 17 (1991)). See Rule 1:4(i).
"[a] court in ruling upon a demurrer [or motion to
dismiss] may consider documents not mentioned in the
challenged pleading when the parties so stipulate."
Flippo, 241 Va. at 17. See Elder v.
Holland, 208 Va. 15, 18 (1967) (considering on demurrer
the transcript of a prior hearing where parties so
stipulate). This Court then "review[s] the circuit
court's decision to dismiss the petition, and any
corresponding issues of statutory interpretation, de
novo." Bragg, 295 Va. at 423. See also
Graves v. Commonwealth, 294 Va. 196, 199 (2017);
Harris, 271 Va. at 195-96. Here, employing these
principles, we summarize New Age's petition for appeal to
the circuit court, its attached exhibit, and a stipulated
subset of exhibits the parties submitted for consideration
along with Dharma's motion to dismiss.
2018, the General Assembly amended 2016 legislation
authorizing the Board to issue pharmaceutical processor
permits to operate cannabidiol/THC-A oil production and
dispensary facilities in each of the five HSAs in Virginia.
See 2018 Va. Acts ch. 567. The amended statute only
allowed one permit for each HSA. Code § 54.1-3442.6(B).
The final legislation also authorized the Board to adopt
regulations establishing health, safety, and security
requirements for the pharmaceutical processors. Code §
to this statutory authority, the Board enacted regulations
establishing a three-stage application process:
"submission of initial application, awarding of
conditional approval, and granting of a pharmaceutical
processor permit." 18 VAC 110-60-110(A). The regulations
identified the information required from each applicant,
including the location where the pharmaceutical processor
would be operated; detailed information regarding the
applicant's financial position; the applicant's plans
for security to prevent diversion, theft, or loss of the
Cannabis plants and the cannabidiol or THC-A oils; previous
or current involvement in the medical cannabidiol oil or
THC-A oil industry; business and marketing plans; detailed
blueprints; any compassionate need program the applicant
intended to offer; and the applicant's expertise in
agriculture and other production techniques. 18 VAC
110-60-110(B)(b)-(d), (g), (i), (k)-(m).
regulations also provided criteria for the Board to consider
in evaluating the applications, including compliance with the
application requirements. 18 VAC 110-60-120(A), (B). The
regulations stated that "[t]he decision of the [B]oard
not to grant conditional approval to an applicant shall be
final." 18 VAC 110-60-120(C).
April 16, 2018, the Board issued a request for applications
("RFA") for pharmaceutical processor permits in the
five HSAs. The RFA, which was not a regulation,
stated that "[t]he review and scoring of the
applications will be performed by an ad hoc committee
appointed by the Board." The RFA stated that the ad hoc
committee would score the applications and make a
recommendation to the Board: "After completing the
review and scoring, the ad hoc committee will rank each
application according to its score. The committee will
recommend to the Board the issuance of conditional approval
to an [a]pplicant in each [HSA] with the highest ranked
specified that the ad hoc committee would score applications
in the following areas: the applicant's financial
position; location within the HSA; security plans;
authorization to conduct business; industry involvement and
disciplinary action; agriculture, production, and dispensing
expertise; marketing plans; facility exterior and blueprints;
product and site safety; expected hours of operation; and an
additional category consisting of plans for compassionate
needs, research, and delivery services to mitigate risks of
diversion, theft, or loss.
also specifically stated that although the ad hoc committee
would make a recommendation to the Board based on its scoring
of the applicants, the Board, not the ad hoc committee, would
make the final decision: "The Board will grant
conditional approval to the [a]pplicants which, in its
opinion, have made the best application."
hoc committee, composed of two Board members and three
citizen members, met in closed session on September 4, 2018,
to evaluate the applications for HSA III, including those
submitted by New Age and Dharma. The committee scored New
Age's application at 957.5 and Dharma's application
September 25, 2018, the Board met to determine which, if any,
applicants should be awarded conditional approval for a
permit. It also received public comments. The Bristol city
manager and an Abingdon pharmacist both spoke in favor of
Dharma's application. No one spoke in support of New
Age's application. Twice, the Board voted unanimously to
go into closed session pursuant to Code §§
2.2-3711(A)(5) and 54.1-108(2). First, the Board convened a
closed session to consult with legal counsel regarding FOIA
and the consideration of applications; second, the Board
convened a closed session to consider and evaluate the
applications. No one objected. The Board also moved that two
of the three citizen members of the ad hoc committee attend
the closed sessions; the third citizen member was not
Board reconvened in open session to record the votes. In a
motion addressing the HSA III permit, seven Board members
voted after one member recused himself, for reasons unrelated
to this case, and two others abstained. These seven members,
representing a quorum of the ten-person Board pursuant to
Code § 54.1-3305, unanimously approved Dharma's
Board issued formal orders announcing its decision and
reasoning on December 21, 2018. In its order granting
conditional approval to Dharma, the Board noted the score
given by the ad hoc committee and made the following
• Dharma's proposed location is "readily
accessible to a large population of potential patients in
• Dharma demonstrated a "strong level of collective
expertise in agriculture, production[, ] and dispensing
• Dharma demonstrated "a strong financial position
for initial operations and long-term stability and
• Dharma demonstrated a "strong compassionate need
Board concluded that "[b]ased on its review and
competitive evaluation of the applications in [HSA III] in
accordance with 18 VAC 110-60-120, including the findings set
forth above regarding the application . . . and its
consideration of the ad hoc committee's scoring
recommendations," Dharma "should be granted
conditional approval in [HSA III]."
Board denied New Age's application. Although the Board
noted the ad hoc committee's ...