16-002614 Loop&Apos;S Nursery And Greenhouses, Inc. vs. Chestnut Hill Tree Farm, Llc.; San Felasco Nurseries, Inc.,D/B/A Grandiflora; And Department Of Health, Office Of Compassionate Use Status: Closed Settled and/or Dismissed prior to entry of RO/FO on Thursday, June 23, 2016.

paragraph, that does not identify the legal basis for the exception, or that does not

include appropriate and specific citations to the record.

An agency may not reject or modify findings of fact in a recommended order

unless the agency first determines from a review of the entire record, and states with

particularity in the order, that the findings of fact were not based upon competent

substantial evidence or that the proceedings on which the findings were based did not

comply with essential requirements oflaw. See section 120.57(1)0), Florida Statutes.

An agency may reject or modify the conclusions of law over which the agency has

substantive jurisdiction and interpretation of administrative rules over which the agency

has substantive jurisdiction. See section 120.57(1)0), Florida Statutes. When rejecting

or modifying such conclusion of law or interpretation of administrative rule, the agency

must state with particularity its reasons and must make a finding that its substituted

conclusion or interpretation is as or more reasonable than that which was rejected or

modified. See id.

Ruling on Exception No.1

Loop's takes exception to the statement in the second paragraph on page 4 of the

Recommended Order, which states that "[t]he effect of the new law was to deem

Chestnut's and San Felasco's applications to be a [dispensing organization] in the

Northeast region approved without further opportunity to be challenged." Loop's

asserts that this is an incorrect interpretation of chapter 2016-123, section 3, Laws of

Florida, ("the new law"). Loop's argues that the Department must make factual

determinations that an applicant meets the requirements set forth in the new law prior

to granting an applicant approval to operate as a dispensing organization ("DO"), that

approval pursuant to the new law is preliminary agency action that can be challenged in

an administrative hearing, and that Loop's substantial interests are affected because the

approval of San Felasco's application may adversely affect Loop's ability to fairly

compete for approval.

The sentence to which Loop's has taken exception is found in the ALJ's

"Preliminary Statement," but is an interpretation of the new law and as such it is a

conclusion of law . See Nassau County . v. Willis, 41 So. 3d 270, 278 (Fla . 1st DCA 2010)

(noting that construction of statutes is a question oflaw). The label given a finding in a

recommended order is not determinative. Rather, the true nature of the ALJ's finding

controls. See Pillsbury v. Dep't of Health and Rehabilitative Services, 744 So. 2d 1040,

1041 (Fla. 2d DCA 1999) . The Department has substantive jurisdiction over the new

law, being the agency tasked with the approval and regulation oflow- THC cannabis and

medical cannabis DOs .

The new law sets out three ways an applicant can receive approval to operate as a

DO. Two are in subsection (1), and one is in subsection (2). First, according to

subsection (1), an applicant "must be granted cultivation authorization" and " is

approved" to operate as a DO if it receives notice from the Department that it is

approved as a region's dispensing organization, posts a $5 million performance bond,

meets the requirements of and requests cultivation authorization , and expends at least

$1oo,ooo to fulfill its legal obligations. Under this provision, Chestnut Hill's approval

to operate as a DO in the Northeast region became final.

Second, according to subsection (1) of the new law, an applicant who received the

highest aggregate score through the Department's evaluation process, notwithstanding

any prior determination by the Department that the applicant failed to meet the

requirements of section 381.986, Florida Statutes, must be granted cultivation

authorization and is approved to operate as a DO . San Felasco fell within this category

and was granted approval to operate as a DO in the Northeast region.

The plain language in subsection (1) indicates that an organization "must" be

granted cultivation authorization and "is approved to operate" as a DO if it falls into one

of the two categories articulated therein. The ALI's interpretation that the new law

deemed Chestnut Hill and San Felasco's applications approved, with no further

opportunity to be challenged, is reasonable and consistent with the Department's

interpretation .

