After the Alabama Medical Cannabis Commission (“AMCC”) issued its stay on its issuance of licenses at their July 12th, 2023, meeting, commission members worked diligently with the third-party evaluator, KPMG, to ensure all “potential inconsistencies in the tabulation of scoring data” were reviewed and corrected. Two (2) months later, the AMCC held a meeting on August 10th, 2023, to void their initial issuance of licenses from the June 12th meeting, and re-issue licenses in each category based on the reevaluations conducted by KPMG.
At such meeting, Pure by Sirmon Farms, LLC, was notified for the second time that they were one (1) of now seven (7) applicants intended to be awarded a lucrative cultivation license in Alabama’s soon-to-be booming medical cannabis industry. The AMCC in its efforts to garner more transparency with the public, published online the combined summary reports of each applicant. Further, each applicant received via email a detailed breakdown of their scored application as some applicants’ overall weighted total average score changed since the first score reports were provide in June. As such, Pure by Sirmon Farms, LLC, was informed they received the #1 score on the cultivation license application garnering a 4147 out of 4575, or a 90.654% on the entire application. This was a 28.5-point increase from the team’s initial score given in the June score report.
However, on August 17th, 2023, Judge James Anderson of the 15th Circuit Court of Alabama – Montgomery County held a hearing to ascertain the arguments of support and opposition to Alabama Always, LLC’s Temporary Restraining Order (“TRO”), which would halt the AMCC’s issuance of licenses conducted at the August 10th meeting as the Plaintiffs allege it was in violation of Alabama’s Open Meetings Act. Ala. Code § 36-25A-9. Based on the evidence and arguments presented, Judge Anderson granted the TRO enjoining and restraining the AMCC from taking any further action in furthering the issuance of the medical marijuana business licenses that were awarded on August 10th. Further, Judge Anderson granted all pending motions to intervene as both winning applicants and denied applicants have asserted their substantial interests in the outcome of this case. Nevertheless, such applicants that desire to assert their stance in the TRO are conditioned on posting a security in the amount of $25,000.00, which must be posted by August 23rd, 2023, along with their motion.
Although the TRO enlists that the preliminary injunction hearing be set for August 28th, 2023, at 1:30 PM (CT), the AMCC filed a Motion for Continuance of the Preliminary Hearing and to Lift Stay, or in the Alternative, Leave to Take Action Despite Stay on August 21st – asking the court to allow the AMCC to conduct its meeting set for August 31st, 2023, so that the AMCC can address the issues at hand by voiding the licenses awarded on August 10th, and re-award them without going into executive session. The AMCC emphasizes that by granting this continuance all such issues at hand will be moot. This is in line with the AMCC’s arguments made at the August 17th hearing in which Will Webster, Esq., the attorney representing the AMCC, suggested the AMCC would air applicants’ “dirty laundry” if applicants want the licenses approved without executive session.
As a result of the TRO, applicants who were denied a license will not be able to request an investigative hearing until after the stay is lifted, as well as halts all site visits and evaluations to be conducted by the AMCC. Unfortunately, as a result of the continuing push back, the residents of Alabama who desperately need access to safe and high-quality medical cannabis products are the ones suffering the most. Although this is the second pause on the Team’s next steps forward in providing pure, high-quality medical cannabis products to the qualified patients of Alabama, we continue to prepare to ensure a prompt start upon approval, so those who need it most will not have to wait much longer.
What’s the Difference? June 12th Meeting vs. August 10th Meeting
Although there were no notable changes in the Processor or Dispensary license categories, there were some major changes that occurred from the AMCC’s June 12th meeting to the August 10th meeting. In the Cultivation license category, the AMCC increased the number of licenses awarded from four (4) to seven (7). Although the original four (4) awardees in the Cultivation license category did not change, I AM FARMS, Greenway Botanicals, LLC, and CRC of Alabama, LLC were added to the brigade. The rankings of the Cultivation category did not change either; however, with the additions of more awarded licenses, it ensured a minority applicant was chosen for this category in compliance with the law.
