Lawyers negotiating in Alabama medical cannabis license disputes; process still unclear

By Mike Cason 

A court hearing on lawsuits against the Alabama Medical Cannabis Commission in Montgomery on Wednesday turned into a negotiating session between the commission’s lawyers and lawyers representing companies seeking business licenses.

About 20 attorneys left the courtroom to meet behind closed doors for 25 minutes at the request of Montgomery County Circuit Judge James Anderson.

When the hearing resumed, the lawyers gave few specifics but did agree to ask the judge to extend a temporary restraining order on the licensing process.

After the hearing, lawyers for the AMCC and for one of the companies that has been most critical of the AMCC both said they were encouraged.

“The judge wanted us to talk, so we did,” said William Somerville, attorney for Alabama Always, a Montgomery company that applied for but was not awarded an integrated license. “We’ve agreed to extend the temporary restraining order. And we’ve also agreed to try to work out a solution to these issues with the Cannabis Commission. We’re very hopeful that we can arrive at a process that will be best for everybody involved, including the patients who need medical cannabis.”

William Webster, an attorney for the AMCC, said the lawyers would meet again on Monday.

“We did talk some procedural things today about how this is going to work, how it might work, some ideas that people have for the commission’s consideration,” Webster said. “So, we’re encouraged that people are talking and maybe we can get this medical cannabis out for the people of the state of Alabama quicker by doing this.”

About 15 companies are involved in litigation over the licensing process, which has dragged out through the summer.

In June, the AMCC awarded licenses to 21 companies but did not issue those after discovering errors in scores used to rank applicants.

At a meeting In August, the AMCC announced that the scores were fixed. The AMCC voided the June license awards and voted to award licenses to 24 companies, 19 that were awarded in June and five others.

But the license awards stalled again because of the lawsuits, which allege the AMCC violated the open meetings act, among other complaints.

The licenses are for cultivators, processors, secure transporters, dispensaries, testing labs, as well as integrated licensees who can cultivate, process, transport, and dispense.

There may be progress in the dispute over the open meetings act violations.

AMCC attorney Webster said the commission will not hold another executive session, or closed session, on the license awards, reiterating what AMCC Chair Rex Vaughn had said at the AMCC’s meeting last week.

Alabama Always has been one of the harshest critics of the commission for holding closed meetings. Somerville, the company’s attorney, said the commitment to keep the meetings open is a positive step.

“If they will comply with the law going forward, and I see no reason to believe they don’t intend to, then I think this is going to be a much better process than what we’ve seen so far,” Somerville said.

Somerville said the goal of the negotiations is to arrive at a license award process that is fair and can withstand legal challenges.

“Right now it would be a solution that allows the best applicants to show that they’re the best applicants and also that is defensible in court and not subject to a lot of attacks so that we can streamline the process and make sure the best applicants get a license and that it’s not stuck in court for years to come,” Somerville said.

Ninety companies applied for licenses. The law authorizing medical cannabis, passed by the Legislature in 2021, placed a cap on how many licenses the AMCC could issue in some of the categories. For example, the AMCC can award only five integrated licenses.

A sticking point has been the scores used to rank the applicants. The scores were compiled by evaluators recruited by the University of South Alabama. Errors in the scores led to the voiding of the license awards in June. Although the AMCC says the mistakes were fixed, some companies that were not awarded licenses believe the scores are flawed and should be disregarded. AMCC Vaughn said at the August 31 meeting the AMCC would not redo the scores and commissioners could still use them as a guideline in making license decisions.

AMCC attorney Webster said Wednesday that the use of the scores is a topic in the ongoing discussions among the lawyers.

Somerville, the attorney for Alabama Always, said he did not think the AMCC should use the scores.

“I personally don’t see it,” Somerville said. “But I’m certainly willing to consider what anybody has to say about it. But I don’t think so.”

Alabama Always had the 26th ranked score among the 38 applicants for integrated licenses. But officials with the company, which has built a facility in west Montgomery to cultivate and process medical marijuana, have said the scores are flawed that the AMCC could make better decisions if it visited the sites of license applicants.

You can see the scores listed by license category here.

Ray French, CEO of Specialty Medical Products of Alabama, based in Foley, also called for the scores to be discarded and for site visits. Specialty Medical Products of Alabama ranked 33rd among the 38 integrated license applicants. But French said the scores were flawed. French said his company is ready to cultivate and make products quickly. He is CEO of another company, Oscity Labs, which grows hemp under a program regulated by the Department of Agriculture and Industries makes CBD oil, gummies, and other products derived from hemp.

French said the AMCC should do site visits and learn more about before another round of license awards.

“We think there are some really good people on the commission,” French said. “We know there’s some great commissioners. And they just haven’t been really given the opportunity to understand who the applicants are.

“What we’re asking for is site visits and follow the spirit of the law and what was written in the law to actually go and see the people that are already operating in the state.”

AMCC Executive Director John McMillan has said the AMCC planned to do site visits to applicants who are awarded licenses as part of a review before actually issuing licenses. McMillan said there were too many applicants to visit all the sites.

Judge Anderson agreed with requests consolidate most of the lawsuits against the AMCC.

An exception is a lawsuit filed by Verano Alabama, an applicant for an integrated license. Verano Alabama had the highest score among the integrated license applicants both for the June awards and after the mistakes were fixed in August. The AMCC awarded Verano Alabama a license in June. But the AMCC voided that, like all the other licenses awarded in June. And Verano was not awarded a license in August, despite still having the highest score.

Verano Alabama’s lawsuit says the AMCC had no legal authority to void the June license awards. The company has asked the court to order the AMCC to reverse that decision and issue its license.

Anderson agreed to let Verano Alabama’s lawsuit stand alone after the company’s lawyers said they opposed consolidation. The judge said the case was a different issue than the others.

The Legislature created the AMCC to oversee the seed-to-sale regulation of the new industry. AMCC officials have said before the licensing process stalled that they hoped products could be available by the end of this year.

Products can include gummies, tablets, capsules, tinctures, patches, oils, and other forms allowed by the legislation.

Patients who receive a medical cannabis card from a doctor will be able to buy the products at licensed dispensaries.

The products can be used to treat a wide range of conditions, including chronic pain, weight loss and nausea from cancer, depression, panic disorder, epilepsy, muscle spasms caused by disease or spinal cord injuries, PTSD, and others.