February 23, 2020

Marijuana in Florida: This Bud's for Us

Headed by Wall Streeters and MBAs and backed by deep-pocketed investor funds, more than 20 companies are fighting for dominance in the era of Big Pot ushered in by voters.

Mike Vogel | 9/25/2019

‘Proven brands’

Amid the competition, operators are seeking to differentiate themselves by brands, formulations, advice, health claims and delivery systems — from vape pens to transdermal patches. VidaCann, for example, has the Florida rights to Charlotte’s Web medical marijuana, a prominent brand, and to Tikum Olam, an Israeli brand that touts its status as research-supported. “We have these proven brands,” says Peyton Moseley, VidaCann’s vice president of product development.

Legal in Florida only since March, smokable marijuana has quickly taken off. It comprises 40% to 60% of sales nationally in markets where it’s legal, says Livingston, the industry researcher. The problem for operators is that it has less value added than THC processed and delivered in other forms. Medical marijuana generally sells at 14 cents per milligram, says Livingston.

Vita says Columbia Care’s focus is on consumers interested in patentable products and willing to pay a premium for quality. He has said the company’s fastest-growing segments are women and Baby Boomers.

“Health and wellness consumers and medical consumers are accustomed to paying for that type of value. More so than somebody who’s just looking to have a good time at the Pink Floyd laser show,” Vita told analysts in August. Vita also promotes his company as having the “first legal credit card” for buying marijuana. Since marijuana remains prohibited federally, customers and operators have to conduct business in cash or find a work-around.

Vita — as do other operators — predicts Columbia Care will be competitive even if Florida hands out more licenses or eliminates the requirement to own cultivation or if voters approve recreational marijuana. “We are fortunate to be in Florida,” he says.

The Evolution of the Revolution

Then: In 2015, the state handed out licenses to just five companies and required them to grow, process and sell medical marijuana in their own facilities — “seed to sale.”

Now: There are 22 companies, and more want in. The “seed-to-sale” requirement is under challenge.

Then: The state law authorizing medical marijuana required it to be low in THC, the compound that produces a “high.”

Now: A voter-approved constitutional amendment in 2016 expanded the definition of medical marijuana to include cannabis with higher levels of THC.

Then: The initial law outlawed smoking medical marijuana, requiring it to be consumed via vaping devices, pills or cream.

Now: Under Gov. Ron DeSantis, the state stopped fighting litigation over whether users of medical marijuana could smoke the products. In 2019, the Legislature passed a law that allows smoking.

Then: In 2017, the first year that medical marijuana stores opened, 34,197 people were approved by the state for medical marijuana cards.

Now: As of September, some 260,725 people in Florida had obtained the necessary qualification for a medical marijuana card from the 2,466 doctors in Florida authorized to do so.

Retail Wrinkles: Inside the Dispensaries

Since marijuana remains prohibited federally, banks could be subject to money-laundering charges if they do business with the firms that sell it. Most banks won’t offer services to marijuana companies and won’t loan money to them. That means customers have to pay cash or find a work-around such as a pre-paid card, though at least one company says it offers a true credit card.

Stores may have security, armed or unarmed, depending on the operator. Displays will have only dummy product packaging. Some segregate reception areas from the display and dispensing areas. Only the customer with the medical marijuana card can place a product order and then receive it at the counter, as at a pharmacy.

Sally Peebles, a Vicente Sederberg partner in Jacksonville, says there is promising support for the SAFE Banking Act of 2019 that is making its way through Congress, which would open up traditional banking services to those in the marijuana industry at the federal level.

Share Crop

According to federal law, marijuana is still illegal, so companies that want to go public tend to do so in Canada. Four of the five companies holding the original licenses to produce and sell marijuana in Florida and a number of newer competitors here have their original stock listings in Canada.

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