Loop's argues that the Department must make factual findings before an

organization can be approved as a DO under subsection (1), specifically whether the

applicant received notice from the Department that it was approved, posted the bond,

met the requirements of and requested cultivation authorization, and expended

$100,000. The new law, however, does not provide Loop's with standing to challenge

whether the Department adequately made these factual findings. Loop's is not asserting

that Loop's was the organization that received notice from the Department that it was

approved or that Loop's was the organization that posted the bond in the Northeast

region. Likewise, Loop's petitions do not aver that it received the highest aggregate

score. Loop's did not meet the criteria in subsection (1) of the new law and cannot be

approved as a DO under subsection (1) .

Subsection (2) of the new law provides the third way an applicant can be

approved, stating:

If an organization that does not meet the criteria of subsection (1)

receives a final determination from the Division of Administrative

Hearings, the Department of Health, or a court of competent jurisdiction

that it was entitled to be a dispensing organization under s. 381.986, Florida

Statutes, and applicable rules, such organization and an organization that

meets the criteria of subsection (1) shall both be dispensing organizations

in the same region.

In Loop ' s Nursery & Greenhouses , Inc . v. Dep ' t of Health, DOAH case no. 15-

7274, Loop's is seeking approval as a DO, arguing that it is entitled to be a DO under

section 381.986, Florida Statutes and the applicable rules. If Loop's prevails in that

case, Loop's will be able to operate as a DO in the Northeast region under subsection (2)

of the new law , along with Chestnut Hill and San Felasco.

As referenced by the ALJ in paragraphs 15 and 16 of the Recommended Order,

Loop's cannot seek the same relief in the instant proceeding that Loop's is seeking in

DOAH case no. 15-7274 . The only remaining relief Loop's seeks in the instant matter is

the revocation of the approvals granted to Chestnut Hill and San Felasco , relief that does

not impact Loop's substantial interests . Revoking the approval granted to Chestnut Hill

and San Felasco does not result in the approval of Loop ' s application to operate as a DO .

The ALJ's interpretation of chapter 2016-123, section 3, Laws of Florida, is well

reasoned, consistent with the plain language of the law and consistent with the

Department's interpretation .

Loop's exception no. 1 is rejected.

Ruling on Exception No. 2

Loop's takes exception to paragraph 6 and paragraph 8 in the Recommended

Order under the heading " Findings of Fact From Loop's Petition . " Loop's avers that the

paragraphs are not drawn from Loop's petitions.

Paragraph 6 of the Recommended Order states:

Chestnut's earlier preliminary approval to become a DO became final

when the new law went into effect. On April 4, 2016, the Department

further issued notice of its intent to approve San Felasco's pending

application to serve as a DO in the Northeast region , 'pursuant to chapter

2016-123, § 3 , Laws of Florida.' Both Chestnut and San Felasco were

deemed approved, but would have to thereafter demonstrate compliance

with criteria set forth in the new law.

Loop's takes exception to t he ALJ's conclusion that Ches t nut Hill and San Felasco

were deemed approved. Loop's asserts that chapter 2016-123, section 3 , Laws of

Florida, does not state that Chestnut Hill and San Felasco must demonstrate compliance

after approval, but that an applicant must demonstrate compliance prior to approval.

Despite being labeled a finding of fact derived from Loop ' s petitions, paragraph 6

of the Recommended Order is an interpretation of chapter 2016 - 123, section 3, Laws of

Florida, and a conclusion oflaw . See Willis, 41 So . 3d at 278; Pillsbury, 744 So. 2d at

1041.

