Verano Sues Alabama Regulators Over Voided Licenses

Editor's note: Since this article was published, Verano CEO George Archos wrote an open letter to Gov. Kay Ivey saying Alabama patients deserve better than "years of litigation" and that his company remains ready to invest $40 million in the state. 

There it was, and there it wasn’t.

Chicago-based Verano Holdings, one of 21 businesses awarded a medical cannabis license June 12 by the Alabama Medical Cannabis Commission (AMCC), is now suing the state regulatory agency for its attempt to void that licensing process due to “potential inconsistencies” in the scoring of applications.

Four days after the initial batch of awardees was announced, AMCC board members voted to pause all licensing proceedings over the scoring concerns. Then, on Aug. 10, the commission members decided to void the original licensing process altogether.

Verano, one of the top-five publicly traded cannabis companies in the world by market cap, was one of the five awardees in the vertically integrated licensing category, meaning its subsidiary, Verano Alabama LLC, stood the opportunity to benefit from cultivation, processing and retail operations in the state’s forthcoming market. Non-vertical licenses were also awarded in the cultivation, processor, dispensary, transporter and testing lab categories.

On the same day (Aug. 10) that the commission announced it was voiding these awarded licenses, state regulators attempted to “re-award” the licenses. Verano was not re-awarded one of these licenses, and the company claims it was given no explanation or opportunity to be heard despite its superior application score.

In the lawsuit filed Aug. 21 in the Montgomery County Circuit Court, Verano argues that AMCC does not have the authority, as provided by the Alabama Legislature, to revoke licenses, the Alabama Reflector first reported.

“Regardless of the commission’s intent when it decided to issue the stay and subsequently ‘re-award’ the licenses, its decision to ‘void’ previously awarded licenses without following the Legislature’s—and its own—clearly established rules and regulations, exceeds and violates the statutory authority it has been granted, violates its own rule, and is clearly erroneous. As such, Verano Alabama’s awarded license remains valid,” the company claims in the lawsuit.

Because no vertically integrated facility licenses are available for award following the AMCC’s Aug. 10 re-awarding process, Verano claims the commission overstepped its powers and that there is no adequate remedy.

In addition, Verano officials claim AMCC regulators cast aside validly awarded licenses only to obtain their “preferred outcome of selected bidders or individuals,” according to company statement provided to Cannabis Business Times.

“Verano Alabama’s filing seeks to restore order and due process to the licensing process, consistent with the state’s laws and regulations,” according to the statement. “Across the country, there are examples of what happens when objective blind scoring metrics and carefully crafted administrative procedures are cast aside for personal or political preferences, which resulted in years of litigation and lost opportunity to serve patients in need.”

Alabama Gov. Kay Ivey signed the state’s medical cannabis legislation into law May 17, 2021.

In addition to Verano, Alabama Always, a company that applied for a license but did not win in the disputed awards from June 12 nor in the re-awarding process on Aug. 10, also sued Alabama regulators over the scoring process and the results. A hearing for that lawsuit is scheduled for Aug. 28.

Meanwhile, the next AMCC board meeting is scheduled for Aug. 31, when commissioners propose voiding the licenses for a second time and then re-awarding them (for a second time) to address concerns over violations of the state’s Open Meetings Act that may have occurred Aug. 10, the Alabama Political Reporter reported.