Challenges abound for medical marijuana businesses
By Kevin Gale
The expansion of medical cannabis in Florida presents many opportunities, but enacting it has been a cumbersome process with lots of red tape, says the co-managing director of a South Florida law firm that’s a national leader in legal issues about the matter.
It’s also creating more discussions in businesses whose leaders wonder whether they will have to accommodate employees who use cannabis.
“It’s really exciting to see what has taken place, and there’s so much more to come,” says Gerald Greenspoon of Greenspoon Marder, who gave the opening remarks Oct. 26 at the second Canna Law and Business Conference and Expo at the Bonaventure Resort and Spa in Weston.
Greenspoon Marder is unique among large national law firms in launching a cannabis practice. It now has lawyers versed in cannabis issues in Florida, Colorado, Oregon, Nevada and California.
Florida takes a vertically integrated business approach to cannabis. Each licensee grows its own cannabis and then distributes it to up to 25 dispensaries. The number of dispensaries will grow as the number of patients increases.
When Greenspoon gave his talk, the 46,000 medical marijuana patients enrolled in the state had already surpassed the number in New York.
The big shadow still overhanging the cannabis field: Marijuana is still a narcotic, classified along with cocaine and heroin, and illegal under federal law. Cannabis industry leaders worry that U.S. Attorney General Jeff Sessions could lead a crackdown, having already stated his opposition to legalized marijuana.
Because of marijuana’s federal status, employers still may pursue drug-free-workplace standards, says Myrna Maysonet, a shareholder with Greenspoon Marder. If a company wants to accommodate employees’ use of cannabis for a medical condition, it could—but not if doing so creates a safety issue, she says.
“There have been cases that were litigated, and the employee lost,” she says. In only a few cases, including one in Rhode Island, has an employee prevailed because of protective state statutes. There’s no protection in Florida.
“What Florida did is kind of splitting the baby in half: I will give what voters voted for, but I am not giving you any protections,” she says.
Deciding whether to accommodate someone may boil down to a cost benefit analysis, she says. For example, if you are looking for gamers and developers, “if you do drug testing you may not get anybody.”
Enabling legislation
Florida Senate Bill 8A has played a key role in implementing the constitutional amendment passed by voters last year.
While patients still can’t smoke marijuana, the bill allows vaping, oils and edibles. Patients can get 210-day supplies in three 70-day increments. Chronic pain is one of the criteria for getting medical marijuana, which it wasn’t under the state’s previous medical marijuana law, which was more restrictive.
Provisions for research, independent testing and education were included in 8A.
The state health department was portrayed as being somewhat slow in implementing the law. Greenspoon Marder Senior Counsel Matthew Ginder says litigation after the amendment has been cited by the department as one reason the process is slow. One pending lawsuit involves a license reserved for black farmers.
Patients have faced delays of three months to get cards that show they qualify for medical marijuana. Ginder says the department is working on a contract for a vendor to issue the cards. One state senator went through the application process herself and lashed out at the department for being slow.
“She talked about patients who died and couldn’t get access,” says Eric Stevens, deputy executive director of Florida for Care, a nonprofit educational organization.
Audience member Ivan Field, CEO of the statewide clinic operator Marijuana Doctor, stepped up to the microphone during a Q&A session and said he also has had patients die without access. He said patients should be able to get a recommendation from their doctors and get it filled immediately.
There also are worries among doctors about how the State Board of Medicine will treat them, such as how much documentation they need to justify a recommendation for a patient to consume cannabis.
Physician Michelle Weiner of South Florida-based Prime Wellness Integrative Medicine, whose doctors can make medical marijuana recommendations, says doctors should develop templates that would show how a condition not listed in the constitutional amendment, such as anxiety, is similar to one that is listed, such as Parkinson’s disease. That would help show where the evidence is similar and why treatment is justified. Over time, that would help the qualified diagnosis list expand.
Moratoriums and bans
On the local level, some cities and counties vary widely on how they handle dispensaries. Some, such as Orange County, are enacting bans while others are calling for moratoriums.
Attorney Michael Minardi, chairman of Regulate Florida, which advocates regulating marijuana like alcohol, says some local governments aren’t thoroughly educated about the issue; he says some leaders don’t understand marijuana can be grown indoors. He’s talked with city and county commissions throughout the state and says many don’t know what to do.
Some are enacting moratoriums, prohibiting dispensaries to give themselves more time to figure out what they will do in the long term.
Finance and taxes
First Green Bank has been addressing one of the biggest issues with cannabis businesses statewide—the difficulty to get bank accounts because cannabis is still a Schedule I drug under federal law.
Lex Ford, senior vice president of First Green Bank, says his institution has accounts for six of the seven original Florida dispensaries.
The wife of the bank’s founder had seizures after an anesthesia episode and was able to wean off traditional medication by using cannabis, Ford says. Now, she speaks around the state about the positive aspects of medical marijuana.
“We’re not making money. We are doing it for the good of the industry and believe in the good that it’s doing, Ford says.
First Green is enlisting technology to ensure good compliance.
One is software from Fort Lauderdale’s BioTrack THC that tracks cannabis from seed to sale. The bank also uses CanPay, which is billed as the world’s first debit payment app for retailers.
Steve Jancic, CEO of Denver-based Amercanex, which has a cannabis electronic trading platform, lauded Green Bank’s efforts. Jancic says he has had accounts closed at five banks, even though he supplies only technology to the industry.
Mary Gelinas, a principal at South Florida accounting firm Daszkal Bolton, says record keeping is critical in the cannabis industry. The state requires audited financial statements, so systems such as BioTrack’s are necessary to provide proper documentation.
Marijuana businesses also cannot deduct many normal business expenses because of cannabis’ federal status. Many of them pay 70 to 90 percent of gross profit in taxes. “There are businesses that have gone bankrupt when their tax bill has come up and they couldn’t pay it,” she says.
Some businesses have managed to segregate the legal activities, such as caregiving, to minimize their tax situations, she says.
Growers and dispensaries
Despite the obstacles, medical marijuana treatment centers are turning into major businesses, which was outlined by three speakers.
Jake Bergmann, founder and CEO of Surterra Holdings, a provider of medical cannabis and devices, is cultivating 300,000 square feet with 17 strains of cannabis. His 100-employee company uses carbon dioxide extraction methods to turn marijuana into a highly refined oil. Surterra has dispensaries in Tallahassee and Tampa and plans to have up to 10 statewide by the end of the second quarter of 2018.
Kim Rivers is CEO of Trulieve, which has dispensaries in 11 cities, including Miami, and about 225 employees in the state. It offers nearly 50 products, including capsules, nasal sprays, vaporizers, oral syringes and tinctures, which are placed under the tongue.
Jose Hidalgo, the founder of Knox Medical, wants to establish a global brand for medical marijuana. It’s licensed in Florida, Puerto Rico, Pennsylvania and Texas, and has made an acquisition in Canada. Knox is the largest greenhouse grower of medical cannabis in Florida, approaching 700,000 square feet. It has fewer than 100 employees in Florida and about 150 companywide, and plans to open dispensaries in Lake Worth, Miami Beach, Hialeah and North Miami Beach.
All three companies offer statewide delivery.↵
