STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LOOPS NURSERY & GREENHOUSES,
INC.,
Petitioner,

Case No. 15-7274

vs.
DEPARTMENT OF HEALTH, OFFICE
OF COMPASSIONATE USE,
Respondent.

RECOMMENDED ORDER
Pursuant to notice to all parties, a final hearing was
conducted in this case on July 6 through 8, 11, and
13 through 15, 2016, in Tallahassee, Florida, before
Administrative Law Judge (ALJ) R. Bruce McKibben of the
Division of Administrative Hearings (DOAH).

The parties were

represented as set forth below.

APPEARANCES
For Petitioner:

Jon C. Moyle, Esquire

Karen Ann Putnal, Esquire
Robert A. Weiss, Esquire
Moyle Law Firm, P.A.
118 North Gadsden Street
Tallahassee, Florida 32301

For Respondent:

William Robert Vezina, III, Esquire

Eduardo S. Lombard, Esquire
Vezina, Lawrence & Piscitelli, P.A.
413 East Park Avenue
Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner, Loops
Nursery & Greenhouses, Inc. (Loops), was entitled to be a
dispensing organization under section 381.986, Florida Statutes,
and applicable rules when its application was reviewed by
Respondent, Department of Health, Office of Compassionate Use
(the Department or OCU), in July through November 2015.
Unless specifically stated otherwise herein, all
references to Florida Statutes shall be to the 2015 version,
as this case involves a backwards-looking, retrospective
assessment of the Loops application.
PRELIMINARY STATEMENT
Loops and other applicants seeking to become a dispensing
organization (DO) filed applications with OCU in July 2015.
Loops was notified by letter dated November 23, 2015, that it
was not the highest scored applicant in the Northeast Region, as
defined in 381.986(5)(b), Florida Statutes.

Loops timely filed

a Petition for Formal Administrative Hearing to contest the

denial of its application and the approval of a competing
application.

Subsequently, the Florida Legislature passed

amendments to section 381.986 which will be discussed more fully

below.

Ultimately, the petition filed by Loops resulted in the

hearing described above for the purpose of determining whether

the Loops application should have been approved by the

Department.
At the final hearing, Loops called the following
11 witnesses:

David Loop, accepted as an expert in

horticulture; Dr. James Lieberman, accepted as an expert in

cannabis processing, extraction, laboratory design, and
operation commissioning and process optimization; Richard
Rampell, CPA, accepted as an expert in accounting, financial
analysis, and valuation; Mark Hand, CPA, accepted as an expert
in accounting; Gregg Connor, accepted as an expert in
transportation, distribution, dispensing, and security;
Dr. Terril Nell, accepted as an expert in horticulture; Holley
Moseley; Joel Stanley, CEO of CW Botanicals, accepted as an
expert in cannabis breeding, cultivation, processing,
extraction, and dispensing; Carla Ard, accepted as an expert in
sales and marketing; Henry Stephen Jones, accepted as an expert
in facilities and premises security, technological security, and
data systems security; and Christian Bax, director of OCU.
Loops Exhibits 1a, 1b, 1c, 2, 7 through 9, 17, 19, 21,
30 through 34, 36 through 38, 40, 41, 49, 58 through 64, and
66 were admitted into evidence.
OCU called the following witness:

Daniel Hevia, CPA,

accepted as an expert in accounting, auditing, financial

forensics, peer review, generally accepted accounting standards

(GAAS), and auditing standards.

OCUs Exhibits 13 through 21,

64 through 69, 71, 72, and 75 through 77 were admitted into

evidence.
A Transcript of the final hearing was ordered; it was filed
at DOAH on August 3, 2016.

By rule, parties are allowed 10 days

after filing of the transcript at DOAH to submit proposed

recommended orders (PROs).

Loops requested additional time

(75 days) to prepare its PRO; the Department objected.

The ALJ

allowed 30 days from the date of filing to submit PROs and

extended the page limit to 45 pages.

Just prior to the date the

PROs were due (which would have been September 2), the
Department filed a Motion seeking clarification of the due date.
Apparently, Loops had contacted the Department and expressed
its understanding that the PROs were due 45 days after the
transcript was filed at DOAH (despite the instructions given by
the ALJ at final hearing and set forth in writing in the
transcript).

An Order of Clarification was entered, reiterating

the due date, September 2, 2016.

