Floridians have been preparing participate in the marijuana market long before the passage of Amendment 2. The burgeoning cannabis market is a dream situation for investors and entrepreneurs: from lawyers to doctors to investment bankers, there isn’t one sector of big business in Florida that doesn’t have its hungry eye on how to participate in the cannabis space. But while lawmakers meet this session to establish the legal framework for Amendment 2, Florida is left without legislative guidance on the issue leaving investors guessing on how to best employ their capital.
There are a number of ways to “read the tea leaves” on how Florida will treat the new MMJ market (“MMJ” is medical marijuana), but potential cannabusiness entrepreneurs would be doing themselves a disservice by structuring business plans, employing capital and otherwise making material decisions based on assumptions of how the law will be implemented. No doubt that investors want to get an early start on MMJ market participation, but the absolute most important and preliminary question has yet to be answered by Florida legislators: will Florida require a vertically integrated system similar to the existing Compassionate Medical Cannabis Act of 2014, or will it adopt a version of the “Brandes Bill” (SB 614), which aims to repeal Florida’s existing MMJ law and establish four separate functional licenses: cultivation (grow), processing (plant into oil), transportation and retail (dispensaries)?
A vertically integrated system requires a market participant to cultivate and produce their own product, process it (whether they intent to sell flower or oil or both) and sell it at its own retail dispensary store. The only independent component to a complete vertically integrated system is the testing labs: the product will have to be tested and approved by an independent laboratory for pesticides and other potential hazardous substances (a list of which has yet to be compiled by the Florida Department of Health or Florida Department of Agriculture) prior to providing it to consumers. The vertically integrated system is hotly contested: the start-up capital required is tremendous and limitations on supply, strains, genetics and competition is more apt to occur.
The Brandes Bill proposes a framework similar to states like Oregon and Washington: entities will have the ability to operate as a licensee for one particular sector of the industry – four separate licenses available in total – so a grower can focus solely on growing without being required to operate a processing lab and a retail store. Of course, if a company wants to vertically integrate, they are able to do so. Proponents of the multiple-license system enjoy the concept of increased competition and easier access to the marketplace; as always, the time, place and manner in which the licensees can operate will be left to local governments, which temper industry saturation and exposure of unwanted MMJ businesses in school zones and residential areas.
The opportunities available in the cannabis space are so abundant it boggles the mind. Regardless of your position on the matter, whether you believe in legalization, decriminalization, medicinal or recreational – or don’t believe it in at all – chances are your industry will be affected by Florida’s new MMJ framework, so keep your eye on Tallahassee closely this year and take advantage of this historical movement!
By Mark NeJame
Contributor Vanessa Louise Braeley