Page 5 - Cannabis News Florida August 2019

Cannabis Industry Vertical

Integration - Endangered

By Choice Of Conjunction

If a recent decision of - the definition of an
the Florida First District MMTC. The court found
Court of Appeal (Florida the statutory definition of
Department of Health, an MMTC “creates a verti-
Office of Medical cally integrated business
Marijuana Use, et al. v. model which amends the
Florigrown, LLC, et al., constitutional definition of
No. 1D18-4471) is MMTC by requiring
upheld, there likely will [through use of the con-
be significant restructur- junction “and”, rather than
ing of the medical mari- “or”] an entity to undertake
juana industry in the several of the activities
State. The cause of this described in the amend-
uncertainty lies in the BY STEPHEN H. SIEGEL, ment.”
Florida Legislature’s ESQ. Further, “the statutory
choice of one conjunc- language directly conflicts
tion, “and” instead of “or”. with the constitutional scheme.”
Florigrown reviewed Florida’s scheme Florigrown, slip opinion at 6. The court
for regulating the medical marijuana made clear its view: “Our ruling that the
industry through the development of a vertically integrated system conflicts
limited number of licensed “medical with the constitutional amendment thus
marijuana treatment centers” renders the statutory cap on the number
(“MMTC”). of facilities in section 381.986(8)(a)
In 2016, Florida voters approved an unreasonable.” Id, at 7. Thus, in the view
amendment to the Florida Constitution of this court, the vertically integrated
legalizing medical marijuana, under cer- scheme for regulating the production,
tain circumstances, the so-called processing, and distribution of medical
“Amendment 2”. This amendment marijuana set forth in section 381.986,
defined an MMTC, in relevant part, as F.S., is unconstitutional.
“an entity that acquires, cultivates, pos- If Florigrown is upheld (at this time it
sesses, processes …, transfers, trans- is not clear what action the State will
ports, sells, distributes, dispenses or take), Florida’s scheme for regulating the
administers medical marijuana ….” Art. medical marijuana industry will need to
X, §29(b)(5) Fla. Const. (emphasis undergo significant changes. Without
added). vertical integration, each step in the
In 2017, the Florida Legislature enact- process- growers, processers, packagers,
ed enabling legislation, defining an etc., probably will need to be separately
MMTC, in relevant part, as “an entity licensed or permitted. Initially, the cur-
that acquires, cultivates, possesses, rent MMTCs are likely to have a compet-
processes …, transfers, transports, sells, itive advantage. However, there will be
distributes, dispenses and administers opportunities for parties wanting to par-
medical marijuana ….” §381.986(8)(e), ticipate in various aspects of the indus-
F.S. (emphasis added). Based on the try. For example, if operating retail out-
statutory definition, the Office of lets is no longer limited to the MMTCs,
Medical Marijuana Use has required Publix, or Walgreens may seek to offer
MMTCs to perform all the functions medical marijuana to their eligible cus-
necessary to grow, process, and distrib- tomers.
ute medical marijuana, thus creating a Assuming businesses in Florida’s med-
vertically integrated industry. ical marijuana industry are “just like”
After its application to become an every other business is a serious mistake.
MMTC was rejected, Florigrown filed Like everything else in Florida’s medical
suit, seeking a declaratory judgment and marijuana industry, the laws will keep
permanent injunction declaring changing, at least for the foreseeable
§381.986, F.S. unconstitutional. The future. Parties who want to participate in
plaintiff also requested an order requir- this industry need to become educated.
ing DOH to grant Florigrown MMTC They also need to work with knowledge-
status. The trial court entered a tempo- able attorneys and consultants, in order
rary injunction in favor of Florigrown, to obtain guidance and advice on how to
which the State appealed. legally accomplish their goals in this
On July 9, 2019, the First District industry.
Court of Appeal upheld (in part) the
decision of the trial court. Although Stephen H. Siegel, Esq., Partner, Lubell
there were several procedural issues, the Rosen, can be reached at (305) 655-3425
court addressed the substantive question or shs@lubellrosen.com.

44 August 2019 cannabisnewsflorida.com Cannabis News Florida