The demand for medical marijuana is increasing, but the fees Florida charges aren’t enough to keep up with licensure and regulatory costs, state budget documents show.
As a result, the Florida Department of Health (DOH) has included a $6.2 million increase for the Office of Medical Marijuana Use (OMMU) in its state Fiscal Year (FY) 2023-24 legislative budget request (LBR).
The push to increase funds comes as Gov. Ron DeSantis has said he doesn’t think the state has been charging enough for the medical marijuana treatment center licenses. But increasing the costs of the licenses to keep up with growing may require a statutory change and approval of a supermajority of the Legislature.
Meanwhile, the DOH says it needs to hire an additional 31 full-time employees for the OMMU in its Tallahassee headquarters, as well as new regional offices due to the increase in demand for medical marijuana.
The state is projecting there will be 1,044,072 patients who qualify for medical marijuana treatment and register with the state by June 2024, and that as a result, an additional eight medical marijuana treatment center licenses will be awarded in FY 2023-24.
But the staff increases account for just half of the $6.2 million request.
The LBR notes that current OMMU revenues won’t be enough to cover costs, including work that currently is done by outside contractors, including legal representation; administration of the seed to sale tracking systems; production of medical marijuana identification cards; background screening costs; and license review.
The OMMU anticipates there will be one application cycle for the eight new medical marijuana treatment center licenses that will be made available during FY 2023-24. It anticipates getting 150 licensure applications during the cycle. Assuming it costs $22,750 to review each application, the state projects the review process will cost $3,412,500, which is about $659,000 more than is available, according to the LBR.
The DOH also contracts for the issuance of medical marijuana treatment cards for qualified patients and their caregivers. While the current contract expires at the end of October, for planning purposes, the OMMU assumed the costs the state currently pays will remain the same for FY 2023-24. Given that, the OMMU is anticipating it will cost $6,986,198 to issue cards to qualified patients and caregivers in FY 2023-24, which is about $1.38 million more than is available.
While the state is anticipating awarding eight new licenses in FY 2023-24, the LBR notes that the OMMU intends on awarding 23 additional licenses in the current fiscal year as the number of registered patients is expected to hit 889,497 by June 30, 2023.
The OMMU is projecting “significant” litigation stemming from those licensure decisions. To accommodate for the increase in litigation, lawmakers included in the current year’s budget an additional $650,000 in nonrecurring funds on top of the $1.5 million it routinely receives.
But the OMMU noted in the LBR that the litigation will extend beyond the current fiscal year and into the next, and that “the hourly rates for the contracted attorneys and paralegal staff have increased.” As a result, the OMMU “requires additional nonrecurring resources” to meet the $2.15 million in legal costs.
LBRs signify the beginning of the annual appropriations process. State agencies are asked to prepare legislative budget requests in advance of Regular Legislative Sessions. The LBRs are wish lists, but they are also used by Governors who rely on the documents as they prepare their own legislative spending proposals.
Lawmakers passed a bill authorizing the compassionate use of low THC to certain patients in 2014
The state subsequently passed rules that authorized the state to charge $60,000 for the licenses and required vendors to pay $60,000 to renew those licenses.
After a constitutional amendment authorized the sale of traditional marijuana in Florida to a broader group of patients in 2016, licensed companies added the new product, including flower, to their offerings. Many of the initial licenses have subsequently sold for tens of millions of dollars.
Lawmakers in 2017 passed a new law and established a licensure framework and required the OMMU to issue a license for a Black farmer no later than October 2017. The OMMU didn’t award the license until September 2022 and charged vendors vying for it $164,000, more than twice the original costs.
Meanwhile, after MedMen Enterprises Inc. announced in August it closed a $63 million deal selling its Florida operations to Green Sentry Holdings LLC, DeSantis said the state should consider what it charges for the licenses.
“I mean, these are very valuable licenses,” DeSantis said in August. “I would charge them an arm and a leg. I mean, everybody wants these licenses.”
But DeSantis acknowledged that to increase the licensure costs, it would require legislation due to a 2018 constitutional amendment that was approved by Florida voters.
Known as Amendment 5 at the time, the provision prohibited the Legislature from imposing or raising a state tax or fee without a supermajority vote of the House and the Senate. The amendment defines a fee as “any charge or payment required by law, including any fee or charge for services and fees or costs for licenses.”