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How Florida Should Regulate #8:  The Government Encourages Monopoly

How Florida Should Regulate #8: The Government Encourages Monopoly

Florida has made a few serious moves towards implementation of its medical marijuana program recently. These long-awaited events did not, however, bring much satisfaction to either potential patients or investors looking to enter the medical marijuana industry in the sunshine state. So, what exactly happened? Department of Health (DOH) lived up to its word after less than a week since the public hearing on Amendment 2 implementation in Florida House was held.

DOH released the preliminary text of the proposed rules to implement Amendment 2. It is important to note that it looks like the government is not aware of the world that surrounds Florida. Instead of analyzing the regulations from other States where medical marijuana has been legal for years and taking what is best from those states’ experience, Florida is reinventing the wheel.

Under the proposed regulations, the Amendment 2 Medical Marijuana Treatment Center is the same as the dispensing organization under the 2014 legislation. This means NO EXPANSION of the industry.   The current license owners (seven of them) are privileged to grow, process, transport, and sell medical cannabis.   The closed vertical integration of the system continues to exist. A good suggestion to DOH would be to look up the Arizona industry and how they developed the closed vertically integrated system with dozens of licenses issued.

Second, DOH effectively rewrote the constitutional language by leaving it up to DOH rather than physicians to determine what qualifying conditions are comparable to those listed and enumerated in the amendment language.   Now, the government is going to control the patients’ needs in medical cannabis. It is unlikely that the other Medical Marijuana States have seen anything similar in the past.

Third, DOH requires physicians to “order” specific quantities of medical cannabis. The physicians are in charge of how much medicine should be consumed by a particular patient which is also unusual. The experience of other states has shown that the most reasonable way is to limit the amount of cannabis a patient can get.

The preliminary rules DOH has released look very raw and create an impression of having been written overnight.   To be objective, there are two positive points I can make. First and foremost, the rules are preliminary and, hopefully, DOH is just trying to grant patients the access to the medicine as soon as possible.   Second, there is a group of people who are more than happy to see these rules. They are the seven license holders who will monopolize the market and rip large profits before an expansion happens. DOH, in a sense, prepares to legalize legal cartels in the State.

Further, Senator Bradley filed the bill SB 406 in the Senate. The bill takes the 2014 legislation as the foundation and polishes it to add up the language from the Amendment 2.  The bill is rather comprehensive consisting of 36 pages. I will highlight the most important points.

Good things first. The bill wipes off the 90-day requirement of the patient-doctor relationship prior to receiving the medicine. The bill adds “pain” as a qualifying condition for patients to be able to use medical cannabis for treatment. The decision-making process on medical cannabis treatment is completely in the physicians’ hands.

The bill, however, does not sufficiently expand the licensing of medical marijuana treatment centers to serve the estimated population of patients in Florida. The bill leaves 7 current licenses in place to serve the Florida patients until after 250,000 patients register with the government.   Only then five more licenses can be issued. The next checkpoints are 350,000 and 400,000 when 10 more licenses will be issued at each point. Additional five licenses will be added at half a million mark. So if one does the math, at 500,000 patients registered, only 27 vertically integrated licenses will be existing in the 20 million State of Florida.

For comparison, in Arizona, there are over 80 vertically integrated licenses serving the population of 6.7 million people and about 120,000 patients. And the State is planning to add more licenses to increase the quality and decrease the prices of the product through competition.

The bill that Bradley filed does not serve the best interest of Floridians by effectively closing down the industry for years, limiting the expansion, and allowing the oligopoly to thrive in the State that gave those seven licenses such privilege.  The bill does not reflect the language of the constitutional amendment.

The industry is anxious to see the bill that Jeff Brandes is about to file. According to the sources close to the Senator, the bill will provide for a large expansion of the medical marijuana industry under the mandate of the Amendment 2 that Floridians voted for in November.

Stanislav A Shamayev, Esq.

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