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Florida’s First District Court of Appeal ruled that medical marijuana providers must pay license renewal fees of around $1.3million every two years. They rejected the argument that these fees should be offset by other cannabis revenue.
This unanimous ruling issued by the Florida Department of Health on Wednesday confirmed that it acted within the statutory authorities when establishing a charge structure for dispensaries (or medical marijuana treatment center, MMTCs), as these centers are called officially.
The Chief Judge Timothy D. Osterhaus wrote for the court and found the emergency regulation was in line with the law of the state, which mandates that license fees cover the costs associated with regulatory oversight.
“We see no arbitrariness or capriciousness in the rule’s formula because § 381.986(8)(b) explicitly conditions the Department’s licensing fee-setting authority on covering two specific costs with these fees,” the decision said.
This case was brought about by a lawsuit filed against Sanctuary Cannabis. Sanctuary Cannabis operates 25 dispensaries in Florida. The company claimed that the emergency rule issued by the department was unjust because it didn’t account for revenue from other sources.
According to the court opinion, Sanctuary “argued that the emergency rule was arbitrary, capricious, and an invalid exercise of delegated legislative authority under § 120.52(8)(e), Florida Statutes, because it failed to account for other sources of marijuana-related revenue.”
The Court disagreed and found that the language of the statute was clear.
In other words, “the plain text of the statute demands that MMTC’s licensing fees cover Department’s administration and implementation costs,” stated the ruling. The ruling stated that “Conversely the statute does not give flexibility to the Department in netting out card fees or other fines paid by customers to lower the MMTC licensing costs”.
Florida’s cannabis market continues to grow, and the court decision coincides with the approval of 22 new licensed medical marijuana companies. This will almost double the total number of licensees. After years of lawsuits over the licensing process, Florida has expanded its medical marijuana industry.
It is a reminder of the cost to operate in Florida’s medical cannabis market. According to analysts, sales will be $2.8 Billion this year even though voters have rejected legalizing recreational marijuana in 2024.
A formula was included in the emergency rule of the health department established by December 2022. It divides the costs of implementation from the past two fiscal year, less revenue from license requests, by total licensed MMTCs.
Florida’s Medical Marijuana Industry continues to face price competition, say industry analysts. In a recent review of the market, prices were down 30% in the 4th quarter of 2024.
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