Administrative judge says McCrory’s Sunny Hill Nursery not entitled to medical pot license

In December 2014, McCrory’s Sunny Hill Nursery in Eustis, along with Grow Healthy Farms Florida spent nearly $2 million for a 33-acre tract of property on which sat an old Sealy Mattress factory. The plan was to convert the making of pillow tops to pot buds in a massive medical marijuana grow house.

But along the way, the business venture, which likely would yield high profits as Florida joins other states in dispensing medical marijuana to eligible patients, hit a snag.

The Florida Department of Health (DOH) and the state Legislature decided only five pot factories would operate in the state, and McCrory’s application to be among that elite group failed by a fraction of a point on a scorecard devised by the health department.

So, the jilted nursery did what it is entitled to do when millions of dollars hang in the balance: It filed a petition alleging it was cheated.

“McCrory’s has an existing state of the art, highly secure and dedicated facility that is more than 180,000 square feet, and is available to implement DO (dispensing organization) activities, and McCrory’s is prepared to timely commence such operations upon receipt of approval from DOH,” according to the petition filed earlier this year with the state’s division of administrative hearings.

“(The) DOH has not revealed all relevant components of the required scoring methodology,” the petition said. “For example, and without limitation, DOH has not revealed the methodology employed by DOH to assign weights to scores for application components, or to calculate the total scores for each application reviewed by the reviewers.

“A review of the scorecards completed by the reviewers for the central region applications reveals clearly erroneously assigned scores,” the petition said, “and scores that were assigned in an arbitrary and capricious manner.”

Friday, an administrative law judge signed a 21-page order dismissing the complaint, with prejudice, but saying the Eustis nursery has the option of taking the case to state court.

A Tallahassee attorney representing McCrory’s could not be reached for comment Tuesday.

The DOH, in coming up with a dispensing plan, split the state into five regions and took applications from nurseries in each of those regions to determine which would be licensed for that part of the state. Only one nursery per region — the highest scoring one — would be permitted to grow medical pot.

McCrory’s is in the central region and competed against six other nurseries for the license.

A three-member DOH panel evaluated the applications and gave scores based on a complicated formula that considered cultivation and processing capabilities, financials, dispensing plans and experience of a medical director.

McCrory’s scored a fraction of a point below Knox Nursery in Winter Garden, which was awarded the right to set up the pot growing operation, but the aggrieved growers in Eustis said the scoring method was flawed.

And McCrory’s was ready to put up a fight.

The nursery’s petition said: “(The) DOH assigned scores that could only be assigned if required documentation had been submitted even when that documentation was not submitted by Knox and other applicants.”

In 2014, the Florida Legislature passed a bill creating a process to provide marijuana-derived medication to treat a short list of ailments, including childhood epilepsy. The medication is low grade, cannot be smoked and does not cause the euphoric effects typically associated with marijuana ingestion.

The law called for the medicine to be available last January, but challenges to the Department of Health’s proposed rules for the program delayed the process. Six medical marijuana grow houses across the state have received approval from the Department of Health and likely will begin dispensing the medication to eligible patients even before a referendum is voted on in November.

That vote could expand the current laws to allow for a higher grade of cannabis and opening up the patient base to those who have a wider variety of ailments.