A split appeals court on Tuesday refused to grant the state’s request to revisit a decision that could revolutionize the way medical marijuana operators do business in Florida.
Instead, the 1st District Court of Appeal asked the Florida Supreme Court to decide whether the state’s “vertical integration” system of requiring licensed operators to grow, process and distribute cannabis and derivative products runs afoul of a constitutional amendment that broadly legalized medical marijuana in Florida.
In an unusual twist in the high-profile lawsuit, five judges on the appeals court recused themselves from deciding whether the case should get a hearing by the full court, known as an “en banc” hearing. The judges did not explain their recusals.
In a 2-1 July ruling, a panel of the appeals court upheld a Leon County circuit judge’s decision that found the state’s vertical integration system conflicted with the constitutional amendment, approved by more than 70 percent of voters in 2016.
Gov. Ron DeSantis’ administration asked the Tallahassee-based appellate court to revisit the panel’s decision, which Florida officials argued injected “confusion and uncertainty” into the state’s medical marijuana industry.
But after the five judges recused themselves, the remaining judges split 4-4, and “less than a majority … voted in favor of rehearing en banc,” Tuesday’s ruling said.
The decision came in a drawn-out lawsuit filed by Tampa-based Florigrown, a medical marijuana company owned in part by prominent strip-club owner Joe Redner. The company challenged provisions of a 2017 law that was aimed at implementing the constitutional amendment.
Under the law, the vertical integration system requires operators --- dubbed “medical marijuana treatment centers” --- to handle all aspects of the cannabis trade. If the state did not have a vertical integration system, companies could focus on individual aspects of the business. Critics of vertical integration contend that it shuts out firms from the industry.
Redner said the restrictions are anti-competitive and hurt Florida's marijuana consumers.
“You've got to have competition in business, we know that,” Redner said. “That's American. That's the way we do it. Free enterprise. Competition keeps the prices down.”
Florida is behind other states that allow medical marijuana sales, he said.
“Florida is becoming like Kansas. It's the only state they don't fix their laws because if they do, they have to take the business away from their buddies, the cartels,” Redner said.
He expects the court fight will take at least another two years before consumers could see a change.
In a concurring opinion Tuesday supporting the decision to deny a rehearing, Judge Scott Makar concentrated, in part, on differences in the definitions of “medical marijuana treatment centers” in the 2017 law and in the constitutional amendment.
The statute says medical marijuana treatment centers “shall cultivate, process, transport, and dispense marijuana for medical use,” while the amendment says a medical marijuana treatment center is an entity that “acquires, cultivates, possesses, processes … transfers, transports, sells, distributes, dispenses, or administers” medical marijuana.
“The power of the Legislature does not include rewriting clear language in the Constitution, transforming a disjunctive ‘or’ into a conjunctive ‘and,’ ” Makar wrote.
“No evidence exists that the people via the elemental language of the medical marijuana amendment clearly intended a market limited to only a few fully vertically-integrated medical marijuana companies,” he wrote.
Because the law “so clearly conflicts with the Constitution, en banc review is unwarranted and would serve only to further delay the inevitable, which is to allow for our Supreme Court to weigh in and definitively pass upon the matter, which the panel has promptly accommodated,” Makar added.
Makar and judges James Wolf and T. Kent Wetherell, who is now a federal judge, made up the three-judge panel in the July 9 decision, which upheld in part a ruling by Leon County Circuit Judge Charles Dodson. Dodson issued a temporary injunction requiring state health officials to begin registering Florigrown and other medical-marijuana firms to do business, but his order was put on hold while the state appealed.
Makar joined Wolf and judges Joseph Lewis and Ross Bilbrey in opposing the request to rehear the case. In his concurring opinion, Makar noted that the decision to ask the Supreme Court to decide the matter leaves the “existing legislatively-established oligopolistic vertically-integrated market structure” intact.
“Even if the Supreme Court denies review, and the panel opinion becomes operative, no floodgates will open that threaten ruination on society --- akin to Reefer Madness --- as might be feared,” Makar wrote. “Properly regulated, medical marijuana serves an important public health goal in accord with the intent of a super-majority of Florida voters.”
But in a sharply worded dissent, Judge Brad Thomas chided his colleagues for refusing to take up the case again and ripped the three-judge panel’s decision. Thomas noted that marijuana remains a Schedule 1 drug under federal law, which means it has a high potential for abuse.
The decision not to revisit the appellate ruling “will have a profound impact on public safety,” Thomas wrote, arguing that the July decision “usurps the constitutional authority of the Legislature, which carefully considered and approved those policies, and the governor, who signed the legislation” and whose Department of Health is responsible for implementing the policies.
Thomas warned that the preliminary injunction “will result in the increased potential for the unregulated use of marijuana, a dangerous drug which has been shown in numerous studies to represent a significant harm to both young people and others who may now be permitted unfettered access to this drug.”
Judges M. Kemmerly Thomas, Timothy Osterhaus, and Harvey Jay joined Thomas in seeking to hear the case en banc, but they did not write separate opinions or sign on to Brad Thomas’ dissent.
Chief Judge Stephanie Ray and judges Clay Roberts, Lori Rowe, Susan Kelsey and Thomas Winokur were recused.
Despite the unusual circumstances of the split decision and the number of judges who did not take part, Tuesday’s ruling did little --- if anything --- to change the landscape for medical marijuana operators already in the state or for those seeking entry to what is projected to be one of the nation’s most-lucrative cannabis markets.
“It’s obvious the court was split on how to resolve the issues in the case,” Jim McKee, a lawyer who represents licensed medical-marijuana operators and companies seeking to do business in the state, told The News Service of Florida in a telephone interview. He added that it was “surprising that five judges recused themselves” from Tuesday’s decision.
Like others in the industry, McKee is waiting for the state Supreme Court to “have the final say on the issues.”
The high court ruling could have a far-reaching impact. Operators’ licenses are routinely selling for upwards of $50 million, but the value of those licenses could plummet if the court does away with state caps on the number of medical marijuana operators, or if the court decides that vertical integration contradicts the constitutional amendment.