Loops then filed a request

for extension of time until September 12, 2016 to file the PROs;
the request was granted.

Each party timely submitted a PRO, and

each was duly considered in the preparation of this Recommended

Order.

FINDINGS OF FACT
1.

In 2014, the Florida Legislature enacted the

Compassionate Medical Cannabis Act, chapter 2014-157, Laws of

Florida, codified in part at section 381.986, Florida Statutes
(2014).

The Department was directed by the new law to authorize

the establishment of one DO in each of five enumerated regions

within the State.
2.

The Department promulgated an application form,

incorporated by reference in Florida Administrative Code Rule

64-4.002, to be used by applicants seeking approval as a
dispensing organization.

In July 2015, Loops filed an

application to become the DO in the Northeast Region, consisting

of 18 primarily rural counties.

The Loops application was

comparatively reviewed with several other applications.

3.

In November 2015, the Department notified Loops that

its application had received the third-highest score during the

comparative review.

San Felasco Nurseries, Inc. (San

Felasco), received the highest score; Chestnut Hill Tree Farm,

LLC (Chestnut Hill), received the second highest score.
However, the Department notified San Felasco that its
application was being denied on the basis of an alleged
deficiency, leaving Chestnut Hill as the approved DO in the
Northeast Region.

Loops and San Felasco each timely filed a

petition for formal administrative hearing to challenge their

denials.

Chestnut Hill filed an approved applicant petition

in support of the Departments decision.

The three petitions

were consolidated into a single case at DOAH.

4.

The Florida Legislature, in the 2016 legislative

session, passed House Bill 307 (CS for CS/CS/HB 307) and House
Bill 1313, which were signed into law on March 25, 2016, as
chapter 2016-123, Laws of Florida (referred to herein as the
2016 Law).

The 2016 Law says, in pertinent part:

Section 3. (1) Notwithstanding

s. 381.986(5)(b), Florida Statutes, a
dispensing organization that receives notice
from the Department of Health that it is
approved as a regions dispensing
organization, posts a $5 million performance
bond in compliance with rule 64-4.002(5)(e),
Florida Administrative Code, and expends at
least $100,000 to fulfill its legal
obligations as a dispensing organization; or
any applicant that received the highest
aggregate score through the departments
evaluation process, notwithstanding any
prior determination by the department that
the applicant failed to meet the
requirements of s. 381.986, Florida
Statutes, must be granted cultivation
authorization by the department and is
approved to operate as a dispensing
organization for the full term of its
original approval and all subsequent
renewals pursuant to s. 381.986, Florida
Statutes. Any applicant that qualifies
under this subsection which has not
previously been approved as a dispensing
organization by the department must be given
approval as a dispensing organization by the
department within 10 days after the
effective date of this act, and within
10 days after receiving such approval must
comply with the bond requirement in rule

64-4.002(5)(e), Florida Administrative Code,

and must comply with all other applicable
requirements of chapter 64-4, Florida
Administrative Code.
(2) If an organization that does not meet
the criteria of subsection (1) receives a
final determination from the Division of
Administrative Hearings, the Department of
Health, or a court of competent jurisdiction
that it was entitled to be a dispensing
organization under s. 381.986, Florida
Statutes, and applicable rules, such
organization and an organization that meets
the criteria of section (1) shall both be
dispensing organizations in the same region.
During the operations of any dispensing
organization that meets the criteria in this
section the Department of Health may enforce
rule 64-4.005, Florida Administrative Code,
as filed on June 17, 2015.
5.

The 2016 Law thus effectively approved the applications

of Chestnut Hill and San Felasco by legislative fiat, declaring

the Departments preliminary agency action to be final.

Those

two entities withdrew their petitions for formal administrative

hearing and, upon accomplishing certain preliminary
requirements, were to be granted licenses as DOs in the
Northeast Region.
6.

The petition filed by Loops remained as the only

challenge to the Departments decision vis--vis the Northeast

Region DO applications, resulting in the hearing at issue in
this Recommended Order.

(Both San Felasco and Chestnut Hill

attempted to intervene in this action, but because the result in

this case would have absolutely no bearing on the status of

their DO licenses, their petitions to intervene were denied for

lack of standing.)

Loops was left to prove that its

application should have been approved instead of one or both of

the now-approved applicants.
7.

It is unclear why the Department takes such an

aggressive adversarial stance against Loops in this proceeding.

