Although much of the attention seems to be on California when it comes to the cannabis market, Florida quickly is making a name for itself in marijuana circles. The state has been adding approximately 2,580 medical marijuana patients every week. As of June 29, Florida's patient count stood at 144,557, an increase of 100% from the beginning of the year.
To put that in perspective, it took New York almost two-and-a-half years to get to 60,000 patients. It's even more impressive when you realize that Florida is a fairly restrictive state when it comes to its medical marijuana program. Flower for smoking is not allowed and edible products aren't available for purchase yet.
The state has tiptoed its way into legalization. In 2014, medical marijuana was approved but with only five licenses to be awarded. In 2016, voters approved a constitutional amendment that expanded the medical marijuana program. In order to institute the expansion, health officials were ordered to issue 10 new licenses. This included applicants who had legal challenges pending as of January 2017.
"The Florida market has issued 13 licenses," said Tyler Beuerlein from cannabis payment processing company Hypur Inc. "The license gives the company the ability to have their own cultivation property and 25 dispensaries. The value is substantial and some are going for as much as $50 million." Beuerlein noted that with the limited amount of licenses there is massive opportunity. "It is very appealing from an investment perspective," Beuerlein said.
Matthew Ginder of Greenspoon Marder, a law firm that works with cannabis companies, said companies such as Trulieve, Surterra, Curaleaf and Knox Medical have established an early presence in the state.
"There are other companies that have followed suit and are here now but may not have dispensaries open yet, such as AltMed, MedMen, IAnthus (ITHUF) , Liberty Health Sciences (LHSIF) and a few others," Ginder said. "Competition is expected to increase as the state issues additional licenses as patient count rises and multistate operators enter through acquisitions of existing licensed MMTCs (medical marijuana treatment centers)."
Ginder said that given Florida's population "and the amount of tourists that visit the state, an estimated 100 million annually, a fully implemented recreational program could generate a few billion dollars in revenue."
Many observers believe the question isn't if Florida will legalize adult-use marijuana, but when. Ginder said he believes the best chance of that happening is through a ballot initiative in 2020.
"There are several issues that the legislature needs to address on the medical marijuana laws," he said. "So, it is unlikely that the legislature will seriously consider passing a law to legalize marijuana for adult use. There will be an effort by a few groups to place a recreational marijuana legalization initiative on the ballot for the general election in 2020. Florida requires a voter approval of at least 60% to pass a constitutional amendment."
Brett Finkelstein, managing director at cannabis investment firm Phyto Partners, agrees that it will become a billion-dollar industry.
"Florida's medical marijuana market is projected to be one of the largest in the country," Finkelstein said. "The patient count continues to grow at a rapid pace and has already surpassed Illinois and New York -- programs that have been in existence for a much longer period of time."
The companies and their locations and/or activities in Florida are as follows:
Trulieve: Bradenton, Clearwater, Edgewater, Fort Myers, Gainesville, Jacksonville, Lady Lake, Miami, New Port Richey, Orlando, Pensacola, St. Petersburg, Tallahassee, Tampa, Vero Beach, delivery
Surterra Therapeutics: Deltona, Jacksonville, Largo, Miami Beach, North Port, Orlando, Pensacola, Port Orange, Tallahassee, Tampa, delivery
Curaleaf: Ft. Myers, Kendall, Lake Worth, Miami, Orlando, Palm Bay, Palm Harbor, St. Petersburg, delivery
Knox Medical: Fort Walton Beach, Gainesville, Jacksonville, Lake Worth, Orlando, St. Petersburg, Tallahassee, delivery
Liberty Health Sciences: Port St. Lucie, St. Petersburg, Summerfield, Tampa, delivery
Vidacann: Holly Hill, delivery
AltMed Florida (MüV): Apollo Beach, delivery
The Green Solution: Dispensing via delivery
GrowHealthy: Dispensing: via delivery
Columbia Care Florida: Dispensing via delivery
3 Boys Farm: Cultivation authorization only
Treadwell Nursery: Cultivation authorization only
KSGNF: Cultivation authorization only
Trulieve recently began the process of a reverse takeover with Schyan Exploration to go public on the Canadian Securities Exchange. Curaleaf is owned by the company PalliaTech, which also is planning on going public this fall. Surterra just made the news when its new board member, chewing gum heir William Wrigley, helped the company raise $65 million. No doubt it, too, is planning on having stock to trade.
Who are these patients?
While the average cannabis patient age group tends to be younger, Florida contains the highest percentage of people over 65, Finkelstein said.
"There will be several types of cannabis patients in Florida, though the largest category for growth will be the senior citizen population," he said.
Consumer Research Around Cannabis looked at the Miami-Fort Lauderdale greater metropolitan area and found that 63% approve of cannabis use in one form or another. The organization surveyed adults over the age of 21 who have bought marijuana from a legal dispensary and found the average cannabis consumer in this area to be an financial optimist and a white-collar worker who voted in the most recent election. About 42% approved of both recreational and medicinal marijuana, with 16% approving of medical marijuana only.
Around 72% of the consumers were employed and 42% were investors with CDs, IRAs and 401(k)s. About 30% of these consumers made more than $100,000 a year, while 56% own their own homes, which had an average value of $324,281.
Florida is a market of consumers with a strong financial footing who can afford to buy these products. With the limited licenses and a who's who of cannabis companies entering the market, investors will want to focus on the names that are planting their flags.