A judge on Monday reinstated a Billings medical marijuana provider’s license, finding that the state failed to give the dispensary owner an opportunity to correct violations before revoking his license and effectively shutting down his business.

In his order, Yellowstone County District Judge Don Harris chided the Montana Department of Public Health and Human Services for not providing a hearing for Montana Organic Medical Supply owner Steven Palmer to dispute the violations identified by the department during a June inspection.

Palmer had been a licensed provider in Billings since 2011, but his license was revoked by DPHHS in August after a June inspection by the department indicated multiple violations of the state’s revamped medical marijuana policies rolled out earlier in the year.

Last month, Palmer sued DPHHS in county district court, alleging that the department’s notice of his violations stated that he had until September to correct the issues, and that the state had not provided any opportunity for him to contest the inspectors’ findings.

Andrew Huff, an attorney for the department, had argued in a September hearing on the case that the court hearing was, itself, Palmer’s opportunity for a review of the department’s decision. The violations were also significant enough to pose an immediate risk to the population of caregivers, Huff argued at the time.

Harris, however, wrote that none of the violations “could have posed an imminent danger to the public’s health safety or welfare if the department did not even issue an inspection report for over a month and then allowed Palmer an additional two months to correct all violations.”

He also threw out the DPHHS argument that the judicial review was the only way for the provider to object to the license revocation. He pointed to a provision in the Montana Medical Marijuana Act and state supreme court precedent that gives licensed providers enough ownership to warrant its protection.

Beyond reversing the department’s revocation, however, Harris wrote that it remains unclear what legal remedy Palmer could receive.

The license revocation came while Palmer was involved in negotiations for a merger between Montana Organic Medical Supplies and Lionheart Caregiving, another medical marijuana dispensary. Palmer has contended that the department’s action effectively sank the possibility of a merger between the two businesses.

“(I)t seems apparent that the department has already destroyed Palmer’s medical marijuana business and that it is probably futile to now remand the case for a contested case hearing,” Harris wrote. “The problem is that Palmer may no longer have a meaningful remedy even if he prevails.”

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Melinda Driscoll, a Billings attorney representing Palmer, said Tuesday that she and her client are still discussing possible requests, and have not ruled out asking for monetary damages.

"He had already torn down his business substantially in anticipation of the merger," Driscoll said. “Maintaining licensure is kind of an empty remedy because they don’t have the capital to invest right now."

She added that she hopes the ruling will spur the department to revisit its policies on medical marijuana licensing procedures.

“The main message of this lawsuit is the state needs to go back to the drawing board as far as how they’re going to effectuate this process,” Driscoll said.

Phone messages left for Jon Ebelt, a DPHHS spokesman, were not returned Tuesday.

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Morning Reporter

General assignment reporter for the Billings Gazette.