Florida’s implementation-challenged medical marijuana program has been hamstrung by an array of nettlesome legal and regulatory hinderances in rolling out what some analysts project could be a taxable $2.5 billion market within a decade.
Now, the state may have another obstacle to contend with after Leon County Circuit Judge Charles Dodson ruled that capping the number of medical marijuana treatment centers (MMTC) and limiting licenses only to “vertically integrated” operators “undermine the clear intent of the amendment” that 71 percent of voters approved in a 2016 ballot measure.
The amendment’s “language seeks to prevent arbitrary restriction on the number of MMTCs authorized to conduct business in the state,” Dodson wrote in an eight-page order released Monday that could, potentially, open licensing to an unlimited number of marijuana operators.
Dodson’s decision was in response to a 238-page lawsuit filed by Florigrown, which is co-owned by Tampa adult nightclub mogul Joe Redner, after it was denied an MMTC license because it did not meet the “vertical integration” standard that requires operators to cultivate, process and dispense medical marijuana from “seed-to-sale.”
While acknowledging Florigrown “has a substantial likelihood of success in its claim that the law conflicts with the amendment,” Dodson denied the company’s request for him to issue a temporary injunction on issuing MMTC licenses.
Instead, Dodson set an Oct. 3 deadline for the state, either through regulatory or legislative action, to resolve the law’s licensing issues.
Florigrown “will not suffer irreparable harm” in the absence of an injunction, Dodson wrote, because it will still “have the ability to apply and compete for one of the remaining available” licenses.
Denying the injunction means the state’s Office of Medical Marijuana Use (OMMU), the embattled state agency created to administer the program, can continue to issue licenses.
As of Aug. 3, there were 14 licensed MMTCs, 46 retail locations and more than 144,557 patients with prescriptions issued by 1,596 qualified physicians in the registry, while 109,749 had received ID cards.
OMMU was required to issue licenses for four more MMTCs after the number of “approved ID card applications” exceeded 100,000. It has issued one and is expected to issue three more soon to bring the total number of MMTCs to 17.
Florigrown CEO Adam Elend said in a statement that by capping the number of MMTCs and requiring them to be vertically integrated, the state has “arbitrarily inflated the value of these licenses.”
Of the four most recently issued licenses, one was issued to California-based Med Men for $53 million and another was granted to a unnamed “health care organization” for $93 million.
“Another was valued at $200 million and still another has raised $100 million in investment,” Elend said. “In the current market, MMTCs are more motivated to flip their licenses for cash than they are to serve patients.”
He said under the state’s “broken system, there’s no way for the (OMMU) to predict supply or calculate how many dispensaries are needed for the number of patients on the registry.”
Tampa attorney Richard Blau, of GrayRobinson's Regulated Products Practice Group, a statewide law firm that advises businesses in regulated industries, including Florida's medical marijuana industry, called Dodson’s ruling “ironic” in the face of recent reports comparing Colorado’s relatively restricted licensing procedures with Oregon’s “more expansive” system, which issues licenses to applicants who meet the qualifications without any caps.
With few limits on the number of licenses to grow, process and retail marijuana, “the industry is in sad shape” in Oregon “because there are too many licenses, resulting in over-production,” Blau told Watchdog News Tuesday.
That over-production means Oregon’s marijuana vendors “cannot sell all [they produce] in the state,” which has not only “destabilized” the market within the state, but is “pushing out” marijuana into neighboring states where it may not be legal and in violation of federal law.
Blau said Dodson’s ruling will “immediately be appealed” by the state which, in his view, has “a compelling argument” against expanding the licensing framework.
“The evidence is that a controlled, integrated system may be the best way to go,” he said. “The Florida Legislature clearly wanted the process to be rolled out in a cautious and structured manner, limiting licensure in a vertically integrated system.”
Blau said it is likely that Florida’s current system will be upheld.
“On the face of it, it is a big win for the [Florigrown] but a tough road on appeal,” he said, noting state district trial courts “tend to be more expansive, but appeals courts tend to be more conservative in hewing to the government’s position. The trial court found the legislature did not have that discretion, but the appellate court may take a different view.”
Redner, a registered medical marijuana patient suffering from lung cancer, is also involved in a separate lawsuit against the state seeking the right to legally grow his own marijuana.
He won his case before Leon County Circuit Judge Karen Gievers earlier this year, but an appeals court later blocked that ruling. In May, the Florida Supreme Court refused to hear Redner’s challenge for “emergency relief.”
Redner – known widely as “Grow Joe Grow” – said taxpayers need to tell the state to stop wasting money by challenging lawsuits instead of fixing its flawed regulations.
“You’ve got case after case – something like six cases now where the judge has ruled their processes around medical marijuana were unconstitutional,” he said in a statement. “The expense the state is going through to fight these cases is unnecessary and shows either complete ignorance of the law or bad faith.”
Since its creation by the 2017 law that implemented the 2016 constitutional amendment, the OMMU has stumbled through a series of regulatory and legislative mishaps, aggravating lawmakers anxious to get the program up-and-running.
During a July 19 Joint Legislative Budget Commission meeting, Rep. Janet Cruz, D-Tampa, alleged the agency was guilty of “sabotage” and “intentional ineptitude.”
On July 27, OMMU Director Christian Bax announced he would resign from the position by Aug. 10. OMMU Deputy Director Courtney Coppola has been named interim director.