Florida’s multibillion-dollar cannabis market set to expand
Florida is the US’s largest and most lucrative medical only cannabis market with over $1 billion in medical cannabis sales in the first half of 2022. With only 22 businesses licensed to legally operate in Florida, cannabis licenses in the state are considered extremely valuable and have sold for well over $50 million. So, the industry has been buzzing with excitement over yesterday’s announcement by the Florida Office of Medical Marijuana Use (OMMU) that the long-awaited new licensing round will begin shortly!
Monday, December 19th, 2022, the OMMU issued Emergency Rule 64ER22-9, which sets the stage for an ongoing and revolving “batching cycle” of new cannabis licenses. While the next batching cycle has yet to be announced, it is expected that there will be a future rule announcement in the next 30 days. In fact, Florida’s cannabis law, § 381.986, Fla. Stat. (2022), legally requires the OMMU do so now that the litigation that was holding up new licensing has been settled. So, Florida’s over 776,365 active medical cannabis patients can look forward to some new product offerings in the coming year!
For cannabis entrepreneurs, Florida presents a unique opportunity for those that can afford it. The Florida cannabis license is unique in several ways, but one of the principal ways is that a licensed cannabis business in Florida can build and manage an unlimited number of production and retail facilities. This makes Florida the only market in the US where the capacity of a cannabis business to grow is entirely dictated by the appetite of its consumer market. The other major unique 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 you 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.
Florida Cannabis Licensing Update
The new licensing opportunity in FL is expected to be similar to its Pigford/BFL Batching Cycle, which closed in March of 2022 and was only open to certain social equity applicants. For instance, the cost to submit the application is a whopping $146,000, which is more than double the $60,830 charged during the initial application round but is similar to what was charged to the Pigford/BFL Applicants. The application is also fairly similar to Pigford/BFL, including in its scoring criteria that awards points for having infrastructure and equipment already secured and constructed while awarding lesser points for plans to secure property and equipment. In other words, the barriers to entry to FL’s medical cannabis market will remain high and Florida is likely to remain a market with a small group of large-scale players.
There is an immediate and potentially lucrative opportunity in Florida right now, but it remains an opportunity that likely only vertically sophisticated and well financed businesses will be able to exploit.
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