Should Loops prove that its application should have been
approved rather than one of the other applicants, OCU would
issue a DO license to Loops.

If Loops fails to meet its

burden of proof, OCU would not issue a license.

extent of OCUs status in this matter.

That is the

Notwithstanding, OCU

fervently opposes approval of Loops as a DO in the Northeast

Region.
The Applicant
8.

Loops was founded in 1949 as a greenhouse and was

organized as a corporation under the laws of Florida in 1970.

It has operated a certified nursery for well over 30 years and
has done so pursuant to a valid Certificate of Registration
issued by the Florida Department of Agriculture and Consumer
Services (DACS) pursuant to section 581.131, Florida Statutes.
9.

Loops is a Florida greenhouse pioneer, having led the

industry in advanced cultivation practices, such as drip

irrigation and the use of blackout shade cloths to maximize
yield.

Today, Loops specializes in greenhouse-grown flowering

potted plants.

It has cultivated more than 400,000 plants

annually since the early 1980s.

10.
Loop.

Loops is operated by a qualified nurseryman, David

Loops currently has 650,000 square feet of state-of-the-

art greenhouses.

The greenhouses are fully automated, with

features including automatic temperature and humidity controls.

The primary Loops nursery is operated in a 150,000 square foot
greenhouse located in Jacksonville, Florida, and there is
another 500,000 square feet of specialized greenhouses located
in St. Johns County, Florida.

Loops has plenty of space

available in which to cultivate medical marijuana, pending

development and approval of a security system for the nursery.
11.

Loops expressed its intention to use a subsidiary

corporation or division (Loops Dispensaries, LLC) to operate

the dispensing functions of its proposed project, if approved.
This plan was in deference to the federal governments refusal
to recognize the legitimacy of medical marijuana and to keep the
marijuana cultivation separate and apart from the other Loops
cultivation processes.

OCUs contention that use of the LLC

constitutes a material misrepresentation in the application is

unfounded.
contingency.

Loops was overt and transparent concerning this

Further, no mention was made of this perceived

misrepresentation in OCUs denial letter following review of the

Loops application.

The Application Form

12.

The application form for applying to be a DO

identifies a number of statutory and rule requirements which

must be met, including three basic criteria:

a) Possess a valid

certificate of registration issued by DACS; b) Show that the

nursery is operated by a Florida nurseryman as described in
section 581.011; and c) Prove continuous operation as a nursery
for at least 30 continuous years.

Loops generally satisfies

each of those criteria.

13.

The application form is divided into four parts:

Part I requires the applicant to provide basic information about

itself.

Part II requires the applicant to document its

compliance with requirements which are mandated by statute.

Part III requires the applicant to provide OCU with information
addressing all items listed in rule 64-4.002.
substantive subparts in the application:

There are five

Cultivation

(constituting 30 percent of the weighted score), Processing (30

percent), Dispensing (15 percent), Medical Director (5 percent),
and Financials (20 percent).

These subparts are further broken

down into sub-subparts, and weights or percentages are assigned

to each of those.

Part IV of the application addresses the

application submission process, including payment of the

application fee.

10

14.

It is clear Loops at least minimally meets the

requirements set forth in the statute and rule and identified

within the application.

It has the ability to cultivate,

process and dispense medical marijuana (or has set forth a

reasonable proposal for doing so in its application).
qualified medical director.

It has a

There is, as set forth below, some

concern about the Loops financial statements, but Loops is

generally stable and meets minimal financial requirements.
15.

However, Loops has the burden in the present case to

show that it satisfied the requirements to such an extent that

it, rather than Chestnut Hill or San Felasco, should have
received the highest point total upon comparative review.1/
16.

Looking at Part I of the application, Loops provided

the requisite information dictated by the application form, as

did--presumably-the other applicants.

There appears to be no

dispute that all three applicants sufficiently satisfied Part I.

17.

As to Part II, Loops provided its DACS certification

and submitted successful level 2 background screens for all of

its owners and managers.

OCU suggested that some individuals

who may be involved with the Loops operation, if approved,

should have undergone level 2 background screening.

There is no

persuasive evidence, however, that such persons were owners or

managers as contemplated by statute and rule so as to be
subject to the background screening.

11

18.

Loops raised a legitimate question as to whether

competing applicant Chestnut Hill satisfied the requirement to

have operated for 30 continuous years as a registered nursery,
as required by section 381.986(5)(b)1.

