Lobbyists, Lawyers Jostle for Pot Business
Around the State
Tallahassee lobbyists and lawyers are hooking up with investors, nursery owners and a variety of other businesspeople with leafy green stars in their eyes in the quest to cash in on Florida's newest regulated industry.
With Florida on the verge of becoming the first Southern state to legalize any form of marijuana, lobbyists from large and small firms are pitching their regulatory expertise and inside connections with an eye not only to nailing down new clients but possible ownership stakes in what, at least for now, may be a limited industry.
Lawmakers broadened eligibility for the substance to include cancer patients as well as those suffering from severe muscle spasms or seizures, thereby opening up the market for potential sellers. The strain of marijuana is high in cannabidiol (CBD) and low in euphoria-inducing tetrahydrocannabinol (THC).
Doctors are supposed to be able to start ordering the low-THC substance for their patients on Jan. 1, meaning the Department of Health has less than six months to move forward with rules and regulations governing doctors and patients, as well as businesses that could act as growers, processors and dispensers.
Passage of the bill has generated a frenzy of activity on the part of investors, growers, pot-shop operators from other states and entrepreneurs looking to make a quick buck, not only on the low-THC marijuana but on the "traditional" medical marijuana that could become legal in Florida after November. Voters will decide during the fall elections if physicians should be allowed to order pot for severely ill patients.
"There's so much confusion and there's a gold rush out there and people are getting ripped off. We've had a number of calls from folks saying what does it do? How does it work with the potential impact of the referendum?" said Tallahassee lobbyist Jeff Sharkey, who with associate Taylor Patrick Biehl recently created the "Medical Marijuana Business Association of Florida."
The for-profit corporation is aimed, in part, at advocating for patients and representing businesses that might provide services or supplies to a health-care industry that will inevitably mushroom around the pot dispensaries, Sharkey said.
"You can't get a direct answer to what's happening. The purpose of this is to give timely and accurate information about what's going on in Tallahassee," he said.
Biehl said he and Sharkey "envision being both an advocate and a resource for business owners, employees, patients and clients in the new business environment for medical marijuana."
Lobbyists Louis Rotundo and Ron Watson registered to represent the "Florida Medical Cannabis Association," which formed in February and includes businesspeople and at least one lawyer from Central Florida.
Watson, who recently left a lobbying job with the Florida Dental Association to set up shop on his own, in part because of his personal support for medical marijuana, is branching out.
He's advising Altmed, a group of former pharmacy executives eager to get in on the ground floor of Florida's medical-marijuana process. But like nearly all other players, Altmed is more intensely interested in what the state of pot will be post-November.
"There are five opportunities for licenses to be awarded. So the market is responding to the law that has been passed," Watson said.
The legislation creates a system that restricts the number of licenses to grow, process and distribute the medical marijuana product to five nurseries that have operated in the state for at least 30 years. The nurseries also have to produce 400,000 plants and be able to manufacture the substance, an extract usually delivered in paste or oil form. The Department of Agriculture and Consumer Services has identified fewer than 40 nurseries as eligible to apply for a license.
While the nurseries have the exclusive ability to get licenses, few if any will have the expertise in extracting the oil from plants or distributing it through dispensaries, Watson said. And none will have operated in what will be a brand-new regulatory climate under the state health department.
"A bunch of people are trying to put together organizations that will represent all of the parties that will be participating," Watson said. "At the same time, I'm looking around trying to see if I can put together some of these deals, as are many other people."
Like many lobbyists, Watson is not officially "lobbying" for Altmed. He and others are "consulting" with businesses in and out of Florida, at least for now. Some lobbyists and lawyers are offering their services for free to nurseries in exchange for an ownership interest or the ability to manage the operations.
The bill, which will become law as soon as Scott signs it, also requires the Department of Health to create and maintain a "compassionate use" registry. That will include patients who have cancer or suffer from severe muscle spasms or seizures and do not respond to other treatments.
Doctors, who would order the substance for their patients, would have to receive eight hours of education and would be required to submit patient-treatment plans to the University of Florida pharmacy school. Dispensing organizations would have to have medical directors who are doctors with special training, be able to prove they are financially able to maintain operations for two years and post $5 million performance bonds. Owners and managers would have to be fingerprinted and successfully pass background checks.
Getting the system up and running by Jan. 1 could be problematic given the often-combative nature of the rule-making process, especially in what is expected to be a highly competitive bid for the five "golden ticket" winners.
Regulatory lawyer John Lockwood is working with MJardin, a Colorado-based company dedicated to cultivating premium cannabis. With operations in Colorado, Massachusetts, Arizona, Nevada and Florida, MJardin is courting Florida nurseries.
"In addition to Mjardin’s cultivation expertise, we have a legal team, regulatory professionals and investors ready to compete for a license. Based upon what we have seen, our team is uniquely qualified to meet the regulatory demands of Senate Bill 1030 and ultimately receive one of the five licenses," Lockwood said. "While this legislation has drawn the attention of numerous companies looking to make a quick buck, the Department of Health's competitive licensure process will demonstrate who has the superior team."
Jon Costello, Gary Rutledge and Steve Schale recently registered to represent "Sanctuary Cannabis," a Florida company whose two partners are Broward County lawyers.
"There is a real big opportunity for lobbyists and lawyers to work with the businesses. Gold rush? I don't know about that. But opportunities in a newly regulated industry? Absolutely," Costello said.
Like other industries operating in a complicated regulatory environment, such as gambling, medical marijuana may wind up creating a niche market for lobbyists and lawyers, Costello predicted.
"But right now there's zero barrier to entry … because everything is up in the air. So it's a new area, and it's going to be interesting to see from the front lines the standing-up of a regulatory system for something that hasn't been legal," he said.