Full Opinion

FIRST DISTRICT COURT OF APPEAL STATE OF FLORIDA _____________________________ No. 1D19-2736 _____________________________ MEDPURE, LLC, Appellant, v. DEPARTMENT OF HEALTH, Appellee. _____________________________ No. 1D19-2737 _____________________________ GREEN POINT RESEARCH, LLC, Appellant, v. DEPARTMENT OF HEALTH, Appellee. _____________________________ On appeal from the Department of Health. Michele Tallent, Deputy Secretary for Operations. April 17, 2020 WOLF, J. This appeal is a consolidation of two cases, 1D19-2736 and 1D19-2737, which both raise the same issue and the same arguments. The appellants, MedPure and Green Point Research, are Florida corporations established to operate a Medical Marijuana Treatment Center (MMTC) in Florida. Appellants argue that the Department of Health (the Department) erred in dismissing their petitions for formal administrative hearings concerning their requests to be licensed to operate MMTCs. The appellants first argue that the Department should have allowed hearings on their claims that they were entitled to default licenses pursuant to section 120.60(1), Florida Statutes (2019). We determine that they were not entitled to default licensure because their bare bones filings were insufficient to constitute an application. In addition, the Department had adopted an emergency rule providing that applications were not being accepted at that time; therefore, the unauthorized and insufficient filings did not trigger the Department’s responsibilities to respond pursuant to section 120.60, Florida Statutes. The appellants next argue that the Department violated its constitutional responsibility to accept applications pursuant to article X, section 29 of the Florida Constitution. We determine, based on the clear constitutional language, this claim is properly brought in the courts rather than as part of an administrative licensing proceeding. Further, the relief sought by appellants— immediate issuance of a license to operate an MMTC as a result of the Department’s failure to follow their constitutional duties—was unavailable based on public policy concerns expressed by the court in Florida Department of Health v. Florigrown, 2019 WL 2943329 *1 (Fla. 1st DCA 2019). We, therefore, affirm. The Medical Marijuana Amendment was approved by Florida voters in 2016, and it went into effect on January 3, 2017. The Amendment is codified at article X, section 29 of the Florida Constitution. The Amendment defines a Medical Marijuana Treatment Center as follows: “Medical Marijuana Treatment Center” (MMTC) means an entity that acquires, cultivates, possesses, 2 processes (including development of related products such as food, tinctures, aerosols, oils, or ointments), transfers, transports, sells, distributes, dispenses, or administers marijuana, products containing marijuana, related supplies, or educational materials to qualifying patients or their caregivers and is registered by the Department. 1 Art. X, § 29(b)(5). The constitutional amendment imposed several duties on the Department and provided statutory standing for persons to “seek judicial relief to compel compliance with the Department’s constitutional duties.” Art. X, § 29(e), Fla. Const. The duties of the Department in regard to implementing the Medical Marijuana Amendment are set forth, in pertinent part, in article X, section 29(d) – (d)(3): --Issue reasonable regulations necessary for the implementation and enforcement of the Amendment to ensure the availability and safe use of medical marijuana by qualifying patients in a timely fashion. See Art. X, § 29(d), Fla. Const. --Promulgate regulations “no later than six (6) months after the effective date” of the Amendment, to include “procedures for the registration of MMTCs that include procedures for the issuance, renewal, suspension and revocation of registration . . . .” Art. X, § 29(d)(1) - (d)(1)c., Fla. Const. --Begin issuing qualifying patient and caregiver identification cards and registering MMTCs no later than nine (9) months after the effective date of this section. See Art. X, § 29(d)(2), Fla. Const. In June 2017, the Legislature passed a bill setting forth a statutory framework for the registration of MMTCs by amending 1 The “Department” is defined in article X, section 29(b)(2) as “the Department of Health.” 3 section 381.986, Florida Statutes. The amended statute, among other things, required the Department --To convert the existing licenses of low-THC and medical cannabis dispensing organizations into MMTC licenses. § 381.986(8)(a)1., Fla. Stat. --To provide for a limited number of additional MMTC licenses under specified conditions set out in the statute. § 381.986(8)(a)1.