The most notable changes occurred in the Integrated Facility license category. Verano Alabama, LLC, who ranked #1 both times in this category, were denied a license at the August 10th re-issuance meeting. Insa Alabama, LLC, who originally ranked #8 in this category, moved up four (4) spots and ranked #4 after the evaluators’ review – taking Verano Alabama’s originally issued license. Further, there were various repositioning in the ranks entirely such as Hornet Medicinals, LLC, originally ranking #6, but were moved down to #15, and 3 Notch Roots, LLC, originally ranking #16, but were moved up to #8. Such differences highlighted the “potential inconsistencies” the AMCC’s June 16th stay were reliant upon.
Overview of Alabama’s Application Process
In 2021, Alabama became the 37th state to legalize medical cannabis for qualified patients with the passage of Senate Bill 46. By September 2022, the AMCC began accepting applications for six (6) license types: (i) Integrated Facility; (ii) Cultivation; (iii) Processor; (iv) Dispensary; (v) Secure Transporter; and (vi) State Testing Laboratory. Under the AMCC’s regulations, interested applicants vying for a license would have to overcome complex regulatory requirements while designing their applications to stand-out from the rest as there was a statutory cap on each license type to be applied for. Specifically, only five (5) Integrated Facility licenses, twelve (12) Cultivation licenses, four (4) Processor licenses, and four (4) Dispensary licenses. Moreover, for those vying for a Secure Transporter or State Testing Laboratory license, it was entirely up to the AMCC to limit the number of licenses to be awarded.
Specifically, the cultivation application had a 25-part “Application Guide” that enlisted each interested applicant to show not only the eligibility requirements such as majority ownership of the applicant to reside in the state for no less than fifteen (15) years as well as commercial horticulture/agronomic production experience, but also their turn-key capabilities to begin operating a prosperous cultivation operation within sixty (60) days of licensure.
On February 13th, 2023, applicants received their Deficiency Notices and had until March 3rd, 2023, to propose corrections in response to the Notice. The AMCC confirmed that twelve (12) cultivation applications were deemed submitted. Although there were twelve (12) approved applicants vying for the twelve (12) available licenses, it was under the AMCC’s discretion to award the number of cultivation licenses in this initial round.
Many experts in the cannabis industry have agreed that the state of Alabama set forth one of the most complex cannabis business license applications the country has seen in recent years. Paula Savchenko, Esq., Founder and CEO of Cannacore Group has spent the past seven (7) years working in multi-state expansion in the cannabis industry. Although she has worked in approximately ten (10) states and has garnered an 85% success rate in achieving licensure for her clients, she believes her work in Alabama taught her a plethora of new complex issues interested groups are facing when entering new markets. “From building a strong local team with 15+ years of commercial horticulture/agronomic production experience and deep roots in their community to complying with each regulatory requirement, this 25-part application required extreme attention to detail,” explained Paula Savchenko. “Each state I have worked in has set forth various obstacles to overcome, but with Alabama’s specific regulations, vital local groundwork, and deadline set around the holidays, it required us to be flexible and adaptive each day we worked with our Team and the state.”
Next Steps for Alabama’s Medical Cannabis Industry
As applicants wait for next steps in this lawsuit, many are anxiously awaiting to see what the future of the Alabama medical cannabis industry will look like. Here is what we do know:
Until the stay is lifted, applicants awarded the license will not have to pay the license fee until a later date is set. Further, those denied the license will be provided a new deadline as to when they can submit an appeal of the denial of their license. Unfortunately, with the stay and possibility for additional future lawsuits, we do not know how the AMCC will approach moving the program forward to ensure patients will receive access to medical cannabis products by the end of this year.
Although the timeline of the AMCC is subject to change, the AMCC did state at their June 12th meeting, that they will afford a second application round for Cultivators, Secure Transporters, and State Testing Laboratories. For those interested, now is the time to begin working with a Team of experts to begin strategizing your competitive application. Contact us today to discuss your options!