Florida’s Medical Marijuana Regulator Faces Lawsuit

Medical marijuana patient advocates and cannabis investors around the state of Florida are abuzz after news of a lawsuit against state marijuana regulators.

The lawsuit was filed after state regulators approved a cannabis investment firm’s request to own more licenses than the federal law allows. The state marijuana regulators also allegedly failed to provide requested public records.

Medical marijuana has been legal in the state of Florida since 2014, with many efforts to expand access to cannabis products– both medically and recreationally– since then. This began as a simple provision for providers to use CBD oil to treat terminally ill patients and has grown to allow a fully-fledged medical marijuana industry to thrive in the state (a measure provided for in a November 2016 amendment).

Florida medical marijuana legislation regulates that no individual or entity may hold ownership of greater than 5 percent in more than one medical merijuana firm, either “directly or indirectly.” State regulations like these are put in place to encourage fewer monopolies in the medical marijuana industry.

Gotham Green Partners, the cannabis firm seeking greater than 5 percent ownership, has been working for years to assert control over iAnthus, a medical marijuana company operating in several states. Florida’s Office of Medical Marijuana Use (OMMU) granted Gotham Green the request, approving the company to hold more than 5 percent ownership in both iAnthus and MedMen, another medical state-licensed marijuana company.

This move is one in a long history of transactions between Gotham Green and iAnthus; in 2020, iAnthus defaulted on a loan from the bigger company, which prompted a recapitalization transaction. iAnthus has since been working to reorganize its financial structure under an order from the Ontario Superior Court of Justice.

A complaint was filed against the requested variance, which would allegedly “illegally authorize an ownership structure that violates” Florida’s state medical marijuana legislature.

Michael Weisser, a plaintiff in the suit, has complained of difficulty accessing the public records concerning the OMMU’s approval of the requested variance.
“This is such a blatant violation of the regulations, it’s unbelievable,” Weisser told Politico. Weisser claimed that the regulators “just want to sweep it under the table.”

The regulator, according to Wiesser, has been less than forthright in producing the documents, but Weisser was ultimately able to secure a redacted version of the report from a third-party consulting firm. This redacted report claims that the “proposed recapitalization structure for iAnthus does not appear to meet the requirements of Florida Statute.”

The draft, provided by the accounting firm Carr, Riggs, & Ingram, does not make it clear why the OMMU granted the variance, despite the request’s alleged contradiction of state law.

Weisser and the other plaintiffs are doing what they can to secure unredacted versions of the reports. Their efforts have largely been in the form of public records requests.

It is unclear whether the state agency specifically redacted the original documents in anticipation of public records requests, but it is unlikely that they would have done so.

The approval of requests like Gotham Green’s is significant for several reasons. While it has little to do in the short-term with consumers’ access to medical marijuana and

other cannabis products (at least directly), the growing legalization of marijuana products leaves room for corporations like Gotham Green to monopolize.
Restrictions like the one in Florida are largely put in place to protect consumers from unfair markets dominated by giants like Gotham Green.

Florida has been adaptive in its approach to marijuana policy reform in the last decade. Following the state’s 2016 amendment to allow a medical marijuana industry, Florida lawmakers revisited the policy in 2017, ultimately passing the Medical Use of Medical Marijuana Act (MUMMA). This legislation outlined specific requirements for all medical marijuana dispensaries, putting a limit on the number of Medical Marijuana Treatment Centers and prohibiting the sale or use of smokable marijuana entirely.

These vertical licensing rules largely only make room for bigger medical marijuana corporations, such as Gotham Green, MedMen, and Curaleaf. Some lawmakers have been making efforts since the 2017 MUMMA to do away with these licensing strictures so that the medical marijuana marketplace might be more open to smaller manufacturers, as well.

The Gotham Green and iAnthus battle is followed by another marijuana-related lawsuit where Florida statutes and private ownership have once again been called into question. Florida Agriculture Commissioner Nikki Fried (also a Democratic gubernatorial candidate) is suing on behalf of medical marijuana patients who are seeking access to firearms.

When completing a background check to purchase firearms, applicants must indicate whether they have used any illegal substances– including cannabis products. For medical marijuana patients, this can be a tough decision, as telling the truth will make them ineligible to purchase a firearm and lying can cost them up to five years in prison.

According to Fried, this is an issue that transcends current debates over firearms; “for decades, marijuana patients have been discriminated against—that they see their rights not being completely afforded to them,” Fried said in one interview.

In the state of Florida, there were roughly 270,000 medical marijuana patients seeking care from approximately 2,500 qualified physicians in 2019– a number that has only grown since then. The state of Florida has more full-time cannabis jobs than any other state. Florida has seen more than a 700 percent increase in its number of full-time cannabis jobs over the last decade.

The Justice Department will have the week to decide how to rule on the issue. Cases like this one make it clear that the broad marijuana prohibition set in place is far more nuanced than lawmakers may have previously assumed.

Many state officials and Florida legislative bodies are working for broader access to medical and recreational marijuana products, facing issues of state regulations and patient privacy in their efforts.

Florida’s lawmakers will have their work cut out for them in the coming weeks, as questions of patients’ rights and the future of the cannabis marketplace demand to be answered.