Chestnut Hill was formed

as a limited liability company in Florida on August 29, 2005.

By law, Chestnut Hill became a corporate person at that time.
See 607.01401(19), Fla. Stat.

Thus, argues Loops, Chestnut

Hill could not have operated a registered nursery for 30 years

because it has not been in existence for 30 years.
19.

The Department takes the position that a nursery may

be certified by DACS and, even if the nursery ownership changes

its name or corporate structure, the nursery will continue to
be certified.

Nursery is defined in section 581.011(20) as

any grounds or premises used for growing nursery stock.

20.

A DACS letter dated August 4, 2015, addressed to

Loops states:

According to the Departments records, your

nursery has operated as a registered nursery since May 1,

1963 and has a current inventory of 951,781 plants.
letter to San Felasco dated July 6, 2015, states:

A DACS

According to

the Departments records, your nursery has operated as a

registered nursery since October 23, 1973 and has a current
inventory of 561,200 plants.

DACS issued a letter dated

August 3, 2015, to Chestnut Hill which states:

According to

the Departments records, your nursery has operated as a

12

registered nursery since November 23, 1981 and has a current

inventory of 406,337 plants.
21.

OCU interpreted the statutory requirement in section

381.986(5)(b)1. to mean that if the applicant operated a

registered nursery (rather than itself being a registered
nursery), that would satisfy the requirement.

OCU reputedly

relied upon the DACS certification of the nursery premises to

deem Chestnut Hill compliant with the 30 year requirement.
Again, no one from Chestnut Hill was called as a witness to
explain this conundrum.
Comparative Review
22.

The five subparts in Part II of the application

addressing the statutory criteria were carefully considered by

OCU in its comparative review of the applicants.

OCUs process

for reviewing the applications is set forth below.

23.

Applicants were to submit their applications and a

$60,000 filing fee to OCU no later than July 8, 2015.

At that

point the applications were initially reviewed for completeness

by OCU Director Bax.

If any items or responses were missing

from an application, Bax would send the applicant an omissions

letter, giving the applicant an opportunity to supplement its
application.

In the case of Loops, Bax noted that Loops had

not provided proof of operating a registered nursery for

30 continuous years and the financial statements provided in the

13

application had not been audited.

Loops timely provided the

missing items requested by the Department.

24.

Once the applications were deemed complete, three

individuals evaluated and scored the applications comparatively.

The scorers were:

Christian Bax; Patricia Nelson, a member of

the Statewide Drug Policy Advisory Council; and Ellyn Hutson, a

certified public accountant.

Nelson and Hutson were appointed

by the State Surgeon General.

25.

Instructions for scoring the applications were

provided by the Departments general counsel, Nicole Geary.

Pursuant to those instructions, the scorers performed their
comparative evaluations independently, not communicating with
one another during the review process.

They were, however,

allowed to make inquiries to certain experts in various areas

within the applications outside the scorers knowledge or
expertise.
26.

The scorers each assigned scores on the various

sections of the application and compiled the scores in a

spreadsheet.

The three spreadsheets were then consolidated into

a single spreadsheet and the scores were totaled.

San Felasco

received the highest aggregate score-3.9750; Chestnut Hill

received the second highest score-3.7917; and Loops received
the third highest score-3.5708.

Each applicants score was an

aggregate score totaling all sections of the application.

14

Scoring higher in one section (e.g., cultivation) would not

necessarily mean the applicant had the highest aggregate score.
The application as a whole had to be scored higher than the
others in order to be approved.

(See, however, ALJ Van

Laninghams September 8, 2016 Informational Order on the MultiCriteria Evaluation, etc., entered in Plants of Ruskin, Inc. v.
Dept. of Health, DOAH Case No. 15-7270, wherein he calls into
question the entire process by which OCU scored the competing
applications, deeming the so-called scores to actually be
rankings and thus inconsistent with the statutory mandate.)
27.

At final hearing, Loops called one of the scorers,

Bax, to discuss his evaluation and review of the applications,

but did not call the other two scorers.

The findings and

conclusions reached by the other two scorers were not addressed.

Nor were principals from the competing applicants called in
order to compare or discuss their applications.

Thus, Loops

attempted to prove that its application was superior by

affirming the appropriateness of its own application,
superficially presenting portions of the competing applications,
and showing that only one of three scorers deemed its
application superior.

That is not a legitimate or appropriate

comparison.
28.

