Florida’s Pot Industry Suffered A Major Loss In November. But It Won’t Easily Be Dethroned.

TALLAHASSEE, Florida — Florida is poised to see a rush of new medical marijuana companies, after Gov. Ron DeSantis’ administration recently issued 25 long-delayed licenses to operate in the state.

But industry experts say that the market to grow and sell marijuana has changed significantly as the state’s growing stockpile of available licenses sat dormant for years — giving new companies only a narrow opportunity to break into the entrenched, $2 billion industry in the Sunshine State.

The ever-increasingly difficult path faced by the new licensees is a welcome consolation prize for the big medical marijuana companies already operating in Florida, which just lost a bruising fight with DeSantis over legalizing recreational marijuana use for adults in the nation’s third-largest state. Had they won, existing pot companies would have been at the front of the line to sell non-medicinal products in a potential $6.1 billion dollar industry.

“It’s going to be really difficult for any of these licensees to even put a dent in the current industry, especially in the way of prices,” said Michael Minardi, who led a previous pot legalization ballot initiative. “And after so many years I think people are sick of the quality and prices, if they can find something better on the black market.”

DeSantis warred with the Amendment 3 campaign — which was primarily bankrolled by Trulieve, the state’s largest medical marijuana company — warning voters that the measure was backed by a “cartel” of wealthy medical marijuana companies that wanted to create a monopoly.

In response, the campaign behind the measure told DeSantis that he could break up the so-called cartel by finally issuing more than a score of licenses that businesses are required to hold in order to sell and grow pot in Florida. But the Office of Medical Marijuana Use, which DeSantis’ office oversees, only began issuing new licenses after Amendment 3 had failed.

The 25 new licenses, which were issued late last year, were well overdue. They were meant to be distributed gradually as the state’s population of medical marijuana patients grew over the years, to almost 892,000 patients as of December. Instead, they sat with the Office of Medical Marijuana Use amid ongoing litigation that ended three years ago. Two lists of winning recipients of the licenses had been completed nearly two years ago.

Three of the licenses were designated by the Legislature for a group of black farmers who were part of a landmark class action discrimination lawsuit against the federal government. Another 22 licenses had attracted 74 applicants that included accounting firms and hemp companies.

The new licenses still face several steps before Florida will finally hand over the credential, but they could ultimately double the 25 pot companies that were already operating in Florida’s medical marijuana program. More licenses may seem like a solution to the “cartel” described by DeSantis, but a former lawmaker and two marijuana industry experts fear the new licensees will also face sky-high overhead costs and diminishing returns as the state’s oldest licensed pot companies continue to grow every day.

Former state Sen. Jeff Brandes, a St. Petersburg Republican who advocated for both legalizing pot and looser controls for medical marijuana before he was term-limited out of office, said DeSantis and the Legislature have no interest in addressing tight regulations that have led most of more than $2 billion in revenue to be collected by a handful of the oldest licensees.

“It became convenient for them to argue about it against the amendment, and now they want to put the genie back in the bottle,” Brandes said, adding he believes how companies are required to organize themselves will also limit the industry’s growth.

Florida’s vertically integrated licenses call for each company to be self-contained. Each licensee grows its own pot, and then uses those crops to manufacture products, and then sells those products in company-owned dispensaries. Wholesale purchasing of raw marijuana is prohibited, unless a sale is authorized by the state due to crop loss.

“They like the control and leverage that it provides,” Brandes said.

In other words, a new marijuana company would need to build facilities to grow marijuana and manufacture products, open at least one dispensary, and hire employees, before it can go into business. Zack Kobrin, a Fort Lauderdale lawyer who helps companies apply for the Florida licenses, said startup costs, depending on the growth strategy of the company, can easily reach $15 million. And the company will likely have to cover another $30 million in operating costs for the first two years.

Also unlike the first few years of the medical marijuana program, the number of investors has gone down, and other potential sources of cash have become limited, especially after Amendment 3 failed.“It’s so capital intensive, and because the capital markets are dry it makes it hard to raise enough money so you can scale competitively,” Kobrin said. “Vertical is absolutely driving up the cost and making it harder to do business in Florida.”

Kobrin said he advises his clients that the licensure process can take a while, but the winning recipients did not anticipate waiting since April 2023 or longer, when application periods were finalized. Still, the licenses could be worth the costly wait, since they have no caps on the size of a company’s overall “canopy” of growing marijuana, or opening dispensaries.

Also without recreational marijuana, thousands of patients who left the medical marijuana program are now getting new recommendations from a doctor. The state has seen a surge of about 10,000 new patients since the election, and doctor’s offices are booked for weeks.

“You have the ability to essentially scale up or as little as you want,” Kobrin said. “That’s what gives a license value.”

One of the recipients of the licenses is an Alachua County farmer who said he is ready to get into the market. Randy Rembert is the owner of the Hawthorne-based Rembert Family Farms, which became the first black-owned cannabis company in the state in more than 80 years after it began making hemp products.

He said he has watched as pot companies from outside Florida spent millions of dollars on building infrastructure and buying unnecessary equipment and supplies. He’s yet to take steps to build a grow room, but even with companies like Trulieve, which has opened 29 dispensaries in 2024 alone, Rembert said he is confident he can compete.

“A lot of people are going to run to buy a bunch of useless stuff that they don't need because they never actually cultivated cannabis before,” Rembert said. “If you don't have a farmer's mentality of buying what you need and keeping away from the stuff that you don't need until the right time, then no, some people would not be successful.”

And there is still the chance for expansion for the marijuana industry in the future. Amendment 3 earlier in November only narrowly missed the 60 percent threshold needed for passage. And an overwhelming 71 percent of voters legalized medical marijuana in 2016 in the first place by supporting a ballot initiative financially backed mostly by high profile Orlando lawyer John Morgan.

As Florida’s self-proclaimed “Pot Daddy,” Morgan said it would be challenging for new companies to get off the ground. He predicted that the state’s medical marijuana program may someday look like the state’s retail pharmaceutical industry, with a few companies handling most of the business. Still the licenses will remain in demand, Morgan said.

“They would be gobbled up in a minute,” Morgan said. “There’s never a shortage of fools to chase fool’s gold.”