Could a Recent Florida Court Ruling Disrupt the State’s Marijuana Industry?

A contested ruling from one of Florida’s appellate courts could mean the end of both (1) required vertical integration and (2) caps on the number of registered medical marijuana treatment centers (MMTCs) in Florida.

To understand the issue, a quick primer on the nature of Florida’s (exclusively medical) marijuana program is in order. First, unlike many states, Florida requires “vertical integration,” meaning that, if registered by the state as a MMTC, the entity must “cultivate, process, transport and dispense” medical marijuana. Fla Stat. § 381.986(8)(e) (emphasis added). Second, Florida also caps the number of registered MMTCs, with the number of allowed MMTCs slated to increase as the number of registered qualified patients grows.

In a lawsuit initiated by a rejected MMTC applicant, the First District Court of Appeal (one of Florida’s five appellate courts) struck a number of significant blows to the existing medical marijuana framework in Florida, delighting prospective applicants and spooking existing license holders

First, the court held that the vertical integration requirement is unconstitutional. As the court explained, the 2016 constitutional amendment requiring the creation of Florida’s medical marijuana program did not require that a MMTC control every element of the supply chain—it defined a MMTC as an entity engaging in one or more of a series of medical marijuana-related activities, not all of them. Yet in Florida, each MMTC is required to do it all—grow the plant, process the plant, transport the medical marijuana product(s), and then sell them to end users (patients).

Second, the court found that its position on vertical integration compelled a finding that the cap on registered MMTCs was likewise unconstitutional. The cap, as the court described, is an “unreasonable” regulation of an industry governed by a constitutional amendment.

Late last week, the State filed a motion asking the entire First DCA to rehear and reconsider the ruling described above, advancing arguments as to why neither the vertical integration requirement nor the cap on MMTC registrations are unconstitutional.

To put it mildly, July has been a whirlwind month for Florida in the cannabis department. On July 1, 2019, Florida’s new hemp law became effective, legalizing (and providing for regulation of) CBD products and creating a framework for commercial hemp growth. Yet, as discussed above, the month closes with more cannabis-related questions than answers. Whatever the resolution, the outcome is bound to have a significant effect on the marijuana market in Florida, as well as on policy discussions throughout the country.