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Medical Marijuana: What Lies Ahead for the Sunshine State?

On November 8, Florida voters will determine the fate of the Florida Medical Marijuana Legalization Initiative (Amendment 2), which would authorize medical marijuana in the state’s constitution.

But many voters do not realize that the state Legislature in 2014 approved a medical marijuana statute (amended in 2015) that allows the growing, distribution and dispensing of “pot” to certain types of patients.  

So, the Amendment 2 ballot issue is not a simple “yes or no” on allowing medical marijuana, but on determining the potential size and scale of the legalized industry and its impact on the state.

For the past three years, the legalization medical marijuana has been a controversial topic for the state’s attorneys, accountants, bankers, physicians and other professionals. “It is simply inappropriate to allow medical decision making to be determined by public opinion with the voters,” Jonathan Daitch, M.D., a pain management specialist in Fort Myers who is a leading opponent of Amendment 2. “All medical decisions should be made by doctors.”

On the financial side, the cultivating, distribution and sale of medical marijuana could potentially become a billion-dollar industry that operates separately from the traditional pharmacy system. Medical marijuana could potentially create new jobs, boost sales tax revenue and increase demand for agricultural land, retail storefronts and office space.

“The Legislature has created a vertically integrated industry, where the only people who would touch the medical marijuana are its licensees and the patients,” said Fort Lauderdale attorney Nicole “Nikki” Fried, founder of Igniting Florida, LLC, a medical marijuana business practice and full-service lobbying firm.

However, there are major legal, ethical and financial challenges that will need to be addressed for Florida’s marijuana industry to grow and prosper. “Right now, the ultimate size of the state’s market, the scope of the regulations and the number of authorized dispensaries are still unknown,” said Jonathan Robbins, partner in Akerman’s Fort Lauderdale office, leader of the firm’s Regulated Substances Task Force and a founding board member of the National Cannabis Bar Association. “Regardless of the fate of Amendment 2, it will take time to answer those fundamental questions.”

State vs. Federal Laws

One of the complex legal challenges facing the Florida industry is that, possession, manufacturing, and distribution of marijuana is still a federal crime – a position reiterated by the Drug Enforcement Administration in August. That decision was based on a “scientific and medical evaluation” conducted by the U.S. Food and Drug Administration (FDA) at the request of the DEA.

“The DEA and the FDA continue to believe that scientifically valid and well-controlled clinical trials conducted under investigational new drug (IND) applications are the most appropriate way to conduct research on the medicinal uses of marijuana,” said a statement from the DEA.

“The U.S. government is concerned about keeping organized crime and money laundering operations out of the medical marijuana sector,” Robbins said. “The federal authorities also want to reduce the risk of a child accidently consuming medical marijuana at home, and the potential for automobile accidents caused by an operator under the influence.”

But Robbins believes a recent federal appellate court decision in U.S. v. McIntosh may keep federal law enforcement authorities from spending resources or prosecuting individuals whose actions are legal under state law. “That ruling could ease some of the legal tensions in this field,” he added.

Attorney David Kotler, a shareholder with Cohen Kotler, P.A. in Boca Raton who represents clients in the marijuana industry, notes that Florida’s law does protect patients from prosecution for the legitimate use of marijuana under approved guidelines.

For attorneys, The Florida Bar has issued a policy stating: “The Florida Bar will not prosecute a Florida Bar member solely for advising a client regarding the validity, scope, and meaning of Florida statutes regarding medical marijuana or for assisting a client in conduct the lawyer reasonably believes is permitted by Florida statutes, regulations, orders, and other state or local provisions implementing them, as long as the lawyer also advises the client regarding related federal law and policy.”

Robbins emphasizes the need to be clear and specific in preparing engagement letters for medical marijuana-related businesses. “We make sure we advise our clients in writing that we will not assist them in any aspect of their operations that does not comply with state law,” he said. “It’s important for any attorney to know their client – but doubly so in this industry.”

Kotler added, “This remains a grey area of the law, and you have to ask yourself ethically if you are comfortable in this field.”

Other Concerns

The conflict between federal and state laws creates other difficulties for the medical marijuana industry in addition to potential prosecution. “Sending medical marijuana via the U.S. Postal Services is not allowed,” Robbins said. “It is also a crime to carry medical marijuana across a state line, even if you are going into another with a similar law.”

A medical marijuana business in financial distress is not allowed to file for bankruptcy protection under federal law, Robbins said. Further, federally chartered banks have been leary to open accounts for marijuana businesses or provide merchant services such as credit card processing, due to significant compliance requirements. As a result, the medical and recreational marijuana businesses across the U.S. have been forced to rely on cash payments or alternative sources of financial services.

The conflict between state and federal laws also extends to the employment sector, says Kevin Vance, a partner at Duane Morris’ Miami office, who focuses on labor and employment issues and other types of business litigation.

 “In many states, an employer can refuse to hire someone or terminate an employee for failing a drug test for marijuana,” he said. “Other states have a provision that prohibits firing if the employee is authorized to take marijuana for medicinal purposes, but Florida’s law does not have that protective provision.”

Under the federal Americans with Disabilities Act (ADA), workers with disabilities receive a certain degree of legal protection, and employers must make accommodations for their disabilities in some circumstances. “To date, the courts have decided there is no protection under the ADA for an employee taking medical marijuana,” Vance said. “However, this area of the law is still evolving, and there will undoubtedly be more litigation as these laws interact with each other.”

