Stalled Expansion in the Nation’s Largest Medical-Only Cannabis Market
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. However, with state voters set to decide on adult-use marijuana legalization in November, the mandated expansion of Florida’s market remains on indefinite hold.
Application Process Stalled
The state accepted applications for 22 available permits in April 2023. Over a year later, there’s no clear answer from state officials as to when those new licenses will be issued. Dustin Robinson, a Fort Lauderdale-based attorney who filed one of the 73 pending applications, expressed frustration, stating, “There is literally nothing coming back to applicants. Nothing. 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’s market is particularly significant due to its strict license caps and large population, including a high number of seniors and military veterans, demographics with increasing cannabis use. This has inflated the value of a medical marijuana treatment center (MMTC) license to as much as $50 million. MMTC permits allow holders to operate an “unlimited” number of cultivation facilities and dispensaries, but the number of MMTC licenses is capped, drawing intense interest from major marijuana multistate operators (MSOs).
Special Permits and Existing Players
In addition to MMTC licenses, the state is awarding a limited number of permits to Black farmers as part of a federal lawsuit settlement. However, the MMTC licenses remain the focal point for national cannabis players.
Adult-Use Cannabis Initiative
MSOs, led by nearly $50 million from Trulieve Cannabis Corp., are heavily funding 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 Florida and grant existing MMTCs the first-mover advantage to sell recreational cannabis. Any further market expansion, including potential social equity programs, would depend on future legislative actions.
Tampa-based attorney Richard Blau, who chairs the regulated products section for GrayRobinson, suggested, “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.” This has led to significant frustration among the 73 applicants, who feel excluded without clear justification.
No Updates for License Applicants
Florida’s marijuana business expansion is uniquely dictated by population growth, unlike other major markets such as California, Illinois, and New York. State law mandates four new licenses for every 100,000 patients enrolled in the state medical marijuana program. With over 882,000 patients currently enrolled, the state health department accepted 73 applications for 22 MMTC licenses in April 2023, requiring a $146,000 application fee and significant investment in potential cultivation or retail locations. Christopher Kimball, director of the Office of Medical Marijuana Use (OMMU), expressed hopes during a December state House hearing to issue licenses within six months, citing potential lawsuits and diligence as reasons for the delay.
Possible Reasons for Delay
One theory for the delay is the potential for lawsuits, which have historically plagued Florida’s program since its launch. Matthew Ginder, a Florida-based attorney with Greenspoon Marder, noted, “Delays to the MMTC application process have been going on since 2017. It has been a consistent theme. 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.”
Despite the fear of potential litigation, some applicants doubt that this alone could explain the 14-month delay. Speculation includes reluctance from Gov. Ron DeSantis’ administration, which opposes Amendment 3, to further expand legal marijuana.
Waiting for License Updates
Any delay benefits existing MMTC license holders who do not have to face new competition and wield significant lobbying power at the Florida Capitol in Tallahassee. This leaves hopeful entrants with little choice but to continue paying leases on empty storefronts and cultivation sites, extending an expensive wait possibly well past Election Day and the potential adult-use legalization.
David Vukelja, an applicant and part-owner of Del Favero Orchids, summed up the situation: “We have not heard anything from the state, and so we just continue to assume that a response is due any day. All we can do is patiently await the outcome.”
