Robert Kline, McDermott Will & Emery, Miami

Three years ago, Floridians voted overwhelmingly to legalize medical marijuana. Indeed, 71 percent of Floridians voted to legalize medical marijuana on a constitutional amendment.

The amendment defines a medical marijuana treatment center as “an entity that acquires, cultivates, possesses, processes … transfers, transports, sells, distributes, dispenses, or administers marijuana, products containing marijuana, related supplies, or educational materials” to qualifying patients or their caregivers.

Notwithstanding the constitutional definition, a 2017 bill signed into law, purportedly to reflect the will of the people, provides that “a licensed medical marijuana treatment center shall cultivate, process, transport and dispense marijuana for medical use.”

Florida's medical marijuana statute required vertical integration for marijuana-related businesses. That is, they must grow, process, package, transport and sell medical marijuana rather than excel in one aspect of the supply chain and work with business partners who specialize in different aspects of the cultivation, processing and distribution of the products.

The law also necessarily excludes smaller businesses that do not have the resources to participate in all aspects of the seed-to-sale model required by Florida law.

Further, Florida's medical marijuana statute caps the number of facilities that can operate in the state. The statute provides for the registration of only 17 medical marijuana treatment centers to serve a state with a population of 21.3 million.

The law also provides that within six months of an additional 100,000 patients registering with the state Department of Health and its Office of Medical Marijuana Use, the department must license only another four medical marijuana treatment centers, or MMTCs.

Two weeks after the constitutional amendment went into effect, a Tampa company, Florigrown, sent a letter to the department seeking to register as an MMTC. The department denied Florigrown's request because the department had not yet promulgated the relevant regulations in response to the amendment.

Then in June 2017, the Florida Legislature passed a bill, signed by the governor, which amended the existing law concerning medical marijuana. The new law added several restrictions on the number and kind of MMTCs that could do business in the state.

In response, Florigrown sued, requesting a declaratory judgment and a permanent injunction mandating the department register Florigrown as an MMTC.

Last year, Leon Circuit Judge Charles Dodson agreed with Florigrown that the Florida statute did not faithfully carry out the constitutional amendment. Dodson required state health officials to register Florigrown and other medical marijuana businesses.

However, the state appealed Dodson's ruling. As a result, his order was put on hold.

On Tuesday, the First District Court of Appeal affirmed Dodson's decision in a per curiam opinion. The court concluded that the Department of Health's creation of a vertically integrated business model impermissibly amended the constitutional definition of MMTC. Consequently, the court found the statutory cap on the number of medical marijuana facilities in Florida is “unreasonable.”

The court concluded that Florigrown was suffering an “irreparable harm” and that it had an inadequate remedy because it was being “unconstitutionally prevented from participating in the process for obtaining a license to operate as an MMTC.”

“And,” the appellate judges wrote, “where time if of the essence, as the medical marijuana amendment clearly provides, it truly can be said in this type of litigation that relief delayed is relief denied.”

The decision is a huge win for marijuana businesses and for Floridians who want to treat their illnesses with medical marijuana. After all, a limited licensing structure creates shortages in the market and inflated prices for patients.

State Agriculture Commissioner Nikki Fried said Tuesday that the major ruling is a victory for openness and the future of medical marijuana in Florida.” Fried added that the vertically integrated system “hinders smaller farms, people of color and others from participating in this vital new economic opportunity.” Fried encouraged Gov. Ron DeSantis “to implement the true will of the people.”

However, it is important to appreciate that the Court of Appeal did not require the Department of Health to begin immediately to register applicants. Rrather, the judges directed the department to design an alternative structure that provides a “reasonable number of licenses.”

Although it remains to be seen what the department will devise to comply with the judges' ruling, let alone whether the department will appeal the ruling to the Florida Supreme Court, the opinion of the Court of Appeal is a huge win for businesses that are trying to participate in Florida's medical marijuana program.

Robert Kline is a partner at McDermott Will & Emery in Miami. He focuses on the legal cannabis industry, providing clients with regulatory and investment guidance in the ever-growing, rapidly evolving industry. He is a member of the firm's trial practice group, and he routinely handles labor and employment issues, internal investigations, class action defense and alleged violations of the Foreign Corrupt Practices Act and Florida's Deceptive and Unfair Trade Practices Act.