-4., Fla. Stat. --To require a licensed medical marijuana treatment center to cultivate, process, transport, and dispense marijuana for medical use. § 381.986(8)(e), Fla. Stat. CONSTITUTIONAL CHALLENGE TO SECTION 381.986(8) THE FLORIGROWN CASE In December 2017, Florigrown, LLC, a medical marijuana provider whose application to register as an MMTC under the Constitutional Amendment was denied by the Department, filed suit in the Second Judicial Circuit seeking a declaration that portions of section 381.986(8) were unconstitutional. The circuit court granted Florigrown’s motion for a temporary injunction and ruled that the implementing statute was unconstitutional. The order granting the temporary injunction also directed the Department to begin registering MMTCs in accordance with the plain language of the Amendment. Id. The Department appealed the circuit court’s order. On appeal, this Court upheld the circuit court’s injunction “to the extent it requires the Department to consider Florigrown’s request for licensure without applying the portions of the statutory scheme which this opinion identifies as being unconstitutional.” See Fla. Dep’t of Health v. Florigrown, LLC, 2019 WL 2943329 *1 (Fla. 1st DCA 2019). The ultimate conclusion of this court, however, was that due to public interest concerns the portion of the injunction which “allow(s) the Department a reasonable period of time to exercise its duties under the constitutional amendment” should be upheld. Florigrown, LLC at *5. The Florida Supreme Court has accepted jurisdiction to review this case and our decision has been stayed pending supreme court review. 4 THE INSTANT CASES: MEDPURE AND GREEN POINT On October 19, 2018, relying on the circuit court’s ruling in Florigrown (No. 2017 CA 002549), which directed the Department to begin registering MMTCs in accordance with the plain language of the Amendment, MedPure and Green Point Research submitted letters to the Department purporting to be registration applications to operate MMTCs pursuant to the language of the Amendment. 2 These letters were filed in spite of a Department rule stating that applications would be received at a later date published by the Department. See Fla. Adm. Code R. 64ER17-2 (9/19/2017). 3 2 The applications of both appellants include the article X, section 29 definition of an MMTC: “to acquire, cultivate possesses, process . . ., transfer, transport sell, distribute, dispense, or administer marijuana, products containing marijuana, related supplies or education materials, to qualifying patients of their caregivers.” 3 In September 2017, and pursuant to chapter 2017-232, section 14(1), Laws of Florida, the Department issued the Notice of Emergency Rule entitled Application for Registration of Medical Marijuana Treatment Centers. Fla. Admin. Code R. 64ER17-2 (9/19/2017). The Emergency Rule incorporated Form DH8013- OMMU-08/2017 (“Application for Medical Marijuana Treatment Center Registration” or “Application Form”) and the requirements for the application for registration of MMTCs. Applicants are required to include with the application a non-refundable application fee of $60,830.00, written documentation from the Department of State or the Department of Revenue showing that the applicant had been registered to do business in Florida for the prior five consecutive years and that the applicant possessed a valid certificate of registration from the Department of Agriculture and Consumer Services, and a list of the owners, officers, board members, and managers. Id. (1)(a), (b), (c). Pursuant to the Rule, if an applicant fails to provide any of these requirements, the application will be denied. Id. at (3). Additionally, in November 2017, pursuant to article X, section 29(d) of the Florida 9 5 On March 26, 2019, the Department informed the appellants that the Office of Medical Marijuana Use was not accepting applications for MMTC registration, and it advised that the Department “will publish in the Florida Administrative Register the date upon which it will begin accepting applications.” On May 24, 2019, MedPure filed a petition with the Department for formal administrative proceedings to challenge the “rejection of the registration application” for an MMTC license. On April 15, 2019, Green Point filed an identical petition. The petitions argued, among other things, that the petitioners were “entitled to a default license under section 120.60(1) because the Agency allowed more than thirty (30) days to elapse without requesting any additional information from [the petitioner], and also allowed more than ninety (90) days to elapse without approving or denying [petitioner’s] MMTC registration application.” The petitions sought “prompt issuance of a license to operate as an MMTC in the state of Florida, by default under section 120.60(1), Florida Statutes, or otherwise.” On June 28, 2019, the Department dismissed the appellants’ petitions with prejudice, finding that the October 19, 2018, letter submitted by the appellants did not operate as an application under chapter 120, and as such, sections 120.60 and 120.52, Florida Statutes, did not apply; that default licensure was not applicable in this case because section 381.986(8) is a need-driven procedure with competing entities vying for a finite number of licenses; and that the appropriate means of compelling compliance with the Amendment was through judicial review rather than administrative agency action. Constitution, the Department published Constitutional Regulation 2-1.01 “Application for Registration of Medical Marijuana Treatment Centers.” The Constitutional Regulation also incorporated the Application Form by reference. Both the Emergency Rule and the Constitutional Regulation state: (4) The department shall publish in the Florida Administrative Register and on its website the date upon which the department will begin accepting applications and the deadline to receive all applications. 