Florida Supreme Court Upholds Vertically Integrated Cannabis Industry

The Florida Supreme Court ruled on Thursday to uphold the state’s medical cannabis law, ending a years-long legal battle that could have reshaped the local , which is currently dominated by some of the highest-valued cannabis companies in the US.

The case, Florida Department of Health v. Florigrown, LLC, centered on the constitutionality of the state’s 2017 medical cannabis law. Florigrown, a Tampa-based aspiring medical cannabis company, argues that the law is unconstitutional, because the law places a cap on the number of available licenses for those seeking to operate a medical cannabis business in the state. The law also requires licensed companies to be vertically integrated, which means that they must control the growing, processing, and sale of their medical cannabis products. 

Two lower courts previously sided with Florigrown before the case reached the Florida Supreme Court. The Court held oral arguments in May 2020, and then allowed for another round in October that was focused, as Cannabis Wire reported at the time, on “whether Florigrown has a substantial likelihood of success on the merits of its challenge to certain provisions of Florida law as invalid special laws under the Florida Constitution.” A “special law” is one that benefits some entities over others. And in this case, Florigrown has argued that those entities are the existing licensees.

There are 22 licensed medical cannabis companies in Florida, including some of the highest valued in the US, like Curaleaf, Trulieve, and Parallel (formerly Surterra). 

If the Florida Supreme Court had sided with Florigrown, the decision would have dramatically changed the landscape of the state’s medical cannabis industry: the door would have been opened to newcomers, and licensees would have had the choice to focus on one part of the supply chain, such as cultivation or retail, instead of the entire chain. 

But the Court did not. The Court concluded on Thursday that “Florigrown does not have a substantial likelihood of success on the merits of its constitutional challenges … Accordingly, Florigrown’s request for a temporary injunction should have been denied. We quash the First District’s decision and remand this case to the First District with instructions to further remand to the trial court for vacation of the temporary injunction.”

Ari Gerstin, a partner at Akerman LLP, which is representing Florigrown, told Cannabis Wire on Thursday, “Of course we are disappointed with the decision and are currently evaluating our options.” 

While Governor Ron DeSantis has not yet responded to the ruling, he spoke out against the vertically integrated system back in 2019. So, too, did Rep. Matt Gaetz, who helped shape the medical cannabis law.

“The structure that I largely built is one that I can no longer defend,” Gaetz said at the time. DeSantis said that the law created a “cartel, essentially.”

“I think it should be horizontally integrated rather than vertically integrated,” DeSantis said.  

This is a rare point of agreement between DeSantis, who opposes legal cannabis, and the state’s Democratic Agriculture Commissioner Nikki Fried, a vocal supporter of legalization and a former industry lobbyist.

“This ruling by our Republican-dominated Supreme Court further entrenches Florida’s unfair, unconstitutional system put in place by our Republican-dominated Legislature. This status quo helps absolutely no one except the 22 medical marijuana companies in Florida at the expense of patients,” Fried said in a statement. 

Lawmakers have introduced bills in recent years to undo vertical integration, though with little traction. legislation has also failed to advance, though a ballot push is gearing up for 2022.

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