As to the technical and technological ability to

cultivate, Loops provided ample proof that it has that ability.

15

Loops will rely in part on assistance from CW Botanicals (i.e.,

the Stanley brothers), and will utilize some of that entitys
policies and procedures.2/

Although it has no experience

cultivating cannabis, Loops is very skilled in cultivating

other flowering plants.

With the help of CW Botanicals, Loops

undoubtedly would be able to successfully cultivate cannabis.

29.

It is the intention of Loops to cultivate the

specific strain of medical cannabis known as Charlottes Web.

That strain was developed by the Stanley brothers and has proven
effective in treating many conditions, especially severe,
intractable epilepsy.

There are many strains of medical

marijuana, however, as evidenced by the fact that the Stanley

brothers themselves grow hundreds of different strains.

San

Felasco proposes to cultivate a strain known as Anovia Medical;

Chestnut Hill plans to grow one known as Green Solutions.

Other

than its notoriety, there was no competent evidence that

Charlottes Web is superior to any other strain.
30.

The Loops proposal to cultivate Charlottes Web is

based entirely on an oral agreement with Ray of Hope, an entity

which holds the rights to Charlottes Web in Florida.

There is

no binding written agreement between Loops and Ray of Hope.

Nothing prohibits Ray of Hope from granting other Florida
growers the right to use that strain as well.

16

31.

The suggestion that Loops could comply with the

cultivation requirement better than the other two applicants is

purely speculative.

Loops pointed out that Chestnut Hill was a

tree farm and that San Felasco dealt with outdoor plants.

Both

are operating registered nurseries within the State, even if

they are not currently growing marijuana.

However, each of

those applicants presumably submitted plans for cultivating

medical marijuana in some fashion.

No competent evidence was

presented to infer that the proposals of Chestnut Hill and/or

San Felasco were inferior to Loops, or, conversely, that the
Loops proposal was superior to those applications.
32.

Loops provided an expert to explain the nature of the

Loops plan for securing its operations and personnel.

The plan

was well-developed and seemed to address all of the issues

Loops would face once it began cultivation.

There were,

however, some glitches pointed out in the Loops plan, e.g., its
24-hour on-site security was to be provided by a single
individual who, presumably, would need to sleep sometimes.

But

again, there is no evidence that the security plans proposed by

the other two applicants are in any way inferior.
33.

The same is true of the three applicants ability to

maintain accountability of their raw materials and finished

products.

Loops had a good plan for doing so, but did not

17

specifically demonstrate how its plan was superior to the

others.
34.

As for a reasonably located infrastructure to dispense

the product, Loops reasonably showed that it had a broader

(geographic) distribution plan than its competitors.

However,

there is no requirement that a DO dispense its product

statewide, only that each DO must cover its designated region,
in this case the Northeast Region.

Thus, the fact that the

other applicants did not propose as wide a distribution of its

product as Loops is not consequential.

In the Loops

application, 12 distinct dispensing sites are proposed.

Eight

of those sites have been clearly identified, but zoning and

other approvals have not yet been obtained.

San Felasco

proposes six sites for dispensaries; Chestnut Hill proposes only

one, with an option for one more.

It is clear Loops intends to

distribute its product on a wider scale than San Felasco or

Chestnut Hill, but there is no requirement for doing so.

(The

application form does include references to such things as being

centrally located to several populated areas and proximity to
patient populations, but those are examples of what an applicant
might want to show OCU.
items).

There is no statutory mandate for those

The statutory and rule provisions relating to

dispensing of the cannabis product does not say that ability to

distribute more product is necessarily better.

18

Further, Loops

did not explain how its product would successfully compete with
the DOs approved in the other regions around the State.

So, in

total, Loops did not prove that its distribution plan was
superior to the other applicants plans.
35.

As for transportation of the product to its

dispensaries and users, Loops plans to use a high-roofed van

with a refrigerated cargo space and a lockbox or safe.

The van

appears to be a very competent means of transporting the

product.

San Felasco proposes the use of one armored van and

several small Prius-model automobiles.

Chestnut Hill plans to

use two Prius automobiles to transport its product.

Each

applicants proposal seems adequate for their projected

distribution of medical marijuana.
36.

In the area of financial ability to maintain

operations for two years, Loops cast some reasonable doubt as

to the showing Chestnut Hill made to satisfy this requirement.
There was no similar failing noted for San Felasco.