6 ANALYSIS Default Licensure Under Section120.60(1) 4 The appellants argue that they are entitled to be licensed under the default licensure provision of section 120.60(1), which provides: An application for a license must be approved or denied within 90 days after receipt of a completed application unless a shorter period of time for agency action is provided by law. . . . Any application for a license which is not approved or denied within the 90-day or shorter time period . . . is considered approved unless the recommended order recommends that the agency deny the license. Thus, under section 120.60(1), where an agency fails to act upon a license application within 90 days, the application is considered approved. The relevant conditions precedent under which default licensure would apply are “receipt of a completed application” and application approval or denial within 90 days. The bare bones letter filed by appellants did not act as a completed application that triggered the Department’s responsibilities under section 120.60, Florida Statutes, under the circumstances of this case. These circumstances include: 1) the Department’s rule that put parties on notice that applications were not being accepted at that time; 2) the letters were not filed on an application form prepared by the Department; 3) the bare bones filing did not demonstrate compliance with the minimum licensure requirements; and 4) allowing the appellants to file for licenses during an undesignated period for filing would contravene the competitive structure for licensing contemplated in section 381.968, Florida Statutes (2019). 4 This section 120.60(1) provision is referred to in the briefs and this analysis as a “deemer provision” or as “default licensure.” 7 Incomplete and Unauthorized Application On October 19, 2018, the date the appellants filed their letters to register as MMTCs, an Emergency Rule of the Department was already in place providing the application requirements and process necessary to apply and be approved for registration as an MMTC. See Fla. Admin. Code R. 64ER17-2 (9/19/2017). The Emergency Rule specifically provides that the Department would publish notice to the public of when it would begin accepting applications, along with the deadline to submit applications for registration as an MMTC. Appellants apparently intended for their letters to be considered applications for licensure even though they made no reference to the Department’s Emergency Rule or to the application process required by the agency. Further, appellants’ intent is immaterial in light of the Department’s rule that they were not accepting applications. 5 In Dixie Lodge Assisted Living Facility v. Agency for Health Care Administration, 273 So. 3d 272, 274 (Fla. 1st DCA 2019), this court found that while the deemer provision was implicated because the agency had not timely denied the license, the applicant was not entitled to default licensure because it failed to meet the minimum licensure requirements of the agency. Here, the appellants’ letter merely states that they “will meet” all the requirements, without offering any actual documentation showing its ability to do so. Merely stating that an applicant will meet various requirements, including security, safety, and record keeping, without specifically identifying how the applicant will operate to meet the requirements does not meet the minimum 5 The letter did not include: 1) an accompanying Form DH8013-OMMU-08/2017, “Application for Medical Marijuana Treatment Center Registration,”; 2) written documentation from the Department of State or the Department of Revenue showing that MedPure and Green Point Research were registered to do business in Florida and had done so for the prior five consecutive years; 3) proof of a valid certificate of registration from the Department of Agriculture and Consumer Services; or 4) the non- refundable application fee of $60,830. 