The latest legal dispute comes after the Ontario Superior Court of Justice approved a proposed recapitalization transaction for Gotham Green to take control of iAnthus in 2021 after the latter defaulted on a loan. The proposal requires regulatory approvals from U.S. states, many of which have cross-ownership restrictions to tamp down monopolies in the industry.
Florida’s medical marijuana laws prohibit an individual or entity from “directly or indirectly” having an ownership stake of greater than 5 percent in more than one medical marijuana licensee.
“This is such a blatant violation of the regulations, it’s unbelievable,” Weisser said in an interview. “[The regulators] just want to sweep it under the table.”
Weisser has been fighting a decision by Florida’s Office of Medical Marijuana Use (OMMU) to grant a variance to Gotham Green, allowing it to own more than 5 percent of two state-licensed medical marijuana companies: MedMen and iAnthus.
The Requested Variance “would illegally authorize an ownership structure that violates [state law],” reads the complaint, which was filed in the state’s 2nd Judicial Circuit Court on Friday.
Public records woes: Weisser has also been trying to obtain documents through public records requests concerning the variance. He says the regulator has not been forthcoming in producing the relevant documents, but did provide a redacted report from a third-party consulting firm.
The redacted draft report by Carr, Riggs, & Ingram, dated June 29 2021, found that the “proposed recapitalization structure for iAnthus does not appear to meet the requirements of Florida Statute.”
It’s unclear why OMMU subsequently granted the variance, or if a similar finding made it into the accounting firm’s final report to the agency.
“The Department does not comment on any pending litigation,” a spokesperson said.
Stephen Menton, an attorney for the plaintiffs, said in an interview that it is highly unusual for a state agency to proactively redact such documents for public records requests.
Typically, a company must submit a request in court to validate a trade secret claim, he said. In this case, it seems the regulators “made their own determination that certain information was [a] trade secret,” Menton said.
Some of the other documents the agency provided as part of the records requests were several pages long and “completely redacted,” Menton said. “We don’t even know what [the document] is.”
What they want: Plaintiffs are hoping to compel the department to provide all the (unredacted) documents they’re seeking through public records requests.
They’re also asking the court to invalidate the department’s decision to grant the variance and declare that the approval exceeds its regulatory authority.
Why it matters: As legalization continues to spread across the country, lawmakers and patients alike are increasingly concerned that large cannabis corporations are monopolizing the industry.
Florida’s regulatory structure was “very restrictive … to begin with,” Menton said. Patient advocates who are plaintiffs in the suit are concerned that “there is an effort to consolidate and limit the number of opportunities that patients have to obtain [different types of] products.”
And it’s not just Florida.
Just a week ago, iAnthus announced that regulators in Massachusetts approved a change in ownership as part of the Recapitalization Transaction.
“We think they’re in clear violation of the regulations in Massachusetts [too],” Weisser said.