Florida’s Evolving Stance on Medical Marijuana

In 2014, Florida voters failed to approve a medical marijuana constitutional amendment similar in many ways to the current ballot measure. Although the amendment received a 58 percent “yes” vote, it failed to meet the super-majority threshold of 60 percent for proposed constitutional amendments.

Before that vote, Florida legislators passed the “Compassionate Medical Cannabis Act of 2014,” which was signed into law by Governor Rick Scott on June 6, 2014. The law allowed patients with seizures and severe muscle spasms to be given marijuana extracts low in euphoria-inducing tetrahydrocannabinol (THC) and high in cannabidiol (CBD). To qualify, patients must obtain permission from a qualified doctor and be added to the Compassionate Use Registry.

In 2016, Scott expanded the medical marijuana law by signing the “Right to Try Act,” allowing patients with terminal illnesses to have access to high-THC medical cannabis. During that session, Fried was part of the main lobbying team for the act’s passage.

Now, the pending ballot measure would expand much further, allowing medical marijuana to be provided for patients with the following specific diseases: cancer, epilepsy, glaucoma, HIV, AIDS, post-traumatic stress disorder (PTSD), amyotrophic lateral sclerosis (ALS), Crohn’s disease, Parkinson’s disease and multiple sclerosis. It would also allow licensed physicians to certify patients for medical marijuana use after diagnosing them with some “other debilitating medical conditions of the same kind or class as or comparable to those enumerated.”

The Case Against Amendment 2

This fall, many Florida medical professionals, along with anti-drug coalitions and the Florida Chamber of Commerce, have taken a stand against Amendment 2 for a variety of reasons. “The state Legislature took its time, listening to physicians, nurses, pharmacists and law enforcement officers before agreeing on legislation that everyone felt would be safe for communities,” said Daitch. “Now, this amendment would supersede that hard work, and remove safeguards that were built into the law.”

While Amendment 2 gives the state the right to control the growing of marijuana, it lacks the specific details concerning dispensaries, distribution, prescriptions, and patient compliance, according to the “Vote No on 2” coalition.
There is also no local option to allow communities to ban, limit or restrict the location of dispensaries.

“I am very concerned about the unbridled dispensing of marijuana,” Daitch said. “I don’t want to see unscrupulous doctors writing authorizations for almost anyone to get marijuana.”

Those concerns are shared by the Florida Medical Association, which voted in August to oppose Amendment 2. The FMA, which represents more than 20,000 physicians in the state, also opposed the 2014 Amendment.

Daitch points out that marijuana is a plant with many strains and varieties, not a medication that can be carefully tested and studied as part of the Federal Drug Administration (FDA) approval process. “We already have pharmaceutical-grade drug formulations that can help patients with the conditions outlined in Amendment 2, and we simply don’t need to pass this measure.”

A High-risk Business Opportunity

Under the 2014 law, the state Department of Health (DOH) was given the authority to register and regulate centers that produce and distribute marijuana for medical purposes and issue identification cards to patients and caregivers. That touched off a stream of administrative maneuvering and litigation over the issuance of DOH licenses.

Initially, five growers were granted licenses to serve different areas of the state, but this year a sixth nursery was granted a license after challenging the regulations. The first licensee to dispense medical marijuana was Truelieve, which opened its Tallahassee dispensary in July.

“I would imagine that each of the license holders has a different business model,” said Fried, who represented San Felasco Nurseries in Gainesville in its successful quest to obtain a state license. “Some may open dispensaries all over the state, while others may focus on home deliveries or more selective dispensary markets. In any case, there are high start-up costs involved with getting into this business when you consider the greenhouses, security requirements and equipment needed to extract the oils from the plants.”

Meanwhile, several Florida law firms have been looking at the medical marijuana business as a potential practice area. One of the early advocates of legalized medical marijuana was Kotler, who founded Medical Marijuana Business Lawyers, LLC, in 2014 and also serves as general counsel to the Florida Cannabis Industry Association. For the past three years, he has been representing clients, hosting educational seminars and consulting with other professionals about the business opportunities in this sector.

“There was quite a bit of interest in medical marijuana in the summer of 2014 leading up to Amendment 2 and after Governor Scott signed the compassionate use act,” Kotler said. “But when Amendment 2 didn’t pass that year, I stayed in this field, while most attorneys went back to their regular practices.”

Since then, Kotler has worked with nurseries, investors, accountants, trade show operators, and ancillary businesses. “There are plenty of Florida entrepreneurs getting involved in the business, along with the growers who have their hands on the plant,” he said. “But I don’t see it as a big ‘green rush.’ Instead, there has been a conservative, measured approach to getting involved this market.”

Taking it slow is particularly important now, since if the Amendment 2 passes in November, the Legislature will need to enact new enabling rules for the Department of Health, Kotler said. “It may be hard to unwind what has already been set up in the state,” he added.

“I don’t think there will be a huge increase in licenses and dispensaries. It’s more likely that newcomers will be integrated into the existing framework. But in any case, the future of medical marijuana will be up to the Legislature and the Department of Health even if Amendment 2 passes in November.”

South Florida Legal Guide 2016 Financial Edition

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