Staff Reports
In a blow to those who want to see Florida’s marijuana sector opened up, the Florida Supreme Court Thursday ruled against a company challenging its vertical integration framework.
The 54-page ruling offered a sobering message to the challenge to the law’s implementation, upholding the current structure of the booming cannabis industry, which compels participants to cultivate, process, and sell their own in-house product and disallows the more freewheeling approaches in other state-level cannabis markets.
“Having considered the certified question together with Florigrown’s special-law-based challenge to section 381.986(8), we hold that Florigrown has not demonstrated a substantial likelihood of success on the merits of any of its constitutional claims. Accordingly, and as is fully explained below, we quash the First District’s decision,” read the majority opinion.
The court rejected the lower courts’ contention that there was a conflict between 2016’s Amendment 2, which authorized the medical cannabis program, and statute passed governing it, saying “the Amendment expressly left the Legislature its authority to enact the legislative framework.”
The high court opinion also affirms the state’s latitude to determine what makes a medical marijuana treatment center.
“This language establishes that the right to register does not result directly from the constitutional definition of MMTC, but from regulations promulgated by the Department providing standards to be met. Notably, the constitutional definition of ‘MMTC’ does not provide for unilateral registration ‘with’ the Department; it requires an entity to be registered ‘by’ the Department, according to regulations designed to ensure safety and security, before it can be considered an MMTC and entitled to immunity from state-law liability.”
The court also rejected the contention by Florigrown and the lower courts that a cap on MMTCs hurt patients, “because competent, substantial evidence does not support a finding that the statute has made medical marijuana unavailable, and the Amendment does not preclude a limit on the number of MMTCs that can be licensed.”
MMTCs can open as many dispensaries as they want, the court notes, and delivery is also available.
“Most importantly this ruling validates the Legislature’s interpretation of the constitutional amendment,” said Taylor Biehl, a lobbyist who represents several cannabis interests. “We are hopeful the Department will move quickly in their rule development for the competitive bidding of 15 licenses with another trigger of four once we hit 600,000 (registered medical marijuana patients), which is on the horizon.”
Under the 2017 law, the number of medical marijuana licenses grows as the number of qualified patients increases. With more than 561,000 patients, at least a dozen new licenses are available. But the Department of Health has not opened the license application process while the Florigrown lawsuit was awaiting a Supreme Court ruling.
Medical marijuana in Florida — the nation’s third most-populous state — has exploded in the few short years since its legalization. But the industry and investors have been leery about investing or expanding in Florida until the Supreme Court resolved the Florigrown case.
“This ruling is welcomed for this industry because it affirms the regulatory scheme that a lot of participants have already built their business models around. And for some of the more recent entrants into the market, it allows them to ramp up their spending in Florida with confidence in the regulatory scheme,” John Lockwood, a lawyer who represents several marijuana license holders, told The News Service of Florida on Thursday.
Much of the ruling calls back to the state of the industry when Florigrown sought its injunction. The patient count has increased fivefold since then, and the court rejected en masse the affidavits speaking to problems in the industry.
“These affidavits and this testimony would support a finding that Florida’s fledgling medical marijuana market is not functioning seamlessly, but not that the statute renders medical marijuana essentially unavailable for safe use in this state.”
The ruling was unanimous, and six of the seven justices signed on. Justice Alan Lawson wrote a partial dissent focusing on special rights to the class of medical marijuana corporations.
The Supreme Court’s decision on this was anticipated for some time, after hearing oral arguments twice last year. Tampa-based Florigrown’s arguments that vertical integration was not the intent of 2016’s Amendment 2 prevailed in lower courts, but ultimately could not meet the high court threshold.
And with that, the medical marijuana space withstands yet another challenge to its status quo, just months after Gov. Ron DeSantis came out against a proposal in the Florida Legislature to cap the levels of THC in whole flower and derivatives.
The decision was unpopular among many critics of VI, including Agriculture Commissioner Nikki Fried.
“This ruling by our Republican-dominated Supreme Court further entrenches Florida’s unfair, unconstitutional medical marijuana system put in place by our Republican-dominated Legislature. This status quo helps absolutely no one except the 22 medical marijuana companies in Florida at the expense of patients,” Fried said.
The Commissioner, who is personally staked in the cannabis industry with stock in one MMTC, went on to condemn vertical integration.
“Unlike hemp’s open, horizontal market in Florida that provides opportunity to everyone, Florida’s medical marijuana industry will remain closed-off, restricting freedom of opportunity, weakening the free market, and leading to ever-higher prices for patients. If we’re applying the law to medical marijuana, then it’s past time to grant the licenses that Black farmers and our citrus industry deserve and the law requires,” Fried added.
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News Service of Florida contributed to this post. Republished with permission.
