What you need to know about the business of Florida Medical Marijuana
Marijuana in Florida
Whether you call it marijuana, cannabis, pot, or weed, the introduction of medical marijuana in the State of Florida and the potential legalization of recreational cannabis will create a new industry worth billions of dollars. The attorneys at Markarian & Hayes are uniquely positioned to assist those eager to enter the ground floor of this burgeoning new industry as businesspeople. Participation in Florida’s growing marijuana industry will not come without complexity and uncertainty, however. The attorneys at Markarian & Hayes have developed distinct experience at the intersection of agriculture, law and business that can be leveraged to provide your new marijuana business with competitive advantage in this evolving marketplace. Our lawyers were raised in families engaged in farming, large and small-scale agriculture operations, and have the unique knowledge necessary to create the platform from which your business will succeed.
The constitutional Amendment 2 (the “Amendment”) guarantees the right of patients with certain “debilitating” illnesses to use medical cannabis and takes effect in January 2017. Much of the details of the Amendment are unknown because it has yet to be implemented by Florida lawmakers. The Amendment delegates authority to Florida’s Department of Health (“DOH”) and its Office of Compassionate Use to promulgate administrative rules and regulations to implement it, including “procedures for the registration of MMTCs [Medical Marijuana Treatment Centers] that include procedures for the issuance, renewal, suspension and revocation of registration, and standards to ensure proper security, record keeping, testing, labeling, inspection, and safety.” MMTCs are the entities that will likely be responsible for the acquisition, cultivation, possession and processing of medical marijuana in Florida. They will be responsible for the development of marijuana-related products such as food and other edibles, tinctures, aerosols, oils and ointments, and may be the sole entities eligible under the law to acquire, cultivate, possess, process, transfer, transport, sell, distribute, dispense and otherwise administer medical marijuana to the public in Florida.
These necessary procedures will be implemented via rulemaking and Florida’s Administrative Procedure Act (“APA”), Chapter 120 Florida Statutes. In Chapter 120, the Florida Legislature created a comprehensive administrative decision-making process that provides a road map for the exercise of authority delegated to agencies by the legislature, and, at the same time, provides full opportunities for public participation. The APA delegates authority to Florida’s administrative agencies to promulgate rules and regulations that comprise the Florida Administrative Code. The rules and regulations promulgated by the Florida DOH are the means by which Florida lawmakers will flesh out the regulatory framework of medical marijuana in Florida, including licensing and registration, regulation of security, record keeping, testing, labeling, inspection, safety and enforcement of these procedures. These are the rules and regulations with which you and your new business must comply, or face financial penalty, suspension or revocation of licensure.
The attorneys at Markarian & Hayes have comprehensive experience in handling administrative law matters, including the entire rulemaking process. The rulemaking process must include public participation by law. If you are starting a new marijuana business in Florida, or are currently operating one, the upcoming DOH rulemaking process will have a direct effect on your business. Call the attorneys at Markarian & Hayes today to discuss the various benefits of having your specific business interests represented in the public rulemaking process.
Crucial Points in the Administrative Process: You Deserve Your Business Interests Represented
- Rulemaking: creation of Florida’s medical marijuana regulatory framework;
- Initial application for licensure;
- Ongoing compliance with regulations; and
- Defending administrative investigations and enforcement actions.
(1) Rulemaking: as a new business in Florida’s novel medical cannabis industry, you have an incredible opportunity to participate in the whole-cloth creation of a medical cannabis regulatory framework in Florida. The rulemaking process, through which the DOH is required to establish the medical marijuana regulatory framework, is open to public participation. Do not forego your opportunity to participate in fashioning the very regulations to which your new business will be subject and on which its successful and profitable operation will depend. The attorneys at Markarian & Hayes have the experience and insight to effectively represent your interests and achieve your ideal circumstances.
Rulemaking is the process by which Florida administrative agencies propose and consider adoption of rules and regulations that will impact your business and its operations. Agencies rely on rule adoption in order to function. By retaining an attorney experienced in the administrative process, your business will have an opportunity to submit comments, suggestions and recommendations in shaping a proposed rule or regulation. Engaging the opportunity to help shapes rules that potentially affect your business is an intelligent way to gain competitive advantage in the marketplace.
The Florida DOH will have nearly unfettered discretion in implementing Amendment 2 because the Amendment gives DOH very little direction in fashioning a regulatory framework. Among the myriad of issues to be determined in the rulemaking process are at least the following:
- Will existing Charlotte’s Web nurseries run all MMTCs, or will DOH expand the program to widen the medical cannabis market with additional Medical Marijuana Treatment Center operators?
- If other entities are permitted to apply for licensure: the Amendment places no restrictions on the type of entities that can run MMTCs, therefore it is still unknown whether MMTCs may be run for-profit or must be not-for-profit entities.
- Will the DOH limit the number of MMTCs in the state? How restrictive will any limitation be?
- Residency: will the DOH require new nurseries to prove that they have operated in the State of Florida for a certain period of time in order to be eligible for licensure? The Charlotte’s Web framework required had robust residency requirements for applicant nurseries.
- Will the DOH require MMTCs to vertically integrate their business, or in other words, control the entire supply chain, from acquisition, to cultivation, processing and through retail sale? Substantial vertical integration requirements may reduce the interest of many would-be medical marijuana businesses due to additional issues of scale and attendant costs.