Loops own

financial ability to operate is somewhat suspect due to the

conditional nature of its audited financial statements.
37.

Loops initially submitted a reviewed financial

statement with its application.

A reviewed statement is one

prepared internally and then reviewed by a certified public

accountant for general correctness.

19

OCU asked Loops to submit

an audited financial statement instead, and Loops complied with

that request.
38.

The audited financial statement was prepared by Steven

Hand, a self-employed CPA whose major business was doing

business evaluations.
prepared since 1998.

The Loops audit was the only one he had

Mr. Hand was familiar with Loops and had

some history with the company.

He was asked, on extremely short

notice, to prepare an audited financial statement for Loops.

The amount of time he had to prepare the statement was probably
insufficient, but he did the best he could in that time.
39.

Mr. Hand did not do a written audit plan before

commencing the audit although that is a requirement for a bona

fide audit.

Mr. Hand said that he had a plan of sorts based

on his conversations with Mr. Loop, but such oral discussions

are not sufficient under GAAS to constitute a plan.

The audited

financial statement he issued did not have the requisite

headings required by GAAS, but the financial statement was
generally acceptable as to content.

Again, failure to include

the headings is a violation of GAAS, but the violation seems

minimal in this context.
40.

Mr. Hand could not issue an unqualified (a/k/a

unmodified or clean) opinion regarding the Loops financial

situation.

That is because he was unable to verify the

inventory due to his having been engaged to do the work more

20

than a year after the audit period.

The verification of

accounts receivables was done by Loops, not by the CPA, another

violation of auditing guidelines.

Thus, Mr. Hand issued a

qualified opinion, i.e., a much weaker opinion that those

submitted by the competing applicants.
41.

There is no evidence of record as to the validity or

appropriateness of the audited financial statement submitted by

San Felasco in its application.

Thus, no comparison of

information contained therein can be made.

42.

Some concerns were raised by Loops about Chestnut

Hills finances related to the way that entity valuated its

inventory.

Further, only the balance sheet on Chestnut Hills

financials was audited; the auditor issued a disclaimer as to

the income statement portion of the financial report.

But,

ultimately, the auditors were able to issue a valid audited

financial statement for the entity.
43.

San Felasco was alleged to have a suspect financial

ratio which could have an effect on its ability to continue

operations for two years, as required by statute.

But no

discreet comparison between the Loops financials and those of

the competing applicants was presented at final hearing.
44.

Loops has retained a qualified physician to act as

its medical director and to supervise the DOs activities.

21

There is no evidence the physician is better than the medical

directors proposed by the other parties.
45.

The evidence at final hearing was abundantly clear

that low THC, high CDB marijuana can have enormously successful
results in children with significant medical conditions.

The

stories of how this drug has helped children overcome

debilitating seizure activity were miraculous in nature.

It is

difficult to conceive how such a beneficial medication could be

objected to by some uninformed persons or groups.
CONCLUSIONS OF LAW
46.

The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to sections 120.569 and 120.57(1), Florida
Statutes (2016).
47.

Section 120.57(1)(k) states:

All proceedings

conducted under this subsection shall be de novo.

The de novo

standard has not been altered by section 381.986, or any other

statute relating to the subject matter in this case.

Thus,

under section 120.57(1), the final hearing at DOAH was conducted

to formulate final agency action, not to review action taken
earlier and preliminarily.

J.D. v. Fla. Dept of Child. &

Fams., 114 So. 2d 1127, 1132 (Fla. 1st DCA 2013), (quoting
McDonald v. Dept of Banking & Fin., 346 So. 2d 569, 584 (Fla.
1st DCA 1977)).3/

22

48.

The general rule is that the party asserting the

affirmative of an issue has the burden of presenting evidence as

to that issue.

Dept of Banking & Fin., Div. of Sec. & Investor

Prot. v. Osborne Stern & Co., 670 So. 2d 932, 933 (Fla. 1996),
citing Fla. Dept of Transp. v. J.W.C. Co., 396 So. 2d 778 (Fla.
1st DCA 1981).
49.

In this case, Loops has the burden.

According to section 120.57(1)(k), Findings of fact

shall be based upon a preponderance of the evidence . . .

except as otherwise provided by statute, and shall be based
exclusively on the evidence of record and on matters
officially recognized.
50.

