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Judge: Health Officials Wrongly Disqualified Pot Applicant

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Wikimedia Commons
The Florida Channel
Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.

Health officials wrongly rejected an application from a Gainesville nursery in competition to become one of the state's five medical-marijuana dispensing organizations, according to a ruling issued Friday.

The Florida Department of Health erroneously disqualified Daniel Banks, the director of research and development for San Felasco Nurseries, for failing what is known as a "level 2" background screening, Administrative Law Judge R. Bruce McKibben wrote in the 17-page ruling.

The nursery was one of five vying for a sought-after dispensing organization license in the Northeast region of the state, but lost out to another grower because of Banks' Kansas conviction for a drug crime more than a decade ago. State law bans convicted felons from being owners or managers of the dispensing organizations.

Banks, then 18, pleaded no contest to illegal possession of Phenobarbital in Kansas in 2004. While the crime is a felony in Florida, it is a misdemeanor under Kansas law.

"And since he was charged in Kansas, not Florida, his crime was a misdemeanor, not a felony, for purposes of determining whether it was a disqualifying offense," McKibben wrote.

Banks later had his record expunged of the crime, which, under Kansas law, means "the conviction and nolo plea would not be a disqualifying event … because the conviction never happened," McKibben wrote.

McKibben's ruling Friday is the latest twist in the drawn-out battle over a 2014 Florida law authorizing non-euphoric marijuana for patients with chronic seizures or cancer. Under the law, doctors were supposed to begin ordering the products for patients more than a year ago. But legal challenges, and the rejection of the health department's first stab at a rule by a separate administrative law judge, have delayed its implementation.

The law authorized five dispensing organizations to grow, process and distribute marijuana that is low in euphoria-inducing tetrahydrocannabinol, or THC, and high in cannabadiol, or CBD. Nurseries that have been in business for at least 30 continuous years in Florida and grow a minimum of 400,000 plants were eligible to apply for one of the five coveted licenses.

A three-member panel --- comprised of the health department's Office of Compassionate Use Director Christian Bax; Patricia Nelson, who works for Gov. Rick Scott and was Bax's predecessor; and a Department of Health accountant --- ranked the dispensing organization applications last year. The panel ranked San Felasco higher than its competitors, according to documents provided by the Department of Health.

In November, health officials selected five applicants --- one in each region of the state --- from more than two-dozen hopefuls seeking the coveted licenses. The selection of the five licensees set off another round of challenges; hearings in the cases are slated from March through August.

San Felasco, whose investors in the medical marijuana operations include the prominent lobbying firm Ballard Partners, is one of the nurseries challenging the awarding of a dispensing organization license to Northeast region winner Chestnut Hill Nurseries. McKibben slated three weeks in July for the hearing.

McKibben and other administrative law judges presiding over the cases are planning to hold "de novo" hearings in which they will essentially rank the applicants themselves. The judges --- and the challengers --- contend that the selection of the five nurseries by health officials was a "preliminary" agency action that will not be final until the administrative cases are completed.

But, in an order in a different case earlier this month, Administrative Law Judge John G. Van Laningham conceded that the judges have no authority to stop the department from moving forward with the process.