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Costa Farms files lawsuit challenging agency's marijuana 'lottery' rule

The Florida Department of Health says it wanted to use a lottery to select the companies that will dispense low-THC cannabis in Florida to avoid lawsuits, but on Monday the agency in charge of writing the medical marijuana rules drew its first lawsuit -- because of the lottery.

Costa Farms of Miami, one of the state's largest farming operations filed an administrative complaint against the Department of Health Monday, alleging that it is violating the law authoritizing the selection of five companies to dispense low-THC cannabis by requiring they be selected through a lottery system.

The company claims that the lottery system violates the law authoritizing the selection of five companies to dispense low-THC cannabis because the lottery system, adopted by the agency after three public hearings, "is not mentioned in the legislation."

"The Department of Health has a duty to ensure that the dispensing organizations that are selected to make this medicine are the very best, not merely the luckiest,'' said Peter Freyre, vice president of Costa Farms in a statement. "We suggest that the Department abandon the notion that a lottery is the appropriate method for selecting dispensing organizations.”

The Department of Health, which had agreed to modify parts of the rule but adhere to the lottery selection process, is not happy. Agency officials said they proposed the lottery to avoid lawsuits -- suggesting that selecting companies based on fixed criteria would be more contentious, thereby delaying the process.

"A rule challenge is regrettable,'' said John Armstrong, secretary of the department and the state's surgeon general, in a statement. "The parties behind a challenge should explain why they are delaying the process of providing compassionate care to children with refractory epilepsy and patients with advanced cancer. The Department remains committed to getting this product to the market as soon as possible for qualified children and families in Florida.”

The proposal requires companies to meet minimal standards but the final names will be selected via lottery. The rule tracks the legislation passed by lawmakers last spring by requiring that the only companies eligible to compete for the licenses are those that have been operating in Florida for more than 30 years and with at least 400,000 plants. 

The lottery concept, however, has been widely opposed by families of people suffering from intractable epilepsy, who are concerned that the standards are not high enough to guarantee the safety of the plans. Growers and investors have also argued against the lottery, suggesting that fixed standards would result in the companies with the safest, most proven approach will emerge as most worthy. Some companies, such as Costa Farms, are prepared to spend thousands to lobby for the license but have said they may not apply if the lottery system remains.

“Costa Farms understands and agrees that the low THC cannabis program needs to be implemented in the time frame contemplated by the Florida legislature,'' Freyre said.  "We are seeking administrative review of the Department’s rule to preserve our rights but are fully cooperative and hope that we can resolve this matter by negotiating a quick resolution of all outstanding issues with the Department.”