Panel Crafts Regulation for Medical Marijuana
A panel crafting regulations to jump-start the state's new medical-marijuana industry replaced a lottery system, scrapped by a judge in November, with a scorecard to pick five nurseries to grow, process and distribute types of pot authorized by the Legislature last year.
The 12-member committee also set an application fee at $75,000 and tried to find ways to avoid the need for legislative approval of the regulations in the hope of getting non-euphoric cannabis to sick children as quickly as possible.
The panel spent more than 25 hours Wednesday and Thursday hashing out a rule to provide a regulatory framework for the new industry. During the talks, nurserymen were unable to convince health officials to change ownership requirements that some contend will keep veteran growers from risking their businesses to participate in the pot-growing industry.
Under the marijuana law passed last spring, nurseries that have been in business for at least 30 continuous years in Florida and cultivate at least 400,000 plants are eligible to be one of five "vertically-integrated" entities that will grow, process and distribute strains of cannabis that are low in euphoria-inducing tetrahydrocannabinol, or THC, and high in cannabadiol, or CBD, for patients who suffer from severe spasms or cancer.
The costs of starting up the new operations include posting a $5 million bond, which could cost from $50,000 to $500,000, depending on how much money or assets the nurseries pledge to secure bonds.
Administrative Law Judge W. David Watkins in November rejected a regulatory framework proposed by the Department of Health. In part, Watkins tossed out a plan to use a lottery system to choose the five entities that would grow, process and distribute the pot.
Also in the order, Watkins wrote that the "plain language" of the law required the "dispensing organizations" to be nurseries.
During the marathon workshop this week, the five nurserymen on the panel wanted to create separate entities to shield assets in existing companies from risks incurred by taking on marijuana, which is still illegal under federal law and is shunned by financial institutions.
"The reason we are here is to create the best structure for having the best applicants … and you should choose the best applicant, whoever scores highest. And I think in this situation … you are not going to have as high of a quality of application pool as if the rule was changed to allow a different (ownership) structure," Bruce Knox, owner of Knox Nurseries, said.
But Patricia Nelson, director of the Department of Health's Office of Compassionate Use, and attorney Donna Blanton, who specializes in administrative law and sat on the panel, said they did not believe a different ownership method would survive a legal challenge.
"The obvious solution here, which I know nobody wants to do, is a legislative fix," Blanton said.
During debate on the issue, Nelson pointed out that lawmakers are now considering a much broader measure (SB 528) that would legalize "traditional" medical marijuana, possibly opening the door for a much more lucrative endeavor for growers.
"With (the) SB 528 proposal out there, do you really think this short-term, 'we're not going to make any money with it,' stays?" Nelson said. "Come on guys, look at the environment we're in. Don't be disingenuous."
Colorado marijuana grower Joel Stanley, who with his brothers manufactures the "Charlotte's Web" non-euphoric cannabis that prompted Florida's law and is hoping to start doing business in the state, said growers should be willing to put their assets on the line to help the sick children who can benefit from the strains of marijuana believed to eliminate or reduce life-threatening seizures in children with severe epilepsy.
"I do wish the best rule would come forward that would allow the department to pick the cream of the crop because that's what the people that are waiting on this deserve. At the same time, I will say that I did this. I know a lot of people who did this years before anyone knew about it or even thought there was any money it. I would encourage not only the people in this room but the people who are considering applying, if you think you're the cream of the crop … to consider putting your cream of the crop on the line because it's a really amazing thing you will get to do. It's a lot better than growing tomatoes or hydrangeas or whatever the hell you're growing," Stanley said.
Under the law, a rule was supposed to be in effect on Jan. 1 but was delayed because of legal challenges to the Department of Health's first attempt. The earliest a new rule could go into effect, if it is not challenged again, would be nearly two months from now, meaning that health officials could select the five growers --- one in each part of the state --- in April. The five dispensing organizations would then have up to seven months to get the product on the market, according to the proposal agreed to Thursday.
The panel scrapped most of the requirements in the old rule and included them as items in the application, in part to reduce the need for legislative approval that would be required if regulatory costs for all of the businesses that might participate in the program exceed $200,000 in one year. The group agreed that the estimated costs to complete an application would be about $1,000.
The panel also created a weighted scorecard that would rate applicants based on cultivation (30 percent), processing (30 percent), dispensing (15 percent), financials (20 percent), and medical director (5 percent). To be able to score high enough to win a license, growers would have to spend hefty sums, including for consultants who charge between $150,000 and $500,000 just to help fill out the application, according to panelist Jill Lamoureux, of Colorado-based CannLabs, Inc.