State Marijuana License Slated To Go To Black Farmer
The state will kick off the rulemaking process for Black farmer applicants within “weeks to months” and set the stage for another set of licenses that would nearly double the number of operators.
A Black farmer with ties to doing business in Florida will be at the head of the line for a long-awaited batch of medical-marijuana licenses in an application process that state health officials will launch soon, senior aides to Gov. Ron DeSantis said.
The aides told The News Service of Florida that the Department of Health will kick off the rulemaking process for Black farmer applicants within “weeks to months” and set the stage for another set of licenses that would nearly double the number of medical marijuana operators in the state.
“It would be awesome if we could get that application, get that license. We are definitely overdue as it relates to that,” Ocala nursery operator Howard Gunn, who is Black, said in a phone interview.
State health officials are poised to begin the application process following a highly anticipated Florida Supreme Court ruling last month that upheld a 2017 law carrying out a 2016 constitutional amendment that broadly legalized medical marijuana. The court upheld a requirement in the law that medical marijuana operators handle all aspects of the business, including cultivation, processing and distributing --- as opposed to companies being able to focus on individual aspects. Tampa-based Florigrown LLC, which challenged the law, had until June 11 to ask for a rehearing but did not.
Part of the 2017 law requires health officials to grant a license to “one applicant that is a recognized class member” in decades-old litigation, known as the “Pigford” cases, which addressed racial discrimination against Black farmers by federal officials.
Florida currently has 22 licensed operators, known as “medical marijuana treatment centers,” or “MMTCs,” that have more than 200 retail sites across the state.
But the number of licensed operators dramatically lags behind part of the 2017 law requiring additional licenses as the number of qualified patients --- now nearing 600,000 --- increases. Under the law, Department of Health officials are required to add 15 MMTCs to the 22 existing operators. When the number of patients tips the 600,000 mark as expected in the coming months, the number of new licenses will mushroom to 19.
State officials first will focus on granting a single license to a Black farmer who meets certain provisions, including being a Pigford litigant. Many of the Black farmers who made claims in the federal class-action lawsuit have died, and most surviving litigants are now in their 80s and 90s.
Pigford applicants will try to enter an established medical marijuana market where licenses are selling for up to $50 million. An initial round of licenses were granted in 2015 to operators seeking to sell low-THC cannabis. They were later allowed to sell full-strength cannabis after state voters approved the 2016 constitutional amendment.
“How do you fight that type of situation? Where do we go from there?” Gunn, who said he is affiliated with some Florida Pigford claimants, told the News Service. “There’s no way that we’re going to be able to keep up with that. And it is not going to change. They get further and further ahead. Now that we’re playing catch up, we’re just going to have to be more strategic.”
Upcoming rulemaking for the Black farmer application likely will serve as a template for the process to award the larger batch of licenses and almost certainly will result in legal and administrative challenges, as investors from around the world wrangle for the first opportunity in six years to join Florida’s “green rush.”
The law doesn’t require the Pigford applicant to have resided in Florida while participating in the class-action lawsuit. But other portions of the law require applicants to have been “registered to do business in the state” for “five consecutive years before submitting the application.”
DeSantis aides’ said Black farmer applicants have to meet all of the other requirements in the law to be eligible for a license, including being registered to conduct business for at least five years in Florida.
It’s unclear exactly how the state’s interpretation of the law would affect business partnerships between Pigford class members and investors eager to establish a footprint in Florida.
Players in the medical marijuana industry are very “creative,” DeSantis’ senior staffers said.
“I think that they will find ways for all applicants, not just Pigford, of bringing in additional key players, whether that be financers, whether that be master growers. I think that you'll see a variety of different strategies they use to put together a multidisciplinary team in order to put together a comprehensive application,” said one senior staffer, who spoke on condition of not being identified.
The interpretation of the law will shrink the number of Pigford litigants who are eligible for a license.
The DeSantis administration’s plan also could face pushback from investors who have partnered with Black farmers from other states in the hopes of nailing down a license. Medical marijuana industry insiders are split on the Department of Health’s approach.
“The legislative intent is clear that you need an applicant that was a class member of the Pigford litigation that otherwise is an owner of a five-year company … in order to file an application for that license,” attorney Jim McKee, who represents existing medical marijuana operators as well as potential new applicants, told the News Service.
Some industry insiders believe the department’s interpretation of the Pigford applicant requirements --- and the 2017 law itself --- is too restrictive and could severely limit the pool of eligible applicants.
State health officials, meanwhile, intend to use emergency rulemaking authority to issue the proposed Black farmer regulation to speed up the process. While the Black farmer application rule may be rolled out before the end of the year, potential challenges make the timeline for the award of a license hazy.
“I can't control the challengers. You have a market that's existed for a long time that will nearly double when we license all those applications. … So that's an element of challengers that we just have to consider are out there who may not be excited about 19 new licensees. And then you have everyone who doesn't win, and we can expect those people to probably challenge those awards as well. So, we are prepared to move as quickly as we can in the best way possible, but we're not naive to the fact that we might get a lot of challenges that slow us down,” a DeSantis aide said.
Senate Agriculture Chairman Darryl Rouson, a St. Petersburg Democrat who led the move to earmark a license for a Black farmer, said he intends to follow up with how health officials are dealing with the Black farmer applications and license when legislative committees start meeting again later this year.
“I’m glad it’s going to be awarded and opened up, but disappointed in that, again, we start behind other licensees that have been operating for five to six years,” Rouson said in an interview. “As the chair of Agriculture I intend to make one of my priorities in the incoming session the plight of the Black farmer and I intend to have discussions with leadership about us taking the lead in making sure this gets done.”