Florida moving forward on marijuana licenses
TALLAHASSEE - Florida health officials will accept applications for 22 medical-marijuana licenses in late April, in a long-awaited move announced Friday by Gov. Ron DeSantis' administration.
An emergency rule about the licenses generated an immediate buzz in the cannabis industry, as the number of licenses in the state will double.
The rule came more than six years after Florida voters approved a constitutional amendment broadly authorizing medical marijuana and after lawmakers in 2017 approved a framework for the industry.
"This is an exciting milestone for Florida's medical cannabis program, more than five years in the making. These additional licenses are an important step in moving the program forward for Florida's patients and future licensees," Courtney Coppola, a former director of the state's Office of Medical Marijuana Use, told The News Service of Florida.
The Florida Department of Health in December set up the process to apply for new licenses, with applications accepted in "batching cycles."
Under the emergency rule released Friday, 22 licenses will be available, adding to the 22 currently licensed operators.
The department will accept applications between April 24 and April 28.
The application window will be the first major opportunity for newcomers to the state's cannabis market to vie for licenses since the 2017 legislation passed.
An earlier round of licenses was based on a 2014 law that legalized non-euphoric cannabis for a limited number of patients.
Investors and marijuana operators for years have viewed Florida as potentially one of the country's premiere landscapes to set up shop.
Also, a proposed constitutional amendment that would allow the recreational use of marijuana has intensified excitement about the licensing process.
The proposed amendment, backed by Trulieve, the state's largest medical-marijuana operator, could go on the 2024 ballot.
Prospective operators "are thrilled" about Friday's announcement, attorney Louise St. Laurent, who is a former general counsel for the state Department of Health, told The News Service of Florida.
"There's been no shortage of companies waiting and watching the department for these rules since probably at least 2017 to be able to have an opportunity to be able to compete for these licenses," St. Laurent said Friday.
The 2017 law required the Department of Health to grant new licenses as the numbers of authorized patients increased.
With more than 778,000 patients, the state should have issued at least another 22 licenses to keep up with the population of patients.
But the DeSantis administration left the application process in limbo after the governor took office in 2019.
The 2017 law also required health officials to issue a license to a Black farmer with ties to doing business in the state.
The health department in September announced it intends to award the license to a Suwannee County man, but legal and administrative challenges have put the license on hold.
Florida's medical marijuana industry is estimated to generate about $1 billion annually, but most pot companies' profit margins are slim unless they can expand into the more-lucrative recreational market.
With a population of more than 22 million people and a booming tourism trade, Florida "offers an incredible opportunity" for investors, according to Next Titan Capital President Jade Green, a national cannabis-industry consultant.
"If you can make it in Florida until rec (recreational marijuana) hits, then you will have a significant advantage in what will be one of the largest cannabis economies not just in the U.S. but in the world," Green, who is based in Miami, told the News Service.
Backers of the proposed constitutional amendment this week passed a key preliminary hurdle, submitting more than enough petition signatures to trigger a Florida Supreme Court review of the measure.
The Supreme Court, whose approval is required for initiatives to be placed on the ballot, in 2021 struck down two proposed constitutional amendments that would have allowed the recreational use of pot.
Uncertainty about the conservative court's handling of the 2024 proposal won't frighten away prospective license applicants, Green said.
"Florida is definitely a market of interest, especially compared to some of the other more mature, more saturated markets. The main reason is, everybody has a similar belief that, whatever happens in 2024, eventually adult-use (recreational) cannabis will come to Florida," she said.
Doubling the size of the state's medical marijuana industry will likely drive down the value of operators' licenses, which have been flipped for between $30 million and $85 million over the past few years.
In addition, the cannabis industry nationally has contracted, due to inflation, worker shortages, sales of unregulated euphoria-inducing products derived from hemp and the black market.
Florida also requires operators to handle all aspects of the business --- growing, processing and selling --- an expensive system known as "vertical integration."
Industry experts estimate that it costs about $30 million to set up the infrastructure to grow and process marijuana and derivative products.
Retail locations can cost another $3 million to $4 million annually, not including salaries for workers.
Still, solid investors won't shy away from the chance to compete in Florida, the country's second-largest medical-marijuana market, consultants like Green predicted.
"Florida still has this hockey-stick trajectory growth because adult use hasn't come here yet. There hasn't been a large amount of saturation. And so if I can get here and hedge until adult use comes, I'll have an explosive growth rate. If I'm unable to perform, then I can sell my license so I should be able to recoup my investment plus quite a bit of profit," Green said.