By John Schroyer
Many in the medical cannabis trade have long viewed Florida as a plum waiting to be picked, a potentially ripe market for both new and existing marijuana companies given the state’s massive population and heavy concentration of seniors.
But the business opportunities could be much more limited than expected.
If Florida voters pass an MMJ initiative in November, the state’s medical cannabis program could end up resembling New York’s tightly controlled system more than Colorado’s free-market approach in terms of the number of business licenses available, depending on how regulators decide to approach medical marijuana.
The ballot measure, Amendment 2, doesn’t specify how many permits the state will award or if there will be a cap at all, leading to speculation that there could be scores of licenses available – or perhaps fewer than 20.
The numbers game
Amendment 2 directs the Florida Department of Health (DOH) to promulgate rules for the new industry and potential licensees by June 2017 and to begin registering “medical marijuana treatment centers” by September.
But the term “medical marijuana treatment centers” is quite broad, and there has been no indication whether the Florida legislature will pass a bill to implement the amendment or leave everything to the DOH.
“It’s a little uncertain how the (state) – should Amendment 2 pass – would implement it in terms of the number of licenses,” said Jeffrey Sharkey, executive director of the Medical Marijuana Business Association of Florida.
Assuming Amendment 2 passes next month and the legislature gets involved, as few as 10 or 15 new medical cannabis business licenses could be made available to companies, on top of the existing six licensees, Sharkey said. And that could set off a hugely competitive rush for applicants.
“I don’t think the legislature wants to open it up to a broad increase in the number of licenses, but they could certainly add some additional licenses to meet this patient demand,” Sharkey said. “There are legislators who would not like to see any increase in licenses, and they’ll use (existing law) to say, ‘We’ve already got that covered.’ ”
Sharkey predicted that if the legislature were to increase the number of MMJ business licenses from the current six CBD producers that are permitted, lawmakers likely would issue only 15 or 20 total.
“We’ll never see 25. I doubt that we would see 20 or more,” Sharkey said.
Ben Pollara, the campaign manager behind Amendment 2, thinks that’s underestimating how many licenses will be up for grabs.
“It’s going to be more than what’s currently out there, certainly. The (state) has estimated right around 2,000, and that’s including dispensaries and growing facilities and testing and everything,” Pollara said.
That number comes from a report by the Office of Economic and Demographic Research, which put together an analysis based on data from Colorado. The report estimated how many MMJ businesses Florida would warrant under a similar regulatory regime.
It suggested that 1,993 MMJ treatment centers would likely end up serving more than 400,000 patients. But “treatment center” could encapsulate a number of different business types – ranging from cultivator to edibles manufacturer to dispensary to testing lab – depending on the actions of either the legislature or DOH (or both).
“The way we define the MMJ business is by defining what we call ‘medical marijuana treatment centers’ … and the way that’s defined is by multiple different types of businesses,” Pollara said. “So I believe, given how we wrote the definition, to require that any one type of treatment center encompass every type of treatment center would not jibe with the law.”
If the legislature defers
There’s also the possibility that lawmakers will decline to pass a law to implement the amendment, which would mean the major policy decisions would be left to the DOH. In such a scenario, the amendment could wind up in the courts, Pollara said.
“If the legislature decides to implement this, it’s going to be a much more restrictive closed system than maybe what a lot of people in the industry would like to see – but much more robust than what we have currently. And if they don’t, I think it’ll go to the courts and be much closer to what the industry would like to see,” said Pollara, the campaign manager.
There are also some in the industry who have been lobbying lawmakers in Tallahassee in an attempt to influence the aftermath of Amendment 2.
Mike Smullen, co-founder of Florida-based AltMed, has been planning to get into the MMJ industry in Florida since before the first Amendment 2 failed at the ballot in 2014. He has been waiting for the measure to pass this year, and in the interim, his team has been trying to keep lawmakers up to date on medical cannabis industry developments.
Smullen also has been working to persuade lawmakers that five or six MMJ businesses aren’t enough to satisfy demand.
“(The legislature) probably wouldn’t be giving 100 licenses out after this amendment, but you could see the need for 20 or 30 licenses above what’s out there right now. But that’s anybody’s guess,” Smullen said when asked how many MMJ business licenses he believes will be available.
One existing licensee, Kim Rivers, the CEO of Trulieve, said there simply aren’t any answers to be had yet, especially on how many licenses may ultimately be available.
“Right now, it’s way too early to make predictions,” Rivers said. “If I was looking at this from an opportunity standpoint, I’d definitely be playing the wait-and-see card. I’d be holding.”
John Schroyer can be reached at [email protected]