A third-party consultant may decide who gets licenses under a new Senate bill that aims to move Alabama’s languishing medical cannabis program out of the courts.
“Four years ago they passed medical legislation, and they can’t seem to get it off the ground,” said H. Marty Schelper, president and founder of the Alabama Cannabis Coalition, which has been advocating for legalization in the state.
The Alabama Medical Cannabis Commission (AMCC) has attempted three separate times to issue the inaugural round of licenses for vertically integrated cannabis producers. Each attempt has been hindered by lawsuits from unsuccessful applicants. Most of the lawsuits currently remain before the Alabama Court of Appeals.
SB 72, introduced Feb. 4, is the latest attempt at a legislative fix to the commission’s legal trouble, though Schelper said she was skeptical it will solve the state’s licensing problem.
Currently, the AMCC is authorized to issue no more than four processor licenses, four dispensary licenses and five integrated facility licenses, but the commission is also allowed to issue fewer than the cap.
SB 72 would increase the number of available vertically integrated licenses from five to seven.
Adding two more integrated facility licenses is a positive step, according to Schelper before explaining that she would rather see an unlimited number of licenses available.
“I support two more licenses, but the ACC supports free markets,” she said.
Licensing appeals process would be eliminated
The commission would be empowered to hire a third-party consultant to select the license winners from the pool of applicants that originally applied before Dec. 31, 2022. That decision would be considered a final decision from the commission. The consultant would have to be hired no later than October.
“The consultant must be a nationally recognized entity with expertise in financial auditing and managerial consulting and which has offices in at least 15 states,” said the 16-page bill.
The consultant would then have until Jan. 1, 2026, to make its decision for the commission.
The bill would remove any requirement for the commission to hold an investigatory hearing after a license denial. That commission’s decision would be final, but any subsequent relief ordered by a court that would prevent the commission from issuing licenses would immediately jump to the state Supreme Court.
In other words, the lower courts would lack jurisdiction to block the issuance of licenses.
If SB 72 were to pass and was successful at jump-starting Alabama’s business licensing efforts, it may be too late for the state’s medical market to succeed because of the proliferation of shops offering hemp-derived intoxicants across the state, according to Schelper.
“People are starting to realize that the products that are available to them are just as good as medical cannabis,” she said. “There’s so many hoops they have to jump through [to buy legal cannabis] when they can just walk to the local hemp dispensary.”
So far, the agency has only been able to issue one license that was not rescinded shortly after, and that was for a single test lab, ALA Labs.
“They have stipulations that they can have as many laboratories as they want, but they had one applicant,” said Schelper. “That laboratory has since gone out of business.”
Last year, Sen. David Sessions proposed SB 276, which would have increased the number of available cannabis licenses in the state. That measure made it out of committee but was then indefinitely postponed one month after it was filed. The bill would eventually die at the close of the 2024 legislative session.
Losing applicants may still get a license
With the increase in available licenses, this bill could result in some of the failed applicants getting a license after all, effectively making their legal claims moot.
The commission first attempted to award medical cannabis licenses on June 12, 2023. Four days later, the commission suspended those awards and announced that they would be re-scored to ensure consistency between applicants.
About two months later, the commission announced its second attempt at awarding licenses. Verano Alabama, a subsidiary of Verano Holdings (VRNOF), sued the state after they were included in the first round but excluded in the second.
The commission made a third attempt at issuing licenses in December, but those results also attracted legal action.
Licensing has been on hold since Jan. 3 when Montgomery County Circuit Court Judge James Anderson issued a temporary restraining order in the case of Alabama Always LLC, et al v. State of Alabama Medical Cannabis Commission.
Most of the AMCC’s legal challenges have been consolidated into a single case, and on March 11, the state filed a motion to dismiss.
More recently, the appellate court heard oral arguments in the consolidated case, in which the appellate judges reportedly appeared to favor the state’s argument that the commission had the right to deny the plaintiffs’ applications and that the lower court’s temporary restraining order against licensing was improper.
The state and license applicants still await a ruling from the appellate court.
