Florida’s Medical Marijuana Market

SB 1030 put on hold again: what’s standing in the way of a medical marijuana market in Florida?

 

The Florida senate bill designed to authorize the medical use of low-THC strains of cannabis has been put on hold yet again due to opposition from patients and potential applicants.

The latest petitions are questioning the business interests and incentives of members of the regulation committee, as well as the requirement for a $5 million performance bond and the hefty application fee, which applicants say would unnecessarily increase the financial risk of starting a cannabis business. This isn’t the first time the regulations have been criticized; the original bill was revamped in late 2014 after controversy over its proposed “may-the-luckiest-nursery-win” license lottery, to create a scoring system that would award licenses based on merit.

The Compassionate Medical Cannabis Act, SB 1030, was passed in Florida in May 2014 to allow the use of marijuana that is high in CBD but low in euphoria-inducing THC for patients with certain medical conditions. This bill was designed to allow the Florida Department of Health to select five dispensing organizations to cultivate, process and distribute cannabis. After Amendment 2 failed to pass in November, this legislation has been the only hope for Florida patients with cancer and disorders causing muscle seizures and spasms, hoping to seek relief through medical marijuana.

Are patients in Florida ever going to be able to access medical marijuana? The license distribution process has stirred a lot of controversy, but there are three main issues standing in the way of a (restrictive) medical marijuana market in the state of Florida.

 

Commercial Interests vs. Patients’ Interests

Moriah Barnhart, the mother of Dahlia Barnhart, a 4-year-old with girl with an inoperable brain tumor, filed a petition in early March on behalf of her daughter challenging the commercial interests of the members of Florida’s rule-making committee.

The petition highlights that many members the state’s committee could stand to profit commercially from Florida’s medical marijuana market. (One committee member is Joel Stanley, whose company has a trademark on the high-CBD strain, Charlotte’s Web and could potentially be the primary seed and clone supplier for Florida’s market.)

Ian Christenson, the author of the Barnhart’s petition and an attorney for Health Law Services, has also criticized the lack of minimum standards for the scoring system in place to award the five licenses to dispensaries.

“Does this mean that if every application received gets a failing score then we pick the best failure?” Christenson noted, emphasizing that the current regulations could lead to low quality standards for the cannabis available on Florida’s market. There are also no requirements for organic cultivation, which could potentially create products dangerous for children with neurological disorders.

 

$5 Million Dollar Bond Requirement

While patients are concerned about commercial interests affecting medical marijuana, potential applicants are focused on the regulatory costs and financial risk of applying for a license. Current regulations require that successful applicants post a $5 million performance bond, which would be paid to the Department of Health in the event that the dispensary’s approval is revoked or the business is shut down.

The $5 million bond requirement creates massive, and unnecessary, financial exposure for cannabis entrepreneurs and the bond companies, especially given that cannabis is still federally illegal. Green Therapeutics, a potential license applicant, has illustrated two potential doomsday scenarios: 1) the federal government shifts its enforcement priorities and shuts down all of these cannabis businesses or 2) low-THC-cannabis is not effective with patients and the dispensaries are commercially unsuccessful. Either scenario could potentially force cannabis businesses owners and bond companies to pay a penalty of $5 million to shut down the business.

 

Excessive Application Fee Requirement

Applicants have also complained that the application fee (currently stated as $60,063 in the regulations) is not a reflection of the actual costs incurred by the committee in the selection process and far surpasses the fees to apply for medical marijuana licenses in other states. The application fee in Illinois, for instance, was $5,000. Green Therapeutics has expressed concern that this application fee adds unnecessary financial burden to cannabis-dispensing organizations, which will eventually be passed on to the consumer and increase patients’ cost of medication. 

While the failure of Amendment 2 and the dilatory rule-making process for SB 1030 is no doubt frustrating, it is also encouraging that medical marijuana patients are speaking out for their rights and are concerned that Florida’s medical marijuana market evolves in a manner that provides quality products for its patients, in a socially and economically sustainable manner.

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