Week in Review: Vermont OKs rec, judge sides with cannabis businessman & Florida lawmakers fail to set MMJ rules

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By John Schroyer, Omar Sacirbey and Bart Schaneman

Vermont legislators legalize recreational marijuana, a judge rules in favor of a cannabis businessman at odds with San Diego’s prosecutor, and Florida lawmakers miss their deadline to set regulations for the state’s MMJ market.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

Vermont wades into rec

If Vermont Gov. Phil Scott signs an adult-use legalization bill passed by the Legislature, he would open a limited number of MJ business opportunities. He could also pave the way for commercial rec marijuana sales in a regulated market. Scott hasn’t said whether he’ll sign the bill.

The bill – which would take effect July 1, 2018 – wouldn’t legalize recreational cannabis distribution or commercial cultivation. But it would legalize possession of up to an ounce of marijuana and home cultivation, which means there could be opportunities for ancillary cultivation supplies companies as well as odor-reduction technology and packaging businesses.

“It’ll be a very interesting opportunity for home grow supplies companies, almost like home brew supplies stores,” said Morgan Paxhia, managing partner at Poseidon Asset Management, a San Francisco cannabis investment firm that has funded ancillary companies.

The bill also tasks a nine-member commission to submit a plan to the state legislature on how to tax and regulate recreational cannabis.

“This is a small step for legalization,” Paxhia said of the measure, “but it’s in the right direction.”

Another legal win

The cannabis industry can chalk up another legal win against overreaching by law enforcement.

A superior court judge ruled this week the San Diego district attorney’s office must repay over $100,000 to marijuana businessman James Slatic and his family. Slatic owned Med-West Distribution, a wholesale distributor of CO2-extracted medical marijuana products that drug agents raided in January 2016s.

The district attorney’s office had frozen the accounts of Slatic, his wife and his two stepdaughters, totaling $100,693.85, before formally seizing the money a few months later – even though no one was charged with any wrongdoing.

The judge’s decision this week means the number of rulings in favor of MMJ companies has increased again.

It also means cannabis companies that abide by state and local laws are increasingly able to rely on the justice system to protect them, their rights and their assets.

“This is a significant victory, both for Slatic and the industry,” said Henry Wykowski, a California attorney who has a history of fighting court battles on behalf of marijuana companies. “This is a trend that we’re seeing in cases, and it should signal to law enforcement that they should think twice about going after the good actors in the industry.”

Wykowski essentially said the San Diego case amounts to a waste of resources by the DA’s office, and the same will likely prove true for other law enforcement agencies that attempt to crack down on compliant marijuana companies.

That should prove a deterrent for anti-marijuana officials like district attorneys, sheriffs or others who may want to target cannabis businesses, Wykowski noted.

What’s next in Florida?

The job of writing the rules governing Florida’s new full-strength medical cannabis industry is in the hands of the Florida Department of Health. That’s because state lawmakers failed to agree on legislation spelling out the regulatory framework. The department would have used that bill to write the regulations.

“Certainly patients and the industry are feeling distressed in trying to figure out where this is all going to go moving forward,” said Jeff Sharkey, the executive director of the Medical Marijuana Business Association of Florida. “Everybody recognized that the outcry from patients was, ‘You’ve gotta expand the number of licenses,’ because at the end of the day, you have to sell this stuff.”

Under Amendment 2 – which Florida voters passed last November – the health department must finalize the rules by July 3 and implement them by October.

The department is expected to look to the amendment for guidance. But it can also make use of lawmakers’ failed efforts.

Sharkey, in fact, expects the department will examine the common ground reached between the House and Senate versions of the legislation. That could mean:

  • Smokable flower would be prohibited. Smokable medical cannabis could have helped attract patients to the program and in turn bolster revenue for the MMJ industry.
  • Patients wouldn’t have to wait 90 days from the date of a doctor’s first consultation before receiving MMJ – an idea floated by the health department in January when it released its own draft regulatory framework.
  • Doctors would find it easier to become certified for MMJ than under the health department’s proposed rules.

The Senate and the House did have major differences, which the health department will have to iron out. Those issues include:

  • The number of retail dispensaries a license holder could own and operate.
  • When MMJ business licenses will be awarded.
  • How the number of licenses could be expanded as the patient pool grows.

Lawmakers, meanwhile, haven’t thrown in the towel entirely.

Florida House Speaker Richard Corcoran has joined Senate President Joe Negron in calling for a special session to take another crack at writing MMJ legislation, the Associated Press reported.

“To just leave it to bureaucrats sitting over at the Department of Health I think would be a gross injustice,” Corcoran said.

Omar Sacirbey can be reached at omars@mjbizdaily.com

John Schroyer can be reached at johns@mjbizdaily.com

Bart Schaneman can be reached at barts@mjbizdaily.com