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Biros' Blog

Washington Changes Course, Selects MJ Freeway as New ASV

By Aaron G. Biros
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Two weeks ago, we reported on the State of Washington choosing Franwell as their apparent successful vendor (ASV) for their seed-to-sale traceability system contract. Late last week, the Washington State Liquor and Cannabis Board (WSLCB) sent out an email explaining that they are no longer going with Franwell and the new ASV is MJ Freeway.

The email (left) consisted of a letter sent by Peter Antolin, Deputy Director of the WSLCB, to licensees “who had written to the Board and staff regarding the marijuana traceability Apparent Successful Vendor and RFID tags.” Apparently, the reason behind switching the ASV to MJ Freeway is because Franwell’s system requires only one method for tagging plants- RFID tags. According to the letter, Deputy Director Antolin says the initial request for proposal (RFP) stated that the traceability system needs to support a variety of tagging methods, including bar codes and RFID. “The RFP requirements did not allow a vendor to make any assumptions regarding use of a single tagging methodology or allow vendors to include any such costs affecting the state or our licensees in their proposal,” says Antolin. As they made clear in the previous press release, the ASV is not the official contract winner until they complete negotiations and sign the contract.

On June 7th, Franwell withdrew their proposal for the state’s traceability system, thus Washington went with the second highest scoring vendor, MJ Freeway. Deputy Director Antolin says they submitted a strong bid, but there are still many questions left unanswered. How could such a glaring mistake be overlooked when the state named Franwell the highest scoring bidder? Is MJ Freeway’s system robust enough and capable of handling the state’s cannabis licensees’ traceability requirements even though they were not the highest scoring bidder? The deadline for the new system to be in place is October 31, 2017, which is quickly approaching for such a massive systems overhaul.

The WSLCB’s oversight highlights a few inadequacies with the state’s regulatory agency, particularly their indecision and lack of foresight. So much of the concept behind seed-to-sale traceability rests on Cole Memo compliance. A big reason why some states seek to implement a robust tracking system is to remain compliant with the Cole Memo; preventing diversion to crime organizations with regulatory oversight is a key tool that states use to tell the federal government they are complying with their directive and intend to protect their state’s legal cannabis operations from federal prosecution. Without a proper system in place, the state runs the risk of exposing their entire cannabis market to threats of federal enforcement, a scenario that seems unlikely but could be disastrous to cannabis businesses and the local economy.

The WSLCB needs to get their act together fast.

Florida On Path to Implement Medical Cannabis Legalization

By Aaron G. Biros
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Voters in Florida passed Amendment 2 last year with an overwhelming majority of over 70%. The constitutional amendment went into effect on January 3rd this year and regulators have until July 3rd to promulgate the rules.

The Florida Department of Health set up the Office of Compassionate Use (OCU) in July of 2014 after the passing of the so-called Charlotte’s Web measure (HB 843). That bill allows use of low THC/high CBD cannabis for treating seizures. The OCU is charged with the task of writing and implementing medical cannabis rules. Ongoing public hearings and workshops at the Department of Health (DOH) are meant to give stakeholders the opportunity to chime in on the proposed rules.

Florida State Capitol, Talahasse Stuart Seeger, Flickr
Florida State Capitol, Talahasse
Stuart Seeger, Flickr

On January 17th, the DOH published proposed rules and announced public hearings, seeking input from the public on the matter. The OCU is required to implement rules consistent with Amendment 2, but they would defer to the legislature if a bill were passed, promulgating rules consistent with Amendment 2 and the bill.

After the passing of Amendment 2, Sen. Jeff Brandes (R-St. Petersburg) filed SB614, a bill that establishes four license categories instead of the currently required vertically integrated business model. Notably, Sen. Brandes’ bill requires laboratory batch testing, whereas other proposed rules do not include such a measure. Sen. Brandes sees the DOH’s proposed rules as more of the same from the current medical program, according to a quote from FloridaPolitics.com. “Any proposal which seeks to mold the spirit of Amendment 2 into the narrow and flawed law on the books today should be rejected, and a more comprehensive strategy must take priority,” says Sen. Brandes. “I will support no bill, nor any rule, that maintains the established state sanctioned cartel system we have today, and I urge my colleagues to join me in proposing a free market solution for Florida.” He is referring to the seven licensed nurseries from the low THC/high CBD medical program, all of which are vertically integrated.

Matthew Ginder, senior counsel of the cannabis practice at Greenspoon Marder
Matthew Ginder, senior counsel in the cannabis practice at Greenspoon Marder

According to Matthew Ginder, senior counsel in the cannabis law practice at Greenspoon Marder, the biggest question for the legislature is how many licenses will they issue and what kind of structures are required for the licensees. Another big issue is the process by which patients access medical cannabis through their physicians. “The current program requires physicians to register as the orderer of medical cannabis, specify dosing and order medical devices, which is highly uncommon in other state programs,” says Ginder. “Sen. Brandes’ bill removes these requirements and is more consistent with other states by requiring a physician’s recommendation.” He says that bill would create four licenses: cultivation, processing transportation and retail.

Sen. Robert Bradley (R-5th District) also filed legislation (SB 406) to implement Amendment 2, but this bill is very different from Sen. Brandes’ bill. “Bradley’s bill is built upon the statutory framework that is already in place,” says Ginder. “Bradley’s is keeping vertical integration intact, seeking to also limit the amount of vertically integrated license based on a patient ratio of about 20,000 registered patients per license issued.” Bradley’s bill does not provide for independent lab testing requirements. Some might characterize Bradley’s bill as more of the same, allowing for the consolidation of existing monopolies.

Ginder says these are just two bills from the Senate, the House still has not proposed any bills. “We will most likely see more bills,” says Ginder. “We still don’t know what iteration of the bill or what language might be adopted and you can expect them to change as it moves through the committees.” With the legislative session beginning on March 7th, we can expect to see these bills debated on the floor and likely the filing of other legislation.

gm-horizontal-bw_nolaw (4)On February 1st, Greenspoon Marder announced the launch of their Organization for Safe Cannabis Regulation (OSCR) in Florida. By hiring lobbyists and making contributions to certain political candidates, the OSCR aims to advocate for a broad and fair marketplace, specifically “advocating for laws that create independently “registered” entities that perform specific functions along the production and distribution chain.”