Leafly Sues Florida Over State’s Ban on Third-Party Cannabis Orders

The battle for the Cannabis Industry 2.0 is heating up. If you follow Cannabis.net and read the viral article "Apple Just Changed the Marijuana Industry Forever", you know that Apple's decision to allow cannabis buying within the app store is a game-changer. That news broke and within a week Weedmaps had ordering in their app and cannabis tech and delivery company EAZE went and bought an MSO. Yes, a tech company bought an MSO! Now, Leafly, soon to go public at a $300 million valuation, is fighting for space in the race to take cannabis orders within one echo system. Florida's recent ban on pot pre-orders will not be going unchallenged as Leafly has dragged the state to court on the basis that the state-issued ban is backed with an invalid law.

Leafly claims the state law which bans operators from procuring services that are directly related to the growing, processing, and dispensing of marijuana has never been approved or adopted, hence the ban is illegal.

Leafly Holdings files legal challenge

This is a well-known e-commerce company with over 10 million active users nationwide. It links customers with all things cannabis. Their shopping site permits visitors to check for the closest medical marijuana dispensary closest to them. They also give information on the available cannabis products that can be found in these cannabis stores. They act as a middle man between the dispensaries and the customers. With sites like Leafly, patients can make their purchases online and then pick up the goods at local stores near them.

The Seattle-based company challenged the ban by the state by stating that the activity of third-party operators is not in any way related to the cultivation, processing, and marketing of cannabis products.  Leafly maintains that it has never dispensed products on behalf of licensed medical marijuana operators in the state.

In the filed petition, the brand's lawyer Seann Frazier stated clearly that Leafly does not prepare, possess, transmit, distribute, or sell medical marijuana in any of the states it operates in. Frazier argued that the company is not involved in any activity related to the handling of marijuana from the operator to the customer.

Frazier further went on to add that the policy announced by Coppola in February had effectively crippled Leafly's business in Florida. Every form of revenue Leafly could gain from rendering services in Florida has been barred.

Frazier emphasized that Leafly does not dispense medical marijuana to registered patients and the company has never provided services that are directly linked to the growth and processing of marijuana delivery devices within Florida.

The petition tendered by the company implores an administrative law judge to determine whether or not the Florida department of health imposed an invalid rule on the cannabis e-commerce industry in the state. The company also asks that the court be the one to conclude if the online services rendered by Leafly violate already approved legislation in the state.

What this means for the industry

The ban which was put in place by Florida health regulators has prevented medical marijuana store owners from processing patient pre-orders with the services of third-party sites like Leafly and others.

Before the ban, licensed medical marijuana operators in Florida relied on popular cannabis e-commerce brands like Leafly and Jane to provide suitable and enjoyable online shopping experiences for registered cannabis patients in the state.

Leafly and Jane have well-designed sites that allow customers to go through the available stock in cannabis stores and dispensaries situated within the state. The patient peruses the stores, selects items to put into the online carts provided, and submits the orders. Albeit, the patients have to go to the dispensary to receive and pay for their orders in person.

Once orders are submitted, the e-commerce sites send out the necessary information out to the medical marijuana store operators. The stores are mandated to fulfill the orders and alert the site vendors when all orders have been completed.

All Marijuana Operators have canceled existing contracts with Leafly and Jane

E-commerce sites have lost major revenue since contracts with Florida marijuana operators were canceled. The operators cannot be blamed as the department of health also threatened to penalize the stores that failed to cancel contracts with these sites.  Since February 1, marijuana operators in the state have had to find alternative methods to replace the pre-order services provided by Leafly and others.

In the Memo that went around in February, Courtney Coppola who was the department of health chief of staff wrote that the medical marijuana office of the state had received several complaints about the pre-order services being taken advantage of by registered patients and their caregivers.

Coppola is currently the deputy chief of staff for Governor Ron Desantis.

Coppola warned that all operators are prohibited from engaging the services of leafly or another third-party website to dispense marijuana or marijuana delivery devices.

Any medical marijuana operator found violating the ban risked being fined around $5,000 per violation. This threat was meant to dissuade the operators from working with the cannabis e-commerce brands, and it worked.

Will the petition be dismissed?

Reports state that the Florida department of health has filed a motion for the challenging petition to be dismissed. The agency also asked Administrative law judge Susanne Van Wyk to issue an order that would prevent Leafly from accessing certain documents regarding the filed motion.

The state argued that the involvement of third-party e-commerce brands in preorders violates the Florida law that states that the confidentiality of patients must be protected by all parties involved. Engaging the services of sites like Leafly puts confidential and personal information of patients at risk. This information includes the names, dates of birth, and ID numbers which are always meant to be within the medical marijuana use registry.

The department's General Counsel Loiuse Wilhite-St Laurent also mentioned that Leafly does not need to challenge the policy because it doesn't regulate the company's activity in any way.

Due to trade secrets contained in the filed motion, an attachment to the motion might remain off-limits to the public. However, for now, the department's motion is still not available to be viewed on the division of administrative hearings website.

Conclusion

Both sides have been given time to solidify their cases, as Van Wyk scheduled a hearing to hold in a few weeks.

It will be a win-win situation if Leafly is successful with its petition. As e-commerce companies like Leafly and Jane save the operational costs of medical marijuana treatment centers. Customers can be easily reached online in a general space rather than on individual platforms.

The patients will also concur that these marijuana e-commerce sites enable them to easily purchase their cannabis  products at affordable rates.

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