TALLAHASSEE, Fla. – Florida is about to see a rush of new medical marijuana businesses after Gov. Ron DeSantis’ administration recently issued 25 long-delayed licenses to operate in the state.
But industry experts say the market for growing and selling marijuana has changed significantly as the state’s growing stock of available licenses lay dormant for years, giving new companies only a limited opportunity to break into the entrenched industry of $ 2 billion in the Sunshine State.
The increasingly difficult path facing the new licensees is a welcome consolation prize for the major medical marijuana companies already operating in Florida, which have just suffered their losses. a nail-biting battle with DeSantis on legalizing recreational marijuana use for adults in the nation’s third-largest state. Had they won, existing cannabis companies would have been at the forefront of selling non-medical products in a potential $6.1 billion dollar industry.
“It’s going to be very difficult for all of these licensees to even make a dent in the current industry, especially in terms of pricing,” said Michael Minardi, who previously led a ballot initiative to legalize marijuana. “And after so many years, I think people are tired of the quality and the prices, when they can find something better on the black market.”
DeSantis went to war with the Amendment 3 campaign — and it was mainly financed by Trulievethe state’s largest medical marijuana company — warned voters that the measure was backed by a “cartel” of wealthy medical marijuana companies that wanted to create a monopoly.
In response, the campaign behind the measure told DeSantis he could break up the so-called cartel by finally issuing more than two dozen licenses that companies must have to sell and grow marijuana in Florida. But the Office of Medical Marijuana Use, which DeSantis’ office oversees, only began issuing new licenses after Amendment 3 failed.
The 25 new permits, which were issued at the end of last year, were well overdue. They were planned to be distributed gradually as the state’s population of medical marijuana patients grew over the years, reaching nearly 892,000 patients as of December. Instead, they found themselves at the Office of Medical Marijuana Use in the middle of an ongoing lawsuit that ended three years ago. Two lists of winning recipients of the licenses were completed almost two years ago.
Three of the permits were designated by the Legislature for a group of Black farmers who were part of a landmark class action discrimination lawsuit against the federal government. Another 22 permits had attracted 74 applicants, including accounting firms and hemp companies.
The new licenses still have a few more steps to go through before Florida finally transfers the designation, but they could ultimately double the 25 marijuana companies already active in Florida’s medical marijuana program. More licenses may seem like a solution to the “cartel” described by DeSantis, but a former lawmaker and two marijuana industry experts fear the new licensees will also face skyrocketing overhead costs and diminishing returns as the nation’s oldest licensed pot companies state continues to grow. every day.
Former Sen. Jeff Brandes, a St. Petersburg Republican who advocated for both legalizing pot and looser controls on medical marijuana before being removed from office, said DeSantis and the Legislature have no interest in imposing strict regulations that have resulted in most of the more than $2 billion in revenue to be collected by a handful of the oldest licensees.
“It became convenient for them to argue about it against the amendment, and now they want to put the genie back in the bottle,” Brandes said, adding that he believes the way companies should organize themselves will also fuel the industry’s growth to limit.
Florida’s vertically integrated licensing requires each business to be self-contained. Each licensee grows its own pot, then uses those crops to manufacture products and then sells those products in company-owned dispensaries. The wholesale purchase of raw marijuana is prohibited unless sales are permitted by the state due to crop loss.
“They like the control and influence it provides,” Brandes says.
In other words, a new marijuana company would have to build facilities to grow marijuana and produce products, open at least one dispensary, and hire employees before it can get started. Zack Kobrin, a Fort Lauderdale attorney who helps companies apply for the Florida licenses, said startup costs could easily reach $15 million, depending on the company’s growth strategy. And the company will likely have to cover another $30 million in operating costs over the first two years.
Also unlike the first few years of the medical marijuana program, the number of investors has declined and other potential sources of cash have become limited, especially after Amendment 3 failed. “It’s so capital intensive, and because the capital markets are dry, it makes it difficult to raise enough money so you can scale competitively,” Kobrin said. “Vertical is definitely driving up costs and making it harder to do business in Florida.”
Kobrin said he told his clients that the licensing process could take some time, but that winning recipients had not expected to wait since April 2023 or longer, when application periods were completed. Still, the licenses may be worth the costly wait because there are no limits on the size of a company’s total “canopy” for growing marijuana or opening dispensaries.
Even without recreational marijuana, thousands of patients who left the medical marijuana program are now receiving new recommendations from a doctor. The state has seen a surge of about 10,000 new patients since the election, and doctors’ offices have been fully booked for weeks.
“You have the ability to essentially scale up or as little as you want,” Kobrin says. “That gives it a licensing value.”
One of the recipients of the permits is an Alachua County farmer who said he is ready to enter the market. Randy Rembert is the owner of Hawthorne-based Rembert Family Farms, which became the first Black-owned cannabis company in the state in more than 80 years after it began making hemp products.
He said he has seen pot companies from outside Florida spend millions of dollars building infrastructure and buying unnecessary equipment and supplies. He has yet to take steps to build a grow room, but even with companies like Trulieve, which has opened 29 dispensaries in 2024 alone, Rembert said he is confident he can compete.
“A lot of people are going to run out and buy a bunch of useless stuff that they don’t need because they’ve never grown cannabis before,” Rembert said. “If you don’t have the farmer mentality of buying what you need and staying away from the stuff you don’t need until the right time, then some people wouldn’t be successful.”
And there is still an opportunity for expansion for the marijuana industry in the future. Amendment 3 earlier in November narrowly missed 60 percent threshold required for passage. And an overwhelming 71 percent of voters legalized medical marijuana in 2016 in the first place by backing a ballot initiative that was financially backed, largely by high-profile Orlando attorney John Morgan.
As Florida’s self-proclaimed “Pot Daddy,” Morgan said it would be challenging for new businesses to get off the ground. He predicted that the state’s medical marijuana program could one day resemble the state’s pharmaceutical retail industry, with a few companies taking the bulk of the business. Still, demand for the licenses will remain, Morgan said.
“They’d be swallowed up in a minute,” Morgan said. “There is never a shortage of fools chasing fool’s gold.”
