Though there’s been a lot of hype surrounding the potential passage of Amendment 2 in Florida, industry players and hopefuls should look at Florida’s recently passed (but not yet signed into law) Compassionate Medical Cannabis Act of 2014 (the “Act”) for what is likely to be a sneak peak at what’s to come for Florida MMJ on the whole. If the Act is any indication of how Florida will treat MMJ post-November (and we think that it is), Florida is going to have a tightly (dare we say, crushingly?) regulated medical marijuana industry.
The Act legalizes cultivating, manufacturing, and distributing certain low-THC/high CBD marijuana (a strain commonly known as Charlotte’s Web) for seizure and cancer patients only. Charlotte’s Web is not the type of cannabis that intoxicates users; it is truly a medicinal strain. Under the Act, after undergoing an eight-hour educational course and examination, medical doctors and doctors of osteopathy will be the only individuals who can recommend patients use Charlotte’s Web, and these medical care providers can begin making these recommendations as soon as January 1, 2015. Problem is, there may not be enough (or any) outlets set up to distribute Charlotte’s Web by that time as the Department of Health (DOH) must create an Office of Compassionate Use to further regulate physicians, cultivators, distributors, and patients.
In an effort to ensure that qualifying patients have safe and secure access to Charlotte’s Web, the State plans to set up a fully regulated and licensed marijuana distribution system for a very limited number of cultivators that can also distribute. The license requirements for cultivation/distributors will be in the works with the DOH over the coming months. Still, the Act already provides certain rigorous criteria for “dispensing organizations”:
- There will only be five dispensing facilities statewide, one for each region in Florida;
- Application fees are still outstanding and will be set by the DOH;
- The dispensing facility must:
-demonstrate that it’s capable of producing and housing at least 400,000 CBD-yielding marijuana plants;
-be a registered plant nursery in the state of Florida that’s been in existence for at least 30 years; and
-submit documentation (to be determined by DOH) demonstrating that it’s a safe and secure facility that accounts for its marijuana (along with demonstration of an infrastructure for distribution of medicine);
-demonstrate the ability to operate for at least two years (which includes a showing of robust financing);
- Upon approval of a license to cultivate/dispense, the dispensing facility must be able to put up a $5 million bond; and
- A medical doctor must be on staff with the dispensing facility to “supervise the activities of the dispensing organization.”
Aside from the fact that each dispensing facility must find a doctor willing to oversee its every move (thereby putting the doctor’s license to practice medicine at risk with the Feds), only five dispensing facilities will serve the State. Plus, there are only 39 nurseries in the entire State that actually meet the “30-years-in-business” standard. Needless to say, if you thought you would be able to open your mom and pop CBD-store on the corner, you’re sorely mistaken.
What’s most interesting though is whether this is a preview of what’s to come if Amendment 2 passes in November. Will Florida go the way of a Nevada or a Washington, with a regulated marketplace that still allows for some market entry from a range of well-organized and relatively well-capitalized budding entrepreneurs, or will it go the way of an Illinois, with very limited license opportunities and absurdly high requirements that only a handful of well-seasoned business people can meet? Frankly, things could go either way in the Sunshine State, but Charlotte’s Web is an indicator that Florida is prepared to put a strangle-hold on MMJ.
Why do we think this?
Number one, Amendment 2 allows for doctors to recommend MMJ for specific debilitating conditions, but it also allows the recommendation of MMJ for “other conditions for which a physician believes that the medical use of marijuana would likely outweigh the potential health risks for a patient.” That’s a pretty broad spectrum that likely includes chronic pain, which ultimately opens the door (at least in our experience) for recreational users who may not be so much in pain as much as they’re in need of solid a buzz. Furthermore, when looking at Amendment 2, it’s pretty much a blank check from the people to the Department of Health, which will have all discretion to set up the entire MMJ program from start to finish. Why? All Amendment 2 says is “The Department (of Health) shall issue reasonable regulations necessary for the implementation and enforcement of this section. The purpose of the regulations is to ensure the availability and safe use of medical marijuana by qualifying patients.” If DOH thinks for even a minute that Amendment 2 opens the door for bad behavior from patients or entrepreneurs (or for undercover recreational use), it’s pretty easy to see why we could have another set of Charlotte’s Web-type rules for marijuana businesses if the ballot initiative is successful in November.
The other issue here is timing. The good news is that Floridians have a set timeline for creation of Amendment 2-based rules for MMJ businesses; DOH has to promulgate the rules within six months of their passage and, if they don’t, any Floridian will have standing to sue the Department. The bad news? Promulgation is not actual implementation. It could take the State much longer to actually get the program up and running (believe us, we know from Washington where it’s taken nearly two years to get recreational businesses up and running).
Though Florida continues to excite all of our cannabis business lawyers (because we have two lawyers licensed for Florida and plans to open for business in the State once the cannabis business really starts moving down there), we are not yet 100% committed to believing that Florida is the next great marijuana marketplace. Per usual, legalization on a state-by-state track is a moving target and, sometimes, states favor being conservative for a multitude of reasons.
Based on what we’ve seen so far, Florida is looking as though it will limit its MMJ program to the bare minimum. In turn, be prepared to lower your expectations.