Arguing that a $1.33 million price tag is unjustified, a medical-marijuana operator is challenging a license renewal fee boost that came after Gov. Ron DeSantis said pot companies aren’t paying enough to conduct business in Florida.
The state Department of Health in December adopted a rule creating a formula that set the license renewal fee for medical-marijuana operators at $1.33 million every two years — more than 22 times the $60,000 biennial fee operators had been paying since the program started six years ago.
The formula is based on the number of licensed operators and the cost to regulate the medical marijuana program. But the fee does not take into account tens of millions of dollars collected by the agency from patients and caregivers who pay $75 a year for identification cards to participate in the program.
The revised license renewal fee is “an exponential increase” from the previous amount, lawyers for Sanctuary Cannabis, whose license is due for renewal in January, argued in a challenge filed last week.
Sanctuary’s petition for an administrative hearing relied heavily on a budget request the health department submitted to the Legislature for the 2024-25 fiscal year, which will begin in July.
The request showed that the Department of Health collected $14.9 million in application and renewal fees for licenses and nearly $65 million from patients and caregivers during the 2022-23 fiscal year, which ended in June. Currently, more than 854,000 patients are qualified for the program.
The agency, which also gets money from testing labs and fines, collected a total of roughly $84 million that year, anticipates collecting the same amount this year and projects receiving $114 million in 2024-25, according to the budget request.
The agency also reported having a $16.3 million surplus during the 2022-23 fiscal year and projected surpluses of nearly $4 million this year and $61 million in 2024-25.
Setting the renewal amount “without accounting for significant and undisputed streams of fee revenue is wholly without logic or reason,” Sanctuary’s lawyers argued in the petition filed at the state Division of Administrative Hearings.
“The petitioners (Sanctuary) take no issue with the department running a surplus or otherwise receiving any fee, fine, or cost that is necessary to support its operation. However, in light of the department’s own income and projections, the department cannot reasonably assert that this exponential renewal fee increase is necessary to keep its operations afloat,” attorneys Will Hall and Daniel Russell of the Dean Mead firm wrote in the Oct. 26 petition.
The biennial $1,332,124.42 fee “imposes inappropriately high regulatory costs” on operators, “rendering the challenged rules invalid,” the lawyers argued.
Florida voters in 2016 approved a constitutional amendment authorizing medical marijuana for a broad swath of patients. A 2017 law setting up the framework for the medical marijuana industry gave the health department the authority to set license application and renewal fees “sufficient to cover the costs of implementing and administering” the program, as well as public education and research about cannabis.
The fee increase came after DeSantis said medical marijuana operators, whose licenses have sold for upwards of $50 million until recently, need to pay more for the opportunity to do business in Florida.
The state “should charge these people more,” DeSantis told reporters in August 2022.
“I mean, these are very valuable licenses,” the governor told reporters. “I would charge them an arm and a leg. I mean, everybody wants these licenses.”
Many operators in Florida and the rest of the country, however, have struggled with finances because marijuana remains illegal under federal law, which creates banking hurdles and forces companies to pay higher corporate-income taxes.