As stated under the Ruling on Exception No. 1, supra, the Department is i n

agreement with the ALJ, that the effect of chapter 2016 - 123, section 3, Laws of Florida ,

was to deem the applications of Chestnut Hill and San Felasco approved. The ALJ is

also correct that the DOs "would have to thereafter demonstrate compliance with

criteria set forth in the new law." Chapter 2016-123, section 1, Laws of Florida,

amended section 381 . 986(6), F1orida Statu t es, directing that an approved DO "must at

all times" maintain compliance with the criteria demonstrated for approval "and the

criteria in this subsection . " The additional criteria in section 381.986(6), Florida

Statutes , includes requirements related to pesticide use, laboratory testing and security.

Loop ' s exception no. 2 is rejected as to paragraph 6 in the Recommended Order.

Loop's also takes exception to the findings of fact in paragraph 8 of the

Recommended Order. Paragraph 8 states:

Loop's has not asserted in its petitions in this case that it received the

highest aggregate score when its application was comparatively reviewed

with competing applications. It merely questions whether its applicat i on

satisfies all statutory and regulatory requirements for approval, pursuant to

section 381.g86(5)(b), and applicable rule criteria.

Loop's avers that the findings in paragraph 8 were not drawn from its petitions.

Loop's states that its petitions seek to preserve Loop's entitlement, under section

381.986, Florida Statutes, to a comparative review against the applications filed by San

Felasco and Chestnut Hill in a formal evidentiary proceeding.

Upon review of Loop's two petitions, there is competent substantial evidence to

support that the ALJ's findings of fact in paragraph 8 are drawn from the petitions. The

petitions indicate that Loop's filed an application that was comparatively reviewed with

four other competing applications, including San Felasco and Chestnut Hill. The

petitions do not allege that Loop's received the highest aggregate score. In the disputed

facts section of each petition, Loop's questions whether its application satisfies the

statutory and regulatory requirements for approval.

Loop's exception no . 2 is rejected as to paragraph 8 of the Recommended Order.

Ruling on Exception No.3

Loop ' s takes exception to the conclusion of law in paragraph 15 in the

Recommended Order, which concludes that "Loop ' s may not seek revocation of the

approvals of Chestnut and/ or San Felasco; their applications have already been deemed

approved by Legislative action." Using the same rationale for rejecting Loop's exception

no. 1, Loop's exception no. 3 is rejected. The ALJ's interpretation of chapter 2016 - 123,

section 3, Laws of Florida, is correct and consistent with the Department's

interpretation that the effect of the law was to deem San Felasco and Chestnut Hill's

applications approved by Legislative action.

Loop's exception no. 3 is rejected.

Ruling on Exception No. 4

Loop's takes exception to the conclusion of law in paragraph 16 to the extent it

incorporates the conclusion oflaw in paragraph 15. For the same reasons that the

D e partment r e jects Loop ' s exception no. 3, the D e partment rejects Loop ' s e x ception no.

4 ·

Ruling on E x ception No. s

Loop's takes exception to the conclusion of law in pa ra graph 16, alleging that it

denies Loop ' s the opportunity to build an evidentiary record pertaining to the

allegations in Loop's Amended Petition that chapter 2016-12 3 , section 3, Laws of

Florida, is unconstitutional. Paragraph 16 of the Recommended Order states :

Accepting the factual allegations in the Loop's petitions filed in this

matter as true, Loop ' s cannot obtain the relief it seeks, to wit: Revocation

of the approvals granted Chestnut and San Felasco as DOs in the Northeast

region . Since the legal insufficiency of the Loop's petitions cannot be cured ,

the dismissal of those petitions should be with prejudice .

Loop's does not articulate a legal basis for the premise that an administrative

agency has jurisdiction to entertain a facial constitutional challenge to a l a w.

Regardless, paragraph 16 of the Recommended Order does not address any

constitutional issues, and the Department does not have substantive jurisdiction over

constitution a l law. The Department is in agreement with the ALJ's conclusion that

Loop's cannot seek revocation of the approvals granted Chestnut Hill and S a n Felasco.

In DOAH case no . 15-7274, Loop's has already been granted an evidentiary hearing

concerning whether Loop's should be granted approval to operate as a DO in the

Northeast region.

