Costa Farms argues transparency lacking in Charlotte’s Web rulemaking

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In his opening statement, Costa Farms’ attorney Stephen Turner said Jennifer Tschetter inserted a lottery in the Charlotte’s Web licensing process before the Department of Health held its first public hearing on regulations for medicinal marijuana.

Administrative Judge W. David Watkins is holding two-days of hearing in Tallahassee on challenges to the proposed regulatory structure for the Charlotte’s Web law approved by lawmakers in May. Monday, Turner said a lottery was not the result of public input but was a “fait accompli.”

“It did not result from a series of workshops, where ideas emerge,” said Turner. “There was no consultant or expert guidance provided to shape the rules (from) inside or outside the agency even though obviously this was a new area for Florida.”

Costas Farms, Plants of Ruskin, Three Boys Farm, and the Florida Medical Cannabis Association argue DOH exceeded its authority by proposing a lottery to award five licenses to cultivate, process and dispense a medicinal cannabis product and in widening the pool of applicants beyond the criteria lawmakers specified in SB 1030.

The petitioners’ lawyers spent most of Monday morning building their case that a lottery was not the end result of a transparent process. Furthermore, they argued it is  based on a misunderstanding of the complexities of growing marijuana and the process to extract oil from the plant, was not consistent with legislative intent and ultimately that a lack of a merit-based selection process harms consumers in terms of cost and safety.

Turner argued that a lottery sets up a game of chance for entry into a complex industry that requires a big capital investment upfront, an intimate understanding of plant biology and chemistry and produces a product for very ill people.

“When combined (the proposed rule) has the effect to discourage serious applicants from putting their best foot forward and encourages inferior minimally qualified applicants to take a chance with no risk…”

Tschetter was called to the stand by DOH to rebut Turner and lawyers for the other petitioners. She spent nearly three hours on the witness stand defending the proposal. Tschetter explained regulators believed a lottery would help the department meet the Jan. 1 start date selected by lawmakers and would expedite the delivery of medicine. Otherwise she explained regulators would have to devise an “elaborate scorecard” to evaluate applicants, a process which could trigger further litigation.

Tschetter also explained a decision to widen the applicant pool to include an entity which the ownership of a qualified nursery had at least 25 percent ownership of came after testimony from nurseries concerned about running afoul of federal banking regulations.  Since marijuana remains illegal under federal law, banks are reluctant to do business with companies involved in illegal activities.

“The comments were virtually unanimous at that first workshop that it couldn’t be nurseries; no one would ever apply, they would mess us their line of credit. They would have no ability to operate a nursery” Tschetter testified. “We needed to allow dispensing organizations be something else or we would receive no applicants.”

The petitioners objected to the line of questioning that produced Tschetter’s response. Ruskin’s attorney Craig Varn pointed out that Tschetter was not a banking expert and an earlier response citing testimony about potential banking problems was hearsay.

Judge David Watkins overruled the objection and advised Varn that it was a good topic for cross examination.

That will happen Wednesday.

The petitioners intend to argue that lawmakers included specific criteria for eligible applicants and if the legislative standard fails to attract applicants then it is the legislature’s responsibility to fix the problem, not DOH’s.

“You can’t go beyond the written law when devising rules to implement the law,” said Louis Rotundo, a lobbyist for the Florida Medical Cannabis Association.

 Jennifer Tschetter is expected to return to the stand when Watkins reconvenes the hearing. The hearing continues Wednesday at 9:30 a.m. in Courtroom A of the Florida State University College of Law Advocacy Center in Tallahassee.

Watkins has 30 days in which to issue a ruling once the hearing concludes.