8 requirement of a license application. Similarly, the deemer provision cannot apply because the appellants failed to meet the minimum licensure requirements of the agency and were on notice as a result of a departmental rule that applications were not being accepted. These specific facts of this case distinguish it from other cases in which courts have found that the deemer provision does apply. In addition, as more fully discussed later in this opinion, this court has previously concluded that public policy concerns require that the Department be given a reasonable period of time to comply with their constitutional duties once the statute’s constitutionality has ultimately been determined. Fla. Dep’t of Health v. Florigrown, 2019 WL 2943329 (Fla. 1st DCA 2019). Competitive Process Finally, section 381.986(8)(a), Florida Statutes, provides that MMTC licenses will only be issued based upon need. 6 The Department argues that if this court were to find that the deemer provision applies to need-based licenses, it would contravene the doctrine announced by the Supreme Court in Ashbacker Radio Corp. v. F.C.C., 326 U.S. 327, 330 (1945), holding that an agency generally may not license one party without considering the applications of others for the same license. This principle 6 Section 381.986(8)(a)4. provides, Within 6 months after the registration of 100,000 active qualified patients in the medical marijuana use registry, the department shall license four additional medical marijuana treatment centers that meet the requirements of this section. Thereafter, the department shall license four medical marijuana treatment centers within 6 months after the registration of each additional 100,000 active qualified patients in the medical marijuana use registry that meet the requirements of this section. 9 “constitutes a fundamental doctrine of fair play which administrative agencies must diligently respect and courts must be ever alert to enforce.” Bio-Med. Applications of Clearwater, Inc. v. Dep’t of Health & Rehab. Servs., 370 So. 2d 19, 23 (Fla. 2d DCA 1979) (finding that the Ashbacker doctrine commands the agency to “conduct a comparative hearing at which the competing applications are considered simultaneously”). Here, providing an MMTC license to the appellants pursuant to the deemer provision would automatically exclude other applicants from consideration. See Bio-Medical Applications of Clearwater, Inc., 370 So. 2d at 23. This would violate the principles of administrative fairness that Ashbacker represents, and it could pose a threat to public health and safety, as the best applicants for MMTC licensure may not be properly considered in the process. An MMTC license cannot be obtained by default under section 120.60(1) because that statute requires a limited number of MMTC licenses based on need under section 381.986(8)(a). Thus, as a matter of law, the filings of appellants were insufficient to require the Department to grant an administrative hearing on the “deemer provisions,” contained in section 120.60, Florida Statutes. Constitutional Claims Judicial Review vs. Agency Action Appellants also claim they were entitled to an administrative hearing on their claims that the Department was not following its constitutional duties under article X, section 29 of the Florida Constitution. They are not entitled to the remedy of issuance of a license pursuant to their constitutional claim through the administrative process for several reasons. First, the language of the constitution itself provides that such relief must be sought through judicial review. Article X, section 29(d)(3), specifically provides: If the Department does not issue regulations, or if the Department does not begin issuing identification cards and registering MMTCs within the time limits set in this section, any Florida citizen shall have standing to 10 seek judicial relief to compel compliance with the Department’s constitutional duties. (Emphasis added.) Appellants’ assertion is that the constitutional duty being violated is failure to timely comply with the registering requirements for MMTCs. However, the language of the Amendment contemplates judicial enforcement. In addition, if constitutional non-compliance is determined to have occurred, there is no indication that the appropriate remedy is the entitlement to immediate licensure or even an immediate entry into the administrative process. As we specifically stated in Florigrown, where we found a constitutional violation had occurred, While it is in the public interest for the Department to promulgate[] rules that do not thwart the purpose of the amendment, it is also clear that the public interest would not be served by requiring the Department to register MMTCs pursuant to a preliminary injunction without applying other regulations to uphold the safety of the public. Id. at *5. We, thus, determined the appropriate remedy was to give the Department a reasonable period of time to comply with its constitutional duties. 7 There is no present requirement for the Department to immediately open up the administrative permitting process. We, therefore, AFFIRM. BILBREY and M.K. THOMAS, JJ., concur. 7 The decision in Florigrown has been stayed and is presently under review by the Florida Supreme Court. Therefore, this court’s mandate to comply with its constitutional duties has been stayed. 11 _____________________________ Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331. _____________________________ Brigid F. Cech Samole and Katherine M. Clemente of Greenberg Traurig, P.A., Miami; Barry Richard and Lorence J. Bielby of Greenberg Traurig, P.A., Tallahassee; and Avi Benayoun of Greenberg Traurig, P.A., Fort Lauderdale, for Appellants. Sarah Young Hodges, Chief Appellate Counsel, Florida Department of Health, Tallahassee, for Appellee. 12