Nursery wants southwest Florida’s first marijuana license

Author: Associated Press / WINK News
Medical marijuana. (Credit: News Service of Florida)
Medical marijuana. (Credit: News Service of Florida)

A Fort Myers nursery owner is competing for one of Florida’s coveted full-service medical marijuana licenses and facing one challenge after another — even suing the state for a license he says he’s owed.

The owner of FTG nursery, John Allen, and his partner William Reese, a third-generation farmer, hand-delivered their application to the Department of Health last November with a cashier’s check for $60,830 to grow, process and distribute cannabis.

Florida law requires the health department to raise any issues with the application in 30 days and make a decision within 90, or issue a license.

None of that happened, Allen said.

“The statute is there for a reason. If the agency can ignore it then why is it there?” FTG’s attorney Craig Varn said.

A federal judge has since ordered the health department to show why the nursery should not be given a default license as the law requires.

FTG also had hoped to stop the agency from awarding eight new licenses until its application is reviewed, but that request was denied.

“We didn’t want them to run out of licenses before ours was reviewed,” Varn said,

They’re not the only ones concerned.

Florida first gave a limited nod to medical cannabis, legalizing it with broad voter approval in 2016. But its chokehold on who could provide the weed has ruffled feathers from the start.

— The state created a medical marijuana super license — the right to grow, process and dispense in a given territory — so only the biggest companies could compete.

— Then it invited a rain of lawsuits for what a judge called its ‘flawed’ scoring of the applications.

— And, instead of opening the door to all, the state awarded the next round of licenses as a settlement to companies that didn’t make the first cut.

“That’s half a billion dollars worth of licenses given to the least qualified applicants,” said David Vukelja of Louis del Favero Orchids, a long-time Tampa orchid grower that’s also suing for a default license.

The health department says it’s beholden to neither of them.

“There has not been, nor is there any, open application period. Accordingly, (the application) was premature, untimely, and did not trigger any obligation for the Department to take action,” it wrote to both nurseries.

Newly elected Florida Agriculture Commissioner Nikki Fried, who took office after medical marijuana was legalized, would like to see a more democratic application process.

“I’m doing everything in my power to make sure the treatment costs go down and assure we have a diversity of patients, treatment centers and growers,” Fried said.

Currently, the state has 14 medical marijuana license holders. When the number of enrolled patients reaches 300,000 — it’s already topped 200,000 with about 10,000 enrolling per week — four more licenses will be offered to all applicants, Fried said.

Florida’s first five license holders, meanwhile, control 82 percent of its cannabis dispensaries, prompting Marijuana Business Daily to dub the state “an oligopoly rather than a highly competitive market.”

Those five get first crack at a market that analysts expect to top $1 billion in 2020.

As an example of how profitable this can be, one of the first licensed nurseries, Gainesville-based San Felasco, recently sold 100 percent of its shares to Harvest Health of Arizona for $65.6 million, a license it obtained with Fried’s help during her days as a medical marijuana lobbyist.


‘It’s the future’

FTG, which stands for Florida Tree Growers, has been cultivating palms and veggies in Southwest Florida for 36 years, although Allen didn’t always own it.

Growing up a city kid in traditionally African-American Dunbar, he played sports with Reese’s sons and worked summers with them on the farm.

As Florida got serious about medical cannabis, Reese tapped Allen — by then a Fortune 100 portfolio manager — to help get the business off the ground.

“It’s the future,” he said of the decision to turn from conventional farming to medical marijuana.

As to why he chose Allen over scores of investors who courted him, “John’s real smart and he’s real trustworthy,” Reese said, “I’m 71 and still use a flip phone. Somebody’s got to run it when we cross the finish line.”

And a long run it appears to be.

Following the state’s early application requirements, the pair raised 400,000 Eureka and Pygmy Date Palm seedlings to six inches in order to demonstrate their grower chops — only to see the plants whisked away by Hurricane Irma in 2017.

They’ve been preparing for this license so long that the cultivation of seedlings is no longer required.

“It’s difficult for me because the return on investment in medical marijuana is over 400 percent right now,” said Allen, who likens the market to a latter-day Gold Rush. “In real estate, 18 percent would be considered a great return.”

But the opportunity for the big bucks is fleeting.

“A small farmer coming in late will get pushed out by the more established players when the market corrects itself,” he explained. “That’s why this is so important to me.”

If awarded a license, FTG will be the first full-service medical marijuana provider in Southwest Florida — as well as its first black-owned license holder.


‘Problems from day one for the medical marijuana field’

In a state where systemic racism has reduced many black farmers to working leased land, Allen, a majority owner, is a rare Florida commodity.

Not that he needs a special consideration for that — Varn, his attorney, says FTG is more qualified than many of the nurseries already licensed — but Allen thinks the state should do more to let certified minority businesses into the game, of which he’s one.

A license does exist for black farmers, not for inclusion’s sake, but, for the same reason as some other medical marijuana licenses, to help the state back its way out of a lawsuit.

Initially, Florida allowed only nurseries with 30 consecutive years in business to apply — an impossibility for many black farmers who traditionally faced lending discrimination to keep their businesses afloat.

The rule was declared unconstitutional. A carve-out license was created with two conditions, neither of which Allen meets:

— The farmer must belong to the Florida Black Farmers and Agriculturalists Association — this, too, was shot down in court; and

— The farmer must belong to the federal class action known as Pigford.

Pigford farmers are those who sued the USDA for discrimination on the basis of race, and, in 1999, won.

“When it was recognized that black (Pigford) farmers would not have been able to receive a loan to meet the 30-year requirement, the solution was to give them a shot,” Fried said.

Many of the farmers are now nearing or past retirement Allen, who’s 42, didn’t own a farm in the 1980s when the case was litigated.

“We fought against limiting it. We were fighting for all black farmers,” said Florida Black Farmers association co-founder Latresia Wilson, whose organization challenged the original medical marijuana licensing rule.

“But we were dealing with a lack of understanding. There were legislators who didn’t understand that they had already created a special class when they picked the first five licensees who were their buddies,” Wilson said. “Pigford legitimized our case.”

In a legal opinion letter to Allen, Tamieka Range, an Orlando attorney, wrote, “Limiting the carve-out to just one Pigford class member severely limits black farmers ability to participate in the medical marijuana industry.”

Reaching out to Black Caucus members, Allen suggested broader language — for example, “qualifying black farmers” who meet the state’s eligibility criteria — but none responded.

Fried has other ideas about democratizing the state’s gold crop.

“There have been problems from day one for the medical marijuana field,” the ag commissioner acknowledged. “When we create the hemp program that is under my jurisdiction, we will have an open market from the start, and it will not be a $70,000 application fee.”

Instead of a super license to grow, process and dispense, a business could opt into just one activity.

“Everyone will be able to participate, from the farmer with five acres to the farmer with 500,” Fried said.

Allen thinks black farmers could do well with hemp.

“In hemp you have a program focused on what most farmers have been doing their whole lives — cultivating,” he said. “A black farmer could even lease land and sell the crop.”

Anticipating the opportunity, FTG is also developing a hemp program that includes Native American as well as black growers in multiple states, he said.

But he and Reese still want the $60-plus-million gold ring.

They hope their default license suit will gain them access to the next round of medial marijuana licenses, if not the most recent, and expect a decision in late June.

“I know where this ends,” attorney Varn said. “Absent some settlement or litigation, we will end up in appellate court.”

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