In the instant matter, Loops was required to prove,

by a preponderance of evidence, that the Department should have

approved its application to become a DO in the Northeast Region
instead of approving San Felasco and/or Chestnut Hill.

The

2016 Law specifically says that the applicant must show that it
was entitled to be a dispensing organization.

That is, that

the application as submitted to OCU was superior to all

competing applications in the same region.

This proceeding,

therefore, is a backward-looking, retrospective assessment of

the applications at the time they were filed and reviewed by
OCU.

(See Judge McArthurs excellent description of this

process in her May 13, 2016, Order Regarding Impact of [the

23

2016 Law], entered in McCrorys Sunny Hill Nursery v. Dept. of

Health, DOAH Case No. 15-7275.)
51.

In this case, it must first be determined whether

Chestnut Hill should have been comparatively reviewed with the

other applicants due to the 30 continuous years of operation
issue.

Although an agencys interpretation of its own statutes

is given deference (See Humana, Inc. v. Dept of Health & Rehab.

Servs., 492 So. 2d 388 (Fla. 4th DCA 1986)), that interpretation
cannot be contrary to the plain language of the statute.

In the

present case, the statute at issue dictates that the applicant

must . . . have been operated as a registered nursery in the
state for at least 30 continuous years.
Stat.

381.986(5)(b)1, Fla.

Nursery is defined as any grounds or premises on which

nursery stock is grown.

581.011(20), Fla. Stat.

A nursery

is not a person, corporate or otherwise; it is grounds or

premises.

Thus, none of the corporate applicants to be a DO in

Florida could have literally satisfied the requirement to have

been operated as a nursery.

DACS also issues certificates of

registration to stock dealers, agents, or plant brokers, each of

which is defined as a person in section 581.131.

But receipt

of a certificate of registration by a stock dealer, agent, or

plant broker does not make that person a nursery.
52.

Inasmuch as no applicant could have literally

complied with the requirement to be a registered nursery, the

24

Departments interpretation of the statute to allow applicants

who operate--rather than operate as--a registered nursery for
30 continuous years to be deemed compliant with the statutory
requirement is accepted.

(See Chiles v. Dept of State, Div.

of Elect., 711 So. 2d 151 (Fla. 1st DCA 1998.)

If Chestnut

Hill had a letter from DACS that it had operated a nursery for
30 continuous years, then its application should have been
comparatively reviewed with the other applicants.4/
53.

This is the first proceeding under the 2016 Law, which

generally establishes the parameters for an applicant such as

Loops to obtain approval of its initially denied application.
Chapter 381, Florida Statutes, wherein portions of the 2016 Law
are codified, sets forth the criteria each applicant must
satisfy.

Those criteria, paraphrased, are:

a)

Technical and technological ability to

cultivate and produce low-THC cannabis;

b)

Ability to secure the premises,

resources, and personnel necessary to
operate as a DO;

c)

Ability to maintain accountability of all

raw materials, finished products, and any
byproducts to prevent diversion or
unlawful access to or possession of these
substances;

d)

An infrastructure reasonably located to

dispense low-THC cannabis to registered
patients statewide or regionally as
determined by the Department;

25

54.
form.

e)

Financial ability to maintain operations

for the duration of the 2-year approval
cycle;

f)

Fingerprinting and level 2 background

screening for all owners and managers;
and

g)

Employment of a medical director who is a

physician licensed under chapter 458 or
chapter 459, Florida Statutes, to
supervise the DOs activities.

Those criteria are incorporated into the application

Under the present stature of this case, Loops is then

required to prove, by a preponderance of evidence, that its

application met or exceeded those criteria in ways that were,
in the aggregate, superior to the competing applicants.
55.

As set forth in the Findings of Fact above, Loops did

not provide comparative proof that its application satisfied

those criteria better than Chestnut Hill or San Felasco such
that its application should have been approved.

While Loops

did prove definitively that it was approvable and had a very

good proposal, that fact alone did not establish that it was
better than the other two applicants at issue.

Loops stated

correctly in its Proposed Recommended Order that, other than

uncorroborated hearsay, there is no evidence in the record that
either San Felasco or Chestnut Hill [satisfied the various
criteria for approval].

By the same token, there was no

competent evidence to prove that those two applicants did not

26

satisfy the criteria, or that their proposals were qualitatively

inferior to the Loops application.

It was Loops duty to show

how its application was superior to the other applicants.

