Finally Some Smoke, Still No Fire in Florida’s Cannabis Market
Craft cannabis never stood a chance once the big money came to town
When Florida voters approved the state’s stab at a medical marijuana market back in 2016 many undoubtedly had visions of Crippy and Triangle Kush dancing through their heads but the buzzkill came quick when the state squashed the sale of any form of smokable cannabis flowers to registered patients. Deemed “unsafe” by the former governor Rick Scott, voters flexed their might once again and kicked him to the curb, replacing him with the marginally more cannabis-friendly Ron DeSantis who, to his credit, lived up to a major campaign promise by ending that ban on buds in March of this year.
Under the new law, effective from March 18th, 2019 a qualified physician in Florida can now recommend smoking as an appropriate delivery system for medical marijuana patients. It took corporate cannabis giant Trulieve roughly 3 days to put product on their shelves and begin selling it to the eager public. Given their massive market share and early entry into the smokable sector of it, the company still accounts for roughly 45% of all smokable cannabis sales in the state. However, that number is being persistently eroded by other well-funded entities looking to catch the wave.
MedMen Inc., for example, reportedly dumped over $50 million to acquire a local cultivation license with the rights to open a dozen dispensaries. When it comes to multi-state operators carpetbagging the Florida market, they are not alone as the number of dispensaries in the state has shot up by 70% since the smokable flower ban was lifted in March. Florida now boasts 187 legal pot shops, compared to 109 in early spring, many owned by outfits headquartered in places like New York, Chicago, California, Arizona, Atlanta, and even in other countries.
Smokable flower is just as attractive to manufacturers and retailers as it is to consumers as its cost of production is far lower than concentrates, edibles, or other product types, but this rampant license stacking (Trulieve controls 38 of the state’s 187 stores, or roughly 1 out of every 5, and Canadian company Liberty Health Sciences has 19 more) cannot be good for the consumer as it drastically limits both competition and disparity of product on the market. The state placed a ridiculous “cap” of 35 dispensary licenses to any one entity, but Trulieve and Surterra sued and won the rights to open as many as 49 each.
Florida is currently the nation’s fastest growing medical marijuana market with over 280,000 registered patients and counting. Since ending the ban on smokable flower, state-sanctioned dispensaries have supposedly pushed upwards of 15,000 ounces out the doors as each patient is allowed to purchase up to 2.5 ounces of flower every 35 days with a doctor’s recommendation.
Now, smokable flower products make up an average of 50-60% of a dispensary’s weekly sales and the state estimates that these products add up to roughly $3.5 - $5 million in sales revenues each week. This has led to widespread reports of a “flower shortage” in Florida, a place whose name literally means “Land of Flowers”. This has helped Trulieve maintain their top position, as their operation was firmly rooted when the ban was lifted while many others are relatively late to the game.
With companies spending tens of millions of dollars just to acquire MMJ licenses in Florida, then that much again to build out vertically integrated operations consisting of cultivation, processing, and retail locations, it remains to be seen whether or not these massive investments will bear fruit, or literally go up in smoke.