- Financing: Amendment 2 is entirely silent on financing. What types of restrictions might the DOH apply to capitalization and financial operation of MMTCs?
- Application procedure: if MMTCs are opened up to new entrepreneurs outside of the six operating Charlotte’s Web nurseries, the competitive application process is likely to be rigorous and expensive. The DOH first tried a lottery application system with respect to Charlotte’s Web, but ultimately used a scorecard system after losing a lawsuit against the lottery system. How robust and comprehensive will the application procedure be for MMTCs?
- Application fee: Charlotte’s Web applicants were required to pay a $60,063.00 application fee. This component will likely depend on the number of applicants the DOH accepts: the higher the amount of applicants, the lower the application fee will likely be. The DOH may also institute other financial barriers to entry in the medical marijuana industry, such as performance bonds or other surety measures. Successful Charlotte’s Web applicants were required to post a $5 million bond prior to registration.
All of these issues, among many others, will have a direct effect on your new marijuana business in Florida. Will your business be a producer, a processor, or a retailer? Each aspect of the industry will be affected differently by the results of the rulemaking process. The determination of these issues will set important precedent that will be considered in the event Florida legalizes recreational marijuana. As a business entering this unusual and unknown industry, you deserve to have your interests represented while these issues are determined, regardless of whether you are a dispensary, producer, or processor.
(2) Initial Licensure: consulting with an attorney before submitting an initial application for licensure can streamline the process and increase the likelihood of a successful application. Often the rules and regulations describing the application process are vague and confusing. Our attorneys are proficient in interpreting the requirements to obtain licensure for your particular business and will advise you throughout the entire process. We have direct experience in negotiating with Florida’s administrative agencies to ensure proper interpretation of statutory and regulatory requirements of new applicants. Having participated directly in the process that generated the rules and regulations governing medical marijuana in Florida, the attorneys at Markarian & Hayes are ideally situated to negotiate your application for licensure.
(3) Ongoing Regulatory Compliance: once your business has obtained a license, it is important to create the appropriate processes required for compliance with the law from day one. Your obligation and relationship with the state usually does not end after you become licensed or registered. Many regulatory frameworks require ongoing compliance with rules, and often require affirmative action within specific timeframes by businesses and professionals when certain circumstances change. Most of Florida’s regulatory frameworks are convoluted and difficult to synthesize. Often multiple rules and regulations must be read in conjunction with one another to properly understand the full extent of your obligations under the law. Ongoing compliance will likely be a large part of operating a dispensary or other Florida medical marijuana related business. If you are unsure whether your operating or potential business is currently compliant with applicable Florida laws, rules and regulations, contact our office today. Ensuring compliance before an administrative enforcement action is filed against you will ultimately save resources.
(4) Defending Administrative Investigations & Enforcement Actions: failure to adhere to the rules and regulations applicable to your business may result in an administrative enforcement action against you. These lawsuits are different than civil suits, and are resolved through different procedures. Parties have different options under the law and employ different strategies to achieve resolution. These actions against you typically have one or several purposes: to fine you, suspend your license, or revoke your license. Often the penalties sought in these actions overreach and do not comply with guidelines. Our attorneys are experienced in negotiating with agency counsel to mitigate financial penalties and avoid costly suspension or revocation of licensure. Consult with an attorney experienced in interpreting Florida’s APA to mitigate your financial penalty or potentially save your business’ license. Having participated directly in the process that generated the rules and regulations governing medical marijuana in Florida, the attorneys at Markarian & Hayes are ideally situated to negotiate a successful resolution to any administrative enforcement action against you or your business’ license.
Protecting Your Medical Marijuana Business Interests
The attorneys at Markarian & Hayes can leverage their experience in business, agriculture and administrative law to help your new Florida medical marijuana business succeed. We are in a unique position to use our decades of knowledge and experience to represent medical marijuana patients, doctors, individuals, as well as potential and existing businesses comply with and navigate Florida’s growing medical marijuana industry. Our record of success in the traditional business setting gives us an exceptional platform from which to assist in proper business formation, strategic planning and operation within the confines of Florida’s new medical marijuana industry. A sample of the services offered by Markarian & Hayes includes:
- Protection of intellectual property
- Due diligence and general counsel for marijuana investors
- Obtaining necessary licensure, zoning, environmental permits and insurance
- Representation in the initial licensing process
- Representation of your business interests throughout the rulemaking process
- Business entity formation and strategic planning, including restructuring and dissolution
- Capitalization of new business entities and financing assistance
- Defending administrative enforcement actions
- Corporate counsel and general counsel for new marijuana businesses
- Ensuring compliance with ongoing administrative regulation
- Defending administrative investigations and audits
- Formal and informal administrative hearings and agency proceedings
- All aspects of rulemaking proceedings, including rule challenges
- Marijuana contract disputes and commercial litigation
- Marijuana dispute mediation and conflict resolution
- Representation in local government, city, county and other municipal ordinance and moratorium proceedings
- All aspects of strategic corporate representation and business transactions for the new Florida medical marijuana business
Legal disclaimer: recreational possession and use of marijuana remains illegal under Florida and federal law. Nothing herein shall be interpreted or relied upon for the purpose of violating federal or Florida law. Markarian & Hayes will at all times abide by federal and Florida law as well as Florida Bar Rule 4-1.2(b) and all other Rules of Professional Conduct promulgated by the Florida Bar and the American Bar Association.