Florida is the largest and most lucrative medical-only cannabis market in the United States, with Brightfield Group expecting the state to register 25 percent year-over-year growth in 2022 to $1.7 billion.
The Sunshine State is poised for more growth this year.
With only 22 businesses licensed to legally operate in Florida, cannabis licenses in the state are extremely valuable and have sold for well over $50 million. Naturally, the industry has been buzzing with excitement over the announcement that more licenses will be made available.
The Dec. 19, 2022 issuance of Emergency Rule 64ER22-9 by the Office of Medical Marijuana Use (OMMU) sets the stage for an ongoing and revolving “batching cycle” of new cannabis licenses. The first cycle will offer up to 22 new licenses. It is expected that a future rule announcement will be forthcoming in January or February.
In fact, Florida’s cannabis law, § 381.986, Fla. Stat. (2022), legally requires the state to do so now that litigation that was holding up new licensing has been settled.
Big-Time Growth
Since Florida’s launch of medical sales in 2017, the market has been a growth engine and cash cow for the big multi-state operators (MSOs) that have licenses there: Curaleaf, Trulieve, GTI, Cresco Labs, Verano and Ayr Wellness.
Those MSOs make up six of the Top 10 cannabis companies the Global Cannabis 50 rankings we published in December.
For cannabis entrepreneurs, Florida presents a unique opportunity for those that can afford it. The Florida cannabis license is different from those in most states in two critical ways:
* Licensed cannabis businesses in Florida can build and manage an unlimited number of production and retail facilities. This makes Florida one of the few medical markets in the U.S. where the capacity of a cannabis business to grow is entirely dictated by the appetite of its consumer market.
* The other major feature to Florida’s cannabis license is that it requires full vertical integration because only the retail sale of medical cannabis is allowed—meaning that each licensed company must have to have the financing to stand up a cultivation center, a GMP-certified manufacturing center, and multiple retail outlets within a year or two of being licensed.
For cannabis entrepreneurs, the new licenses in Florida then present enormous upside: Florida has 776,365 active medical cannabis patients, representing more than 20 percent of the whole country’s registered patient count. Ultimately, with nearly 2 million monthly adult cannabis consumers, Florida could become the second biggest market in the country, or even exceed the size of the troubled California market if regulators maintain a laissez-faire approach when the state transitions to adult-use.
How It Will Work
The new licensing opportunity in Florida is expected to be similar to its Pigford/BFL batching cycle for Black farmers who won a judgment from the U.S. Department of Agriculture (Pigford v Glickman) for the agency’s history of racial discrimination and contested the Florida Department of Health’s non-issuance of a single medical marijuana treatment center (MMTC) to a Black applicant.
For instance, the cost to submit the application in the new round is a whopping $146,000. That is more than double the $60,830 charged during Florida’s initial application round but is similar to what the state charged the Pigford/BFL applicants. The application is also fairly similar to Pigford/BFL, including in its scoring criteria.
Points will be awarded for applicants who have infrastructure and equipment already secured and constructed while those who don’t will not get points. In other words, the barriers to entry to Florida’s medical cannabis market will remain high, and Florida is likely to remain a market with a limited number of large-scale players.