Florida is set to start selling medical marijuana on Tuesday, but just one company is approved to dispense it and cannabis investors are divided on whether or not now is the right time to invest in the state's nascent pot industry.
A half dozen businesses were granted licenses to cultivate the medical cannabis but as of Thursday evening Hackney Nursery, doing business as Trulieve, was the only one to receive approval to dispense it, according to Mara Gambineri, a spokeswoman for the Florida Department of Health. Trulieve plans to sell medical cannabis at its retail store in Tallahassee and its website indicates the company eventually intends to have locations in three other cities.
"We're not talking about having a dispensary on every street corner," said Richard Blau, an attorney who leads the regulated products practice at the Florida law firm of GrayRobinson. "It is still a very controlled, closely tailored and very heavily regulated structure."
Florida's medical cannabis law dates back two years ago when the state legislature passed the measure and Governor Rick Scott signed it. A series of legal challenges held up the rollout of the program and also had the effect of reducing the number of applicants.
Florida's Compassionate Medical Cannabis Act of 2014 was originally designed to help a specific group of patients who suffer epilepsy, seizure disorders or certain cancers. And in the last legislative session lawmakers expanded allowed use to terminally ill patients.
The marijuana approved for sale next week is a low-THC cannabis and medical cannabis. The low-THC (or tetrahydrocannabinol) strain doesn't produce a "high" and is frequently given through injection or pill form. THC and cannabidiol are some of the main components found in marijuana plants.
Amendment Two on the Nov. 8 ballot in Florida would broaden medical cannabis usage to individuals with "debilitating" medical conditions certified by a licensed physician. It also would greatly expand the consumer base for the state's marijuana industry.
Medical marijuana could be a $1.5 billion industry in Florida by 2020 and represent a 7 percent share of the total U.S. legal cannabis market, according to ArcView Group, an Oakland, California-based cannabis research and investment firm.
"Florida stands to be one of the biggest medical marijuana markets," said Leslie Bocskor, president of Las Vegas-based cannabis-focused investment firm Electrum Partners. He's an advisor to the United For Care group backing passage of Amendment Two in Florida and he expects there's money to be made in the industry.
"We could see probably close to $1 billion invested in the infrastructure of the Florida market," said Bocskor. "The aging population there is the demographic that tends to skew most aggressively toward being new adopters of medical cannabis."
Some take the opposite view and counter that the market is too restrictive to allow for major growth.
"From an investor perspective, this is very early and there's still a lot of risk," said Morgan Paxhia, founder and chief investor at Poseidon Asset Management, a cannabis-focused hedge fund based in San Francisco. "There is certainly potential long term, but in this existing program, it's very risky."
The entities licensed to grow, process and dispense medical cannabis in Florida all are required to meet special requirements, including having a plant nursery in business for at least 30 years in the state and showing they grew at least 400,000 plants. They also are required to post a $5 million performance bond and pay fees to the state.
"They wanted a small number of capable, experienced horticulturists that have a proven track record that they can raise a lot of plants successfully," said Blau.
Out-of-state investors with experience can invest in the business but the Florida nursery has to have equity of at least 25 percent in whatever consortium makes the application.
Nearly half of the states and the District of Columbia have passed legislation or ballot measures to legalize the possession and distribution of marijuana for medical purposes, and four states — Washington, Oregon, Alaska and Colorado — have legalized adