Controversy isn’t new when it comes to granting marijuana licenses to cultivators, processors, and dispensaries in states that have approved medical marijuana. This month, controversy broke out in Pennsylvania and Florida where questions about license application screening processes and laws prompted many license applicants whose applications were denied to file lawsuits which could stall the availability of medical marijuana to patients.
Unfair Application Screening in Pennsylvania
In Pennsylvania, 457 applications were submitted for just 39 available licenses to grow, process, and dispense medical marijuana. A total of 27 of those licenses went to dispensaries and 12 went to growers/processors (growing and processing licenses are stacked in Pennsylvania).
At this time, 140 administrative appeals have been filed questioning the validity of application denials. Said another way, approximately one out of every three license applicants filed an appeal with the state Department of Health’s Office of Medical Marijuana (the department responsible for reviewing applications and rewarding licenses).
What caused all of these appeals? After Keystone Relief, a license applicant, sued the state Department of Health calling for a shut down of the entire medical marijuana program due to the flawed license evaluation process, Morning Call conducted an investigation that sheds some light on the flawed application review and licensing processes put in place in Pennsylvania.
Some of the questionable application review processes discovered by Morning Call include:
- Identical answers to the same question on different applications were scored differently.
- Two dozen applications were disqualified due to technical glitches or clerical oversights that applicants were not given the opportunity to resolve.
- Applicants were not told that some pass/fail questions would be graded on a sliding scale.
- Some parts of the application were evaluated with a scoring scale where one should not have been used.
- Incomplete applications were disqualified and all applicants that submitted incomplete applications were not given the opportunity to provide the missing information as the Medical Marijuana Act requires.
- Scores were not always added correctly.
- The grading criteria has not been made widely available.
Many license applicants in Pennsylvania invested large sums of money to meet the application requirements. They also paid hefty application fees of $10,000 for a grower/processor application and $5,000 for a dispensary application.
KeyStone Relief’s dispensary application was more than 400 pages. CannaMed Green Inc. estimates that it spent $2 million to submit two applications, both of which were rejected for one missing attachment (although the owner of CannaMed Green Inc. insists the attachment was submitted). For applicants, this was not a small investment in terms of time or money.
Unfair Medical Marijuana Law in Florida
The problem in Florida is different than what’s happening in Pennsylvania. Florida originally issued seven fully-stacked marijuana licenses to cultivate and distribute cannabis to be processed into medical marijuana. However, a new law passed in June of this year that required 10 more licenses be issued. One of those 10 licenses was reserved for minorities since no African American farmers met the eligibility criteria, but a new lawsuit claims that this license violates the Florida Constitution.
The plaintiff in the lawsuit, Columbus Smith, is an 80-year old African American farmer in Panama City, Florida. In his lawsuit, he asks the state to block the issuance of the medical marijuana license that has been set aside for minorities because to be awarded that license, an applicant must be a member of the Florida Chapter of the Black Farmers and Agriculturalists Association.
This is a private association that Smith claims is not accepting new members. In fact, Smith claims the association hasn’t accepted new members since before the law was passed in June. That means only existing members of the association could get that single license reserved for minorities. According to Smith, the association has five members at most, but it won’t make its membership list public.
Smith wants the state to block the license that has already been granted to a minority and overturn the part of the state’s marijuana law that requires a license go to a member of the Florida Chapter of Black Farmers and Agriculturalists Association. His lawsuit claims that part of the law is a “special law” that “grants a privilege to a private corporation,” which violates the Florida Constitution.
What’s the Solution?
In states where the marijuana license application process is highly regulated and the number of available licenses is very limited, controversy related to which applications are approved is common. As a result, lawsuits and program delays end up costing applicants, license holders, and states more money. At the same time, patients who need medical marijuana to treat approved conditions often end up waiting even longer to access it.
In an industry where many entrepreneurs want to play but there isn’t enough room, there will be problems. It’s inevitable. Unless states loosen some of the limitations, lawsuits and program delays will continue. What’s happening in Pennsylvania and Florida should be a lesson for other states that haven’t yet started the license application process. Transparency is best.
Susan Gunelius, Lead Analyst for Cannabiz Media and author of Marijuana Licensing Reference Guide: 2017 Edition, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her 25-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. She has been working with clients in the cannabis industry since 2015. Susan has written 11 marketing-related books, including the highly popular Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, The Ultimate Guide to Email Marketing, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.