Pot rule challenge rolls ahead
TALLAHASSEE, Fla. – The fight over the state's attempt to get a non-euphoric pot industry off the ground continued Thursday during a day-long hearing in a challenge filed by a Florida nurseryman who complains that health officials' proposed regulations are unfair and vague.
The hearing over the rule challenge, filed by Baywood Nurseries of Apopka, comes as legislators said this week they have abandoned an effort to revamp Florida's first-in-the-nation law, passed last year, legalizing cannabis that purportedly does not get users high. The cannabis is low in euphoria-inducing tetrahydrocannabinol, or THC, and high in cannabadiol, or CBD.
Administrative Law Judge W. David Watkins kept open the possibility of dismissing the challenge prior to hearing more than five hours of testimony from nursery owner Raymond Hogshead, his partner, Heather Zabinofsky, and others. The challenge is filed against the state Department of Health, which is in charge of carrying out the law.
Watkins is the same judge who tossed out the Department of Health's first attempt at a rule last year. That prompted the agency's Office of Compassionate Use to hold a rare "negotiated rulemaking" workshop earlier this year in which a 12-member panel, handpicked by the office's executive director Patricia Nelson, spent 27 hours over two days hashing out the proposed regulations.
Watkins earlier dismissed a challenge to the new rule filed by Zabinofsky, sole proprietor of Sanford-based Master Growers, P.A. The decision came because she is not a nursery that meets criteria to compete for selection as one of five "dispensing organization" that will grow, process and distribute the medical marijuana ordered by doctors for patients with severe muscle spasms or cancer.
But the testimony of Zabinofsky, who claims she is an expert in growing marijuana and has appeared at several rule-making workshops held by health officials since Gov. Rick Scott signed the bill into law last year, was the highlight of the dry administrative hearing.
Eduardo Lombard -- a private lawyer who, along with his partner William Robert Vezina, is representing the Department of Health -- shredded Zabinofsky for admitting to growing cannabis, a Schedule 1 drug that is illegal under state and federal law. The department is paying $400 an hour, up to $150,000, for the legal representation.
Although Zabinofsky admitted in her deposition that she grows marijuana, she hedged when grilled by Lombard on Thursday about growing the illegal substance in Florida.
"I assist medical marijuana patients with their marijuana needs," she repeatedly told Lombard.
Charles Moure, a Seattle lawyer representing Hogshead, argued that the members of the negotiated rulemaking committee -- which included representatives of large nurseries, marijuana growers from other states and Holley Moseley, the mother of a child with epilepsy who was the figurehead of the push for the low-THC law -- were selected because of extensive "lobbying" on their behalf.
But Lombard disputed that, saying that the negotiated rulemaking process -- which makes it more difficult to challenge regulations --"was a thoughtful, rational, deliberate process" that resulted in "rules that make sense."
He conceded that the nurseries who participated in the process had an interest in the rule.
"That is the point of negotiated rulemaking. You're supposed to bring people who have different perspectives … and get them in a room and hash it out," Lombard said.
Under the law, nurseries that have been in business for at least 30 years in Florida and grow a minimum of 400,000 plants are eligible for the licenses. About 100 nurseries meet the criteria, according to the Florida Department of Agriculture.
Moure complained about how the rule deals with a $5 million bond required in the law.
"We contend that it creates a situation that not the entire 98 applicants but maybe less than 10 percent of them, 20 percent of them, can truly apply," Moure said.
Part of the scoring mechanism used to select the five dispensing organizations is also tilted toward large nurseries, Moure said.
The health department's lawyers spent much of the day trying to lay the groundwork for Watkins to dismiss the suit by painting Hogshead's nursery as lacking the financial wherewithal to get a license. Under the proposed rule, dispensing organizations would have to prove that they would be able to stay in business for at least two years and be able to cover not only the bond but what could be expensive start-up costs.
Lombard challenged Hogshead, who said in a deposition last week that he would not be able to afford the "certified financials" required as part of the application. But on Wednesday, Baywood Nurseries filed a letter from Hogshead's accountant saying the grower would be able to provide the audited financial statements, but that they would be expensive.
"Based on what I know right now, it will be difficult, expensive, but I think I can do it," Hogshead said.
Baywood Nurseries, which specializes in gardenias, saw net sales drop 30 percent, from $650,000 in 2009 to $440,000 in 2013, Vezina noted. But Hogshead said that about half of the state's nurseries went under during the recession, and that he believes he will have the backing to participate in the pot business.
"I will have a financial partner at that point that will show that we're good to go," he said.
Vezina also pressed Hogshead on whether he was concerned that Zabinofsky, the vice president of his nursery, is currently growing marijuana illegally.
"Yes, I have a little concern of that," Hogshead said.
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