State Issues New Pot License, Gets Ready For Four More

Florida Department of Health officials took two major actions in the medical-marijuana sphere Friday, issuing a highly sought-after license to a Miami nursery that successfully challenged the state and laying out the process for four more licenses as the cannabis industry continues to blossom.

In a blistering opinion last month, Administrative Law Judge John Van Laningham recommended that health officials grant a medical marijuana license to Nature’s Way Nursery of Miami, Inc. The June 19 recommended order scalded the state Office of Medical Marijuana Use for using a flawed system to decide which applicants were granted the coveted licenses.

While Van Laningham’s order was just a recommendation, health officials on Friday issued the license to Nature’s Way and reduced the number of available slots as hundreds of applicants are expected to compete to join a highly restricted market in one of the country’s most populous states.

At the same time, health officials laid out the framework for a new process to handle what they expect to be up to 400 applications for four licenses that recently became available because the number of eligible patients in a statewide database has exceeded 100,000.

John Lockwood, a lawyer who represents operators in the marijuana industry, hailed the department's moves Friday.

"It takes these four licenses that they have to issue by statute and removes them from the litigious issues. These are just four open, competitive licenses. So in my opinion this is a very, very smart move by the department to get these licenses to market as quickly as possible. This is the way it should be done," he said.

But it’s unclear whether Friday’s moves by the health department will appease critics --- including legislators, patient advocates and marijuana industry operators --- who have blasted the agency for delays in issuing new licenses.

Florida’s medical marijuana industry has been mired in controversy since its inception in 2014, when lawmakers legalized non-euphoric cannabis and authorized five licenses.

The already intense competition for the licenses intensified after voters approved a constitutional amendment in 2016 that broadly legalized medical marijuana.

A law passed last year, aimed at implementing the constitutional amendment, required health officials to issue 10 new licenses, including to applicants who had legal challenges pending as of January 2017 or who had scored within one point of the highest-ranked applicants in five regions.

Health officials initially said Nature’s Way was ineligible for a license because its aggregate score of 2.8833 was not within one point of the 4.4 received by Costa Farms, which was granted a license for the Southeast region in 2015.

But as he had previously done in an unrelated challenge, Van Laningham found that health officials’ ranking of the applicants --- the method used to determine which ones would get licenses --- was not the same as scoring the applications.

“To repeat a point that cannot be stated enough, it is impossible to determine a quantifiable ‘point’ difference between the rankings of Best and, e.g., Fourth Best,” he wrote in the lengthy opinion that included pages of mathematical analysis and charts.

The health agency’s licensure Friday of Nature’s Way means that 14 licenses have been issued. It also shrinks the number of available licenses, because six of the 10 licenses authorized under the 2017 law have already been doled out. One of the new licenses not yet issued must go to a black farmer who was part of class-action lawsuits, known as “Pigford” cases, about discrimination by federal officials.

The new law also required health officials to give preference for two licenses to applicants who own facilities that were used to process citrus, the subject of at least one lawsuit.

Because of the litigation regarding the citrus preference, the department is holding off on accepting applications for the remaining two licenses, according to a news release issued Friday.

But the state is moving forward with a process for four new licenses ordered under a different part of the law, which requires health officials to grant four licenses after at least 100,000 qualified, eligible patients have enrolled in a statewide database, a benchmark that was recently surpassed.

“The Florida Department of Health is committed to ensuring qualified patients have safe, reliable access to low-THC cannabis and medical marijuana,” agency officials said in the release. “In an effort to continue to expand availability of this treatment, the department will accept applications for registration as a medical marijuana treatment center through a new rule. This new rule addresses the Pigford class license and the four additional licenses available upon reaching 100,000 patients, as outlined by the Florida Legislature in 2017.”

The Office of Medical Marijuana Use had originally planned to issue the four licenses spawned by the increase in the number of patients to applicants who were “runners-up.” But the agency has yet to begin accepting applications for the new licenses.

The Office of Medical Marijuana Use is asking the Legislature for more money as it prepares for an influx of applications in a state where one license --- tied to an operator that had not yet begun selling cannabis --- recently sold for $53 million.

Less than two weeks after the state’s new fiscal year began July 1, the office is asking the Joint Legislative Budget Commission for nearly $13.3 million in additional money to cover its expenses this year.

The request includes more than $7.3 million to handle what health officials, who have contracted with the firm KPMG to process and score the applications, estimate will be up to 400 applications, with an estimated price tag of $18,354 each to review, according to documents posted on the commission’s website.

The health department, which is currently fending off at least 10 legal or administrative challenges, is also estimating it will need an additional $1.5 million for current and future lawsuits, and $3.4 million for a seed-to-sale tracking system.

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