CNBC: A Look Inside the Black Market for Weed Shows the Huge Threat to Legal Businesses

CNBC: A Look Inside the Black Market for Weed Shows the Huge Threat to Legal Businesses

An appellate court has sided with a Florida medical cannabis business, once again delivering a blow to the law directing the state’s medical cannabis market. Tampa-based Florigrown sued the state after it was denied a medical cannabis business license. In 2016, Florida voters approved medical cannabis legalization; state legislators then drafted a bill to implement that measure. 

The Florigrown lawsuit and its attendant judicial rulings thus far reveal the tension between what the voters approved and what the legislators approved. The two foundational problems: Florida’s vertical integration mandate and the cap on the total number of medical cannabis businesses licenses. In the 2016 voter-approved initiative, the language includes the crucial conjunction “or”: “’Medical Marijuana Treatment Center’ (MMTC) means an entity that acquires, cultivates, possesses, processes (including development of related products such as food, tinctures, aerosols, oils, or ointments), transfers, transports, sells, distributes, dispenses, or administers marijuana, products containing marijuana, related supplies, or educational materials to qualifying patients or their caregivers and is registered by the Department.” (Emphasis ours.)

The law passed by the state legislature rolled those licensed activities into one vertically integrated MMTC license and placed a cap on the number of licenses, based on the number of registered medical cannabis patients.

Last year, a Leon County Circuit Court judge supported Florigrown’s argument and issued a temporary injunction demanding that the state begin issuing more medical cannabis business licenses. The state appealed, and here we are.

As Matthew Ginder, senior counsel in the cannabis practice of Greenspoon Marder, says, the appellate court “agreed with the trial court that there’s a substantial likelihood of success on the merits that those provisions are essentially unconstitutional.”

The state has an opportunity to appeal this ruling, as well, though Gov. Ron DeSantis has said publicly that he does not wish to continue appealing civil cases involving medical cannabis that had been pursued by his predecessor, Gov. Rick Scott. (Whether that will hold remains to be seen.)

In this case, the Florida House of Representatives has attempted to insert itself into the litigation—seeking to protect its own legislation’s integrity. What emerges, then, is a contradiction between how the state’s judicial branch and legislative branch are viewing this case. In the middle, DeSantis’ executive branch (which includes the Department of Health) could play the role of arbiter. The administration could appeal this case once more, or it could pass the regulatory mandate onto the Department of Health and begin rewriting the script on how Florida’s medical cannabis market is structured.

“You have more weight behind the argument that this licensing structure doesn’t withstand scrutiny,” Ginder says. “On the other hand, there is an existing industry in Florida that’s composed of companies that have expended a significant amount of resources to build out their infrastructure based on laws they were expecting to be there. They have an interest in operating under laws that don’t open up the floodgates. As you can imagine, the governor has to weigh all these interests and has to make a decision on how he wants to proceed.”

Published at Mon, 15 Jul 2019 14:09:00 +0000

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