Florida Medical Marijuana: Fear and Loathing and What We Don’t Know About Amendment 2

Florida cannabis lawyerA great battle has been won in Florida for a more comprehensive medical marijuana program thanks to Florida voters overwhelmingly voting for Amendment 2. But the war still remains in that Amendment 2 is a very short piece of legislation that gives huge power to Florida’s Department of Health (DOH) to make rules tfor Florida Medical Marijuana Treatment Centers (MMTCs). Amendment 2 simply states that DOH must come up with regulations for, among other things, “[p]rocedures for the registration of MMTCs that include procedures for the issuance, renewal, suspension and revocation of registration, and standards to ensure proper security, record keeping, testing, labeling, inspection, and safety.” That’s it. After writing “Florida Legalizes Medical Marijuana, So Now What? Here’s the 4-1-1,” I’ve been getting many calls from Floridians who want a license to run an MMTC, but many questions remain about who can participate in Florida’s new medical cannabis industry and how participating businesses can be run and financed, because the Amendment is silent on these topics.

The only reference Florida has for previous DOH rule making on medical marijuana is its 2014 Compassionate Medical Cannabis Act (i.e., the “Charlotte’s Web law”), which has since been amended. Upon its passage by the legislature, that law contained way more detail than Amendment 2 on who could operate and own a Dispensing Organization, and it set forth qualification thresholds DOH could not change through rule making. The Charlotte’s Web “final” DOH rules can be found here, and you can read our analysis of DOH’s initial rules here.

Here is a run-down on some of what the Amendment does not cover and where DOH (and, more likely, the Office of Compassionate Use) will need to fill in the blanks for better or worse:

  1. Existing Charlotte’s Web nurseries. Since Amendment 2 pretty much puts DOH in full charge of the fate of Medical Marijuana Treatment Centers, the question becomes whether DOH will only allow the existing Charlotte’s Web nurseries to run all MMTCs or whether DOH will expand the program to allow for a more open medical cannabis market with a diverse range of Medical Marijuana Treatment Center operators. Because Amendment 2 does not say that this sort of exclusive situation cannot happen, and because we all know these nurseries have tremendous influence with the Office of Compassionate Use, it is at least possible that these very same nurseries will walk off with all of the licenses for Florida’s Medical Marijuana Treatment Centers. If DOH follows the path of Charlotte’s Web and engages in negotiated rule making for Amendment 2, you can bet these nurseries will at minimum have big seats at the table.
  2. Limitations on number of MMTCs and vertical integration. The Amendment doesn’t dictate that DOH must limit the number of MMTCs in the state, but I see DOH strictly limiting the number of MMTCs to ensure DOH control and oversight. There’s also the question of vertical integration and whether the DOH will DOH force Florida’s Medical Marijuana Treatment Centers to be vertically integrated. Or will DOH create and issue different kinds of cannabis licenses and registrations without tied-house restrictions for cultivation, manufacturing, and dispensing? If DOH opts for mandatory vertical integration, expect to see many would-be marijuana operators lose interest in Amendment 2 because the costs and the difficulties of vertical integration will prove impossible or undesirable for so many.
  3. Residency. The Amendment does not have an explicit residency requirement. The MMJ industry in many states has suffered much heartburn when marijuana operators have to prove (and sometimes fail to prove) that their financiers or fellow owners have spent a certain amount of time in the state. Florida’s Charlotte’s Web law has no explicit residency requirement, but since it mandated that only Florida-registered plant nurseries existing for thirty or more years with the capability of cultivating more than 400,000 cannabis plants could participate, it essentially did have a residency requirement. Assuming DOH doesn’t just turn over all new Medical Marijuana Treatment Centers to these nurseries as well, it remains to be seen as to whether Florida will allow out of staters to enter its cannabis market.
  4. Financing. The Amendment is also silent on financing for MMTCs and so we do not know whether Florida will cap financing or restrict certain kinds of financing.
  5. Criminal background checks. The Amendment does not tell us what kind of criminal history Florida Medical Marijuana Treatment Center owners and managers can or cannot have. In most marijuana states, a felony conviction within the past ten years (or, sometimes, at all), makes you ineligible to own or manage a marijuana business. Since Florida hasn’t been the friendliest state when it comes to marijuana-related crimes, I am expecting it will implement fairly aggressive criminal background standards.
  6. Corporate entities. There’s no mention in the Amendment as to whether Medical Marijuana Treatment Centers can be either for-profit or not-for-profit. Some states care about this distinction, but the trend is to allow marijuana businesses to be for-profit companies. Surely, when DOH defines “MMTC applicant,” it will tell us what kind of corporate entities can participate in its medical cannabis program, but we likely won’t know this before the first set of DOH rules comes out.
  7. Application, scoring, and application fees. We can only guess at what the application for a Florida Medical Marijuana Treatment Center will look like and the information it will require. Having helped clients with competitive licensing applications in New York, Minnesota, Maryland, and Nevada (and less competitive licensing applications in a host of other states), I can tell you that if DOH doesn’t hand all of the keys to Amendment 2 over to the Charlotte’s Web nurseries, its MMTC applications are likely to be pretty intense. The application for the Charlotte’s Web nurseries was no picnic and I don’t see DOH being any less restrictive or invasive for MMTC applications. There’s also the issue of how DOH will choose MMTC operators. In Charlotte’s Web, DOH first tried to implement a lottery system but got sued and lost. DOH then ended up going with an obtuse scorecard that allegedly ranked applicants based on merit (that also got them sued, but they prevailed on that system). Regarding any MMTC application fees, the Amendment says nothing. But you can be sure DOH will implement an application fee under Amendment 2. Charlotte’s Web applicants had to pay a $60,063 non-refundable application fee, but I anticipate the fee for Medical Marijuana Treatment Centers (hopefully) being lower since considerably more applicants will be involved. Florida might also institute other threshold financial requirements to create barriers to entry for MMTC applicants. For example, the Charlotte’s Web program required a $5 million performance bond prior to registration as a Dispensing Organization.
  8. Buffer requirements and “regional restrictions.” The Amendment is also slient on whether MMTCs have to be located a certain distance from sensitive uses like schools or playgrounds. The buffer for these things has varied from state to state (usually from around 500 to 1,000 feet as the crow flies) and cities and counties usually have a say on this also. At one point in the initial draft rules, Dispensing Organizations under Charlotte’s Web could not “be located within 500 feet of any public or private school that existed prior to the date of the dispensing organization’s application,” but that buffer requirement didn’t make it into the “final” rules. MMTCs may also see regional restrictions like nurseries saw with Charlotte’s Web where those nurseries are limited to serving the five regions of Florida. If the goal of Amendment 2 is to provide better and more convenient access to cannabis for medical use, the five-region plan of Charlotte’s Web will likely not be the way to go.

There are a whole host of other issues not covered in the Amendment with which DOH will have to wrestle, but the above are some of the most important, and they constitute plenty to get you started in planning for your application and your eventual cannabis business.

Be sure to stay tuned as DOH gears up for Amendment 2 rule making.

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