It

was Loops duty to present whatever evidence about San Felasco

and Chestnut Hill was necessary to make that comparison.

Loops

failed to do so.
56.

The 2016 Law refers to a final determination from the

Division of Administrative Hearings, the Department of Health,

or a court of competent jurisdiction.

Inasmuch as DOAH does

not have final order authority in this matter, the

recommendation below is not dispositive of the Loops
application until a final order is entered by the Department.
RECOMMENDATION
Based on the foregoing Findings of Fact and Conclusions
of Law, it is
RECOMMENDED that a final order be entered by Respondent,
Department of Health, Office of Compassionate Use, finding that
Petitioner, Loops Nursery & Greenhouses, Inc., failed to prove
by a preponderance of evidence that its application to become a
distributing organization in the Northeast Region should have
been approved, and therefore, denying Loops application to
become a dispensing organization in the Northeast Region.

27

DONE AND ENTERED this 7th day of October, 2016 in

Tallahassee, Leon County, Florida.

S
R. BRUCE MCKIBBEN
Administrative Law Judge
Division of Administrative Hearings
The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847
www.doah.state.fl.us
Filed with the Clerk of the
Division of Administrative Hearings
this 7th day of October, 2016.
ENDNOTES
1/

This matter is unique in its stature at DOAH. Loops is

charged with proving, by comparative review, that its
application was-at the time OCU made its decision-superior to
the applications of Chestnut Hill and San Felasco. This case is
akin to the comparative review done by an ALJ in certificate of
need cases, but the facts here are limited to those existing at
the time the applications were reviewed by OCU. However,
neither of the competing applicants was involved in the final
hearing (after being denied intervenor status) and all evidence
concerning their applications was essentially uncorroborated
hearsay. This fact significantly impaired Loops ability to
meet its burden of proof. Loops might have remedied this
problem by calling witnesses from the competing applicants, but
that will never be known.
2/

The Stanley brothers developed the low THC, high CDB strain
of medical marijuana known as Charlottes Web. They have
gained notoriety in the industry as pioneers and recognized
experts in the cultivation of medical marijuana strains.
3/

Note, however, Judge Van Landinghams well-reasoned

conclusion to the contrary in Plants of Ruskin, Inc. v. Dept.
of Health, DOAH Case No. 15-7270, Order Granting Ruskins Motion
28

in Limine, September 12, 2016. Judge Van Laningham concludes

that an applicant that has not been in existence for over
30 years cannot satisfy the requirement, regardless of whether
it holds a certificate from DACS.
4/

The Department continues to suggest that an abuse of

discretion standard should be applied to the instant case.
That argument is again rejected. Besides, no evidence was
presented at final hearing directed to whether OCU abused its
discretion; the evidence addressed whether the Loops
application was superior to the competing applicants.
COPIES FURNISHED:
William Robert Vezina, Esquire
Vezina, Lawrence and Piscitelli, P.A.
413 East Park Avenue
Tallahassee, Florida 32301
(eServed)
Megan S. Reynolds, Esquire
Vezina, Lawrence and Piscitelli, P.A.
413 East Park Avenue
Tallahassee, Florida 32301
(eServed)
Eduardo S. Lombard, Esquire
Vezina, Lawrence and Piscitelli, P.A.
413 East Park Avenue
Tallahassee, Florida 32301
(eServed)
Jon C. Moyle, Esquire
Moyle Law Firm, P.A.
118 North Gadsden Street
Tallahassee, Florida 32301
(eServed)
Karen Ann Putnal, Esquire
Moyle Law Firm, P.A.
118 North Gadsden Street
Tallahassee, Florida 32301
(eServed)

29

Robert A. Weiss, Esquire

Moyle Law Firm, P.A.
118 North Gadsden Street
Tallahassee, Florida 32301
(eServed)
Shannon Revels, Agency Clerk
Department of Health
4052 Bald Cypress Way, Bin A02
Tallahassee, Florida 32399-1703
(eServed)
Nichole C. Geary, General Counsel
Department of Health
4052 Bald Cypress Way, Bin A02
Tallahassee, Florida 32399-1701
(eServed)
Celeste Philip, M.D., M.P.H.
Interim State Surgeon General
Department of Health
4052 Bald Cypress Way, Bin A00
Tallahassee, Florida 32399-1701
(eServed)
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions
to this Recommended Order should be filed with the agency that
will issue the Final Order in this case.

30