Posted on September 30, 2019

The state of medical marijuana licensing in Florida is still up in the air after the 1st District Court of Appeals refused to grant Governor Ron DeSantis’ request to revisit the landmark licensing case last week. The original case, filed by local dispensary Florigrown against the state of Florida, argues that current licensing laws are unconstitutional. The appellate court refused to revisit the case and instead asked the Florida Supreme Court to weigh in on the constitutionality of the state’s licensing laws.

Marijuana licensing laws vary from state-to-state, requiring cannabis companies and dispensaries to carry licenses for various tiers of cannabis production and sales, ranging from cultivation to transportation. The licensing laws in Florida are under such scrutiny because the legal language of the marijuana amendment in the state’s constitution does not match the language used to implement the state’s licensing laws.

Medical marijuana licensing laws in Florida

Marijuana laws were amended into the state’s constitution in 2016, legalizing medical marijuana across the Sunshine State to treat certain diseases and symptoms. In the amendment, dispensaries are referred to as “medical marijuana treatment centers” which “acquire, cultivate...transport, sell, distribute, dispense, or administer” medical cannabis. But per a 2017 statute aimed at implementing the new laws, these treatment centers are defined as entities that “cultivate, process, transport, and dispense” medical marijuana.

According to the case filed by Florigrown, the use of “and” instead of “or” violates the constitutional amendment. The licensing laws force local medical marijuana treatment centers to vertically integrate their business model from seed to sale in order to procure a medical marijuana license. Florigrown argues that requiring Florida treatment centers to be vertically integrated directly conflicts with the state constitution, which defines a treatment center as a facility that operates with cannabis in any capacity. 

Ultimately, the 2017 statute prevents smaller businesses that specialize in only one or two tiers of cannabis production from getting a license by only granting licenses to vertically integrated cannabis companies. And in July, the 1st District Court of Appeals ruled that the requisite vertical integration was, in fact, unconstitutional. But September saw the same court unable to reach an agreement regarding what the state should do with their vertically integrated cannabis model.

What does vertically integrated cannabis look like in Florida?

Vertical integration refers to any cannabis company that controls the production of marijuana from seed to sale. These companies cultivate, extract, transport, and sell all of their own products, thus controlling what kinds of cannabis products are sold, and limiting the number of brands available to patients.

According to the 2019 Marijuana Factbook, out of the 142 dispensaries operating in Florida, 120 of them are operated by just six vertically integrated companies. The way the licensing laws are now, the state risks limiting their $525 million medical marijuana market to just that handful of companies legally able to obtain a license, a move that could create a very expensive market for entrepreneurs and drive up prices for patients.

The licensing laws of other legalized states, like Colorado and Nevada, follow a more horizontal model that requires cannabis companies to have licenses for each aspect of their business. Dispensaries wanting to sell cannabis only need a sales license while other companies would need additional licenses to cultivate cannabis or extract cannabis oils.

If Florida were to modify their licensing laws to include horizontal integration, it would broaden the state’s overall marijuana market. Cannabis companies that are vertically integrated and those that are not would each have the opportunity to obtain a state marijuana license and create a more competitive market that would benefit both the state and its patients.

State Governor Ron DeSantis made a statement earlier this year regarding vertical integration, saying that the current laws do not follow free-market principles. “I think it should be horizontally integrated instead of vertically integrated,” he said back in March, but DeSantis has since teetered back and forth on his stance regarding the matter, creating a sense of confusion and concern throughout the state.

Progress on medical marijuana licensing laws in Florida

In July, with support from Florida health officials, DeSantis asked the court to revisit the case with a hearing in front of the full appellate court, a trial known as an “en banc review”. Last Tuesday, the 1st District Court of Appeals refused the en banc review after a split-court was unable to reach a unanimous decision. After five judges recused themselves from the vote, the remaining eight judges were split down the middle regarding whether an en banc review was necessary for this case. Instead, the judges voted to send the case to the Florida State Supreme Court for a final ruling. 

The court acknowledged that the licensing law “clearly conflicts with the state constitution,” but argued that because the court itself does not hold the power to rewrite the constitution, an en banc would only “delay the inevitable,” The inevitable, as it were, is a hearing with the state supreme court. By voting to send the case to the supreme court without en banc, some of the judges hope to expedite this already long, drawn-out case and finally reach a decision. Still, others argue that refusing to revisit the case now could have a negative impact on public safety later by increasing the use and risk of unregulated and illicit cannabis markets. 

Medical marijuana patients may have to wait as long as 18 months before the case is finally heard by the Florida State Supreme Court. In the meantime, licensed medical marijuana treatment centers will continue to operate and meet the needs of the over 240,000 licensed patients in the state. Marijuana Doctor will continue to follow this story as it develops, and we will be updating our blog and our patients as more news becomes available. If you have any questions about obtaining your medical marijuana card, see our post on how you can qualify for your own medical marijuana card.