Loop's exception no . 5 is rejected .

FINDINGS OF FACT

1. The Findings of Fact set forth in the Recommended Order, attached as

Exhibit A, are adopted and incorporated by reference in this Final Order.

CONCLUSIONS OF LAW

2. The Conclusions of Law set forth in the Recommended Order, attached as

Exhibit A, are adopted and incorporated by reference in this Final Order.

ORDER

Based on the foregoing, the Recommendation of the Administrative Law Judge is

adopted in this Final Order. The Petitions for Formal Administrative Hearing filed by

Loop's Nursery and Greenhouses, Inc., are dismissed with prejudice.

DONE AND ORDERED in Tallahassee, Leon County, Florida this 2fl! day of

September 2016 .

Ce ilip, MD, MPH

Surgeon General & Secretary

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY ADVERSELY AFFECTED BY THIS ORDER IS ENTITLED TO

JUDICIAL REVIEW PURSUANT TO SECTION 120 .68, FLORIDA STATUTES.

REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF

APPELLATE PROCEDURE. A REVIEW PROCEEDING IS INITIATED BY

FILING A NOTICE OF APPEAL WITH THE CLERK OF THE DEPARTMENT

OF HEALTH AND A COPY ACCOMPANIED BY THE FILING FEE WITH THE

DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE

PARTY RESIDES OR IN THE FIRST DISTRICT COURT OF APPEAL. THE

NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF THE FILING

DATE OF THIS ORDER.

Copies furnished to :

Counsel for Loop ' s Counsel for Chestnut Hill

Jon C. Moyle, Esquire John Lockwood, Esquire

Karen A . Putnal , Esquire Thomas J. Morton, Esquire

Robert A . Weiss, Esquire Kala Shankle, Esquire

The Moyle Law Firm , P . A. The Lockwood Law Firm

118 North Gadsden Street 106 E . College Avenue, Suite 810

Tallahassee , Florida 32301 Tallahassee , Florida 32301

[e-mail] [e-mail]

[e-mail] tj @lockwoodlawfirm.com

rweiss@moylelaw . com kala@lockwoodlawfirm . com

Counsel for San Felasco Kelly Johnson , Esquire

Amy Schrader , Esquire

Michael J. Glazer, Esquire Baker Donelson

Dylan Rivers, Esquire 101 N . Monroe Street, Suite 925

Ausley McMullen Tallahassee, Florida 32301

123 S . Calhoun Street [e-mail]

P.O. Box 391 aschrader@ bakerdonelson.com

Tallahassee, Florida 32301

[e-mail]

[e-mail] Counsel for the Department

J. Stephen Menton, Esquire W . Robert Vezina, III, Esquire

Rutledge, Ecenia & Purnell, P . A. Eduardo S. Lombard, Esquire

119 S. Monroe Street, Suite 202 Megan S . Reynolds, Esquire

Tallahassee, Florida 3230 1 Vezina, Lawrence & Piscitelli, P.A .

smenton@rutledge-ecenia . com 413 East Park Avenue

Tallahassee , Florida 32301

James A. McKee, Esquire [e-mail]

Benjamin J . Grossman, Esquire [e-mail]

Foley & Lardner, LLP [e-mail]

106 E. College Avenue, Suite 900 [e-mail]

Tallahassee, Florida 32301

[e-mail] Nichole Geary , General Counsel

bjgrossman@foley .c om Florida Department of Health

4052 Bald Cypress Way , Bin A - 02

Administrative Law Judge Tallahassee, Florida 32399-1703

nichole.geary@flhealth . gov

R. Bruce McKibben

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee , Florida 32399-3060

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Order has been

sent to the above named parties by email and regular U.S . mail or interoffice mail this

day of September 2016.

Agency Clerk

Department of Health

4052 Bald Cypress Way, Bin A-02

Tallahassee , Florida 32399-1703