State draws challenges over pot license

By Dara Kam
News Service of Florida

 Weeks after state health officials selected a Suwannee County man to receive a long-awaited medical marijuana license earmarked for a Black farmer, applicants who lost out on joining Florida’s growing cannabis industry are challenging the decision.

The Florida Department of Health on Sept. 21 announced it had issued an “intent to approve” a medical-marijuana license for Terry Donnell Gwinn, who vied with 11 other applicants for a license required to be awarded to a Black farmer. A 2017 state law made a license available to people with ties to class-action litigation — known as the “Pigford” litigation — about lending discrimination by federal officials against Black farmers.

But nearly all of the losing applicants for the medical-marijuana license last week filed petitions challenging the Department of Health decision, citing a variety of reasons. They asked for administrative hearings to sort out the issue and requested that they be granted licenses.

In one instance, state health officials denied the application of Moton Hopkins, an 84-year-old Ocala resident whose application received the highest score, because Hopkins died after his application was submitted.

“The department cannot award a license to a deceased person. Moreover, any interest Mr. Hopkins had in the MMTC (medical marijuana treatment center) application ceased upon Mr. Hopkins’ death, as the licensure qualifications are personal to Mr. Hopkins and do not flow to third parties,” agency officials wrote to Hopkins’ lawyers on Sept. 20, according to a petition filed last week.

But lawyers for Hopkins’ team argued that the agency was wrong because the application instructions “do not specify that the death of an applicant while the application is pending is a basis for denial.”

The denial of Hopkins’ application “is fundamentally inconsistent” with the Pigford federal settlement, which “recognized that the heirs of an identified and qualified farmer are intended beneficiaries,” Stephen Menton and Tana Storey, attorneys with the Rutledge Ecenia firm, wrote.

“It would be erroneous, arbitrary and capricious to ignore the rights and status of Moton Hopkins’ heirs who are intended beneficiaries of the federal statute and the resulting class action settlement,” they argued.

The petition of Leola Robinson, a 99-year-old Escambia County widow whose application was rejected, sketches the history of the Pigford litigation, which spanned more than two decades and resulted in a $1.25 billion settlement. Many of the participants in class-action lawsuits over the U.S. Department of Agriculture’s discrimination in farm loans have died, the petition noted.

Robinson and her husband owned and operated an animal and crop farm from 1964 until his death in 1986. The land was converted to a timber farm nearly 20 years ago, and a third-party contractor manages the property.

“Mrs. Robinson is exactly the type of applicant and potential licensee the Florida Legislature had in mind” when it ordered health officials to issue at least one license to a participant in the Black farmer litigation, Robinson’s lawyers argued in the Oct. 11 petition.

In another petition, lawyers for Shedrick McGriff argued that his application “best satisfies all applicable statutory and rule criteria, is best prepared to comply with the operational requirements imposed” on marijuana operators, “and should be approved based on a comparative and competitive review” of the applications.

The petitions also criticized the way the Department of Health handled the applications, which were scored by KPMG LLC. The consulting company was paid $22,750 for each of the 12 applications evaluated, according to records posted on state Chief Financial Officer Jimmy Patronis’ website.

The petitions also portray confusion about the state’s complicated licensing process. The law required health officials to grant a license to “one applicant that is a recognized class member” in the “Pigford” or “Black Farmer Litigation” cases. Eligible applicants also had to show that they had done business in Florida for at least five years.

A petition filed on behalf of Innovative Fix, LLC, and Homer Gary illustrates the muddle over eligibility.

Gary, a Marion County resident, is a Pigford claimant who in January purchased a majority ownership interest in Innovative Fix, which has been registered in the state for 20 years, according to the petition.

But the department determined that Innovative Fix was not a qualified applicant for a license to operate a medical-marijuana treatment center, the state’s name for a business that grows, processes and sells cannabis.

“The department has conceived a completely unrealistic applicant provision and the department’s implementation of that provision is equally ludicrous. It is absurd to think that any MMTC can operate as a sole proprietorship. Not one of the 22 existing MMTCs operate as a sole proprietorship,” attorney Jeffrey Feiler wrote in the petition filed Oct. 10.

Gary and other applicants, argued Feiler, “needed to harness the participation of third parties to fund the millions of dollars necessary” to compete for the license and to build out the project, if they were approved.

“Would it have been acceptable for Homer Gary to apply as a sole proprietor, win the license and then merge that license into Innovative Fix? So then why not permit Homer Gary to do so in reverse?” he asked.

Henry Crusaw, a 91-year old Suwannee County farmer, submitted documentation from the Columbia County tax collector’s office and the Suwannee County property appraiser’s office confirming his engagement in business in Florida for the past five years.

But the Department of Health said Crusaw failed to demonstrate he was registered to do business for the five years before submitting his application, a finding Crusaw’s lawyer, Jennifer Tschetter, called “erroneous.”

The Department of Health did not provide copies of the petitions when The News Service of Florida requested them last Tuesday. The News Service obtained the petitions from lawyers representing applicants.

The 2017 law that requires a Black farmer license provides an overall framework for the cannabis industry. The Legislature passed the law after voters in 2016 approved a constitutional amendment broadly legalizing medical marijuana.

Gov. Ron DeSantis’ administration began accepting applications for the Black farmer license in March.

Jim McKee, an attorney who represents Gwinn, said Tuesday his client “intends to vigorously defend” the health department’s intended award of a license and looks forward to receiving the license after the challenges are resolved.

“Mr. Gwinn is proud of the application he submitted, which required investment of an extensive amount of time and expertise,” McKee told the News Service. “While many of the applications submitted appear not to have met even minimum requirements, Mr. Gwinn and his team worked diligently to ensure his application did comply with all applicable requirements.”