A months-long legal showdown began on October 20 over who gets to enter Florida’s tightly controlled medical cannabis market, a fight that could reshape one of the state’s fastest-growing industries.
The administrative hearing, expected to continue into mid-February, follows nearly a year of disputes since health officials announced they intended to grant 22 new licenses out of more than 70 applications. Thirteen rejected companies are now challenging those decisions before an administrative judge.
The state’s health department and most of the selected applicants are also part of the complex proceedings, which include hundreds of documents and days of expert testimony. At the heart of the dispute are scoring discrepancies that determined which companies advanced and which were left out. Applicants were graded on a point system ranging from 1,450 to 3,280. The lowest winner scored just a single point higher than one of the challengers.
Attorney Will Hall, representing Liner Source Inc., told the judge that his client missed the cutoff by only 23 points. Hall argued that evaluators unfairly rated Liner Source’s cultivation plan, awarding just 5 of 60 possible points, even though the company had already invested heavily in growing facilities and equipment.
Other disputes center on procedural issues. MSD Enterprises LLC, which earned one of the highest total scores, was disqualified because regulators said the company failed to list every individual associated with its ownership, as required by the state. Another contender, Niraam LLC, is fighting its rejection under a rule that bars any entity from holding stakes in multiple cannabis licenses.
The disputed licenses stem from a 2017 state law requiring the expansion of Florida’s medical cannabis program as patient numbers grow. More than 930,000 Floridians are now qualified for medical cannabis, making this the first major opportunity for new businesses since that law passed.
Florida currently has 25 licensed operators running 736 dispensaries statewide. The latest application round, launched in 2023, drew 72 submissions, nearly doubling the state’s potential market size.
Ed Lombard, representing the Health Department, noted that the hearing coincides with the 10th anniversary of Florida’s first cannabis licenses.
Many applicants had hoped to capitalize on the potential legalization of recreational cannabis through a 2024 constitutional amendment. The measure fell short of the required 60% approval, despite a $145 million campaign by Trulieve-backed Smart and Safe Florida, which now plans a similar push for the 2026 ballot.
The expansion of the medical marijuana program is expected to create opportunities not only for marijuana companies but also ancillary companies operating on a similar model to that of Innovative Industrial Properties Inc. (NYSE: IIPR) within the wider business ecosystem around the cannabis industry.
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