Florida marijuana licenses overdue as adult-use vote looms

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By law, the Florida marijuana industry – the largest medical-only cannabis market in the country with $2 billion in projected annual sales – is supposed to have nearly twice as many businesses involved as are operating today.

But with state voters set to decide on adult-use marijuana legalization in November, potentially inflating the value of coveted vertically integrated business licenses, the mandated expansion of Florida’s market remains on indefinite hold.

The state accepted applications for 22 available permits in April 2023.

More than a year later, there’s no clear answer from state officials as to when those new licenses will be issued.

“There is literally nothing coming back to applicants. Nothing,” Dustin Robinson, a Fort Lauderdale-based attorney who filed one of the 73 pending applications for a permit, told MJBizDaily.

“In my opinion, they are literally sitting on their hands.

“It is so disrespectful to applicants who have spent so much time and money.”

Big market, few operators

Florida is one of the most important markets for state-regulated marijuana.

The state’s unique combination of strict license caps and a large population – including a disproportionate share of seniors and military veterans, two demographics whose cannabis use is increasing, according to recent data – have helped inflate the value of a medical marijuana treatment center (MMTC) license to as much as $50 million, according to reports.

MMTC permits allow license holders to operate an “unlimited” number of cultivation facilities and dispensaries.

But there’s a cap on the number of MMTC licenses.

This arrangement has drawn intense interest from some of the country’s biggest marijuana multistate operators, who hold most of the 25 MMTC permits issued to date.

Separately, the state also is awarding a limited number of permits to Black farmers as part of a federal lawsuit settlement.

But it’s the MMTC licenses that are drawing interest from national cannabis players.

Adult-use marijuana initiative

Led by nearly $50 million from Tallahassee, Florida-based Trulieve Cannabis Corp. alone, MSOs are bankrolling the campaign to pass Amendment 3 – the adult-use initiative – in November.

If passed by 60% of voters, Amendment 3 would legalize adult use in the state – and give first-mover status to existing MMTCs to start selling recreational cannabis.

Any further expansion of the market – including any potential social equity program – would depend on future action from the state Legislature.

And conventional wisdom is that both lawmakers and the existing medical marijuana industry would prefer to leave things as is, Tampa-based attorney Richard Blau, who chairs the regulated products section for Florida-based law firm GrayRobinson, told MJBizDaily.

“Based on past experience, with the reluctant attitude by the state to expand the existing system, I think the majority of observers feel it’s unlikely that the vertically integrated system will be changed,” he said.

That’s led to “a lot of anxious demand, as the 73 applicants feel like they’ve been boxed out of that system without any fair reason why,” Blau added.

No updates for license applicants

Florida also is an outlier in how marijuana business expansion is dictated by population growth, a model also seen in Arizona but absent from other major markets such as California, Illinois and New York.

After the initial 25 MMTCs, state law says that for every 100,000 patients enrolled in the state medical marijuana program, four new licenses must be issued “within 6 months.”

There are now more than 882,000 patients in the state, according to the latest Office of Medical Marijuana Use figures.

In April 2023, after a series of lawsuits challenging Florida’s 2016 MMJ legalization law, the state health department accepted 73 applications for 22 MMTC licenses.

Applicants paid a $146,000 application fee and also were required to hold leases on any potential cultivation or retail locations mentioned in their applications, necessitating investment in the seven figures and climbing, applicants told MJBizDaily.

During a state House hearing in December, Christopher Kimball, the director of the health department’s Office of Medical Marijuana Use (OMMU), said it was his “hope” to have issued the licenses in six months.

Kimball cited potential for lawsuits and the diligence required to ensure permits wouldn’t be invalidated in court as reasons for the lengthy review period.

But nearly six months later, the OMMU has not offered any updates.

Neither the health department nor the OMMU responded to questions from MJBizDaily.

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Avoiding lawsuits?

One theory behind the delay is the obvious one Kimball offered: lawsuits.

Court battles have dogged Florida’s program since it launched, and most observers predict that litigation from applicants denied a license is a near-certainty.

“Delays to the MMTC application process have been going on since 2017,” said Matthew Ginder, a Florida-based attorney with Greenspoon Marder.

“It has been a consistent theme,” he added.

“The only thing I can predict with certainty is that there will be more delays before the issuance of licenses to applicants due to legal challenges.”

Though some lawsuits have led to industry-friendly changes in Florida marijuana law – smokable flower, for example, was legalized via the courts – looming legalization raises the stakes even further.

Some applicants doubt that fear of potential litigation alone could fully explain the delay, which is about to enter its 14th month.

But absent any information from the state, speculation is filling the resulting information vacuum.

Some theories include reluctance in the administration of Gov. Ron DeSantis, who has said he opposes Amendment 3, to further expand legal marijuana.

Waiting for license updates

Whatever the cause, observers point out, any delay might be welcome news for the existing MMTC license holders that do not have to contend with new competition.

It’s existing license holders who also wield lobbying power at the Florida Capitol in Tallahassee.

That leaves hopeful entrants with little alternative beyond paying leases on empty storefronts and cultivation sites, extending an expensive wait that some fear could extend well past Election Day and adult-use legalization.

“We have not heard anything from the state, and so we just continue to assume that a response is due any day,” said applicant David Vukelja, an Ormond Beach, Florida-based attorney and part-owner of Del Favero Orchids.

“All we can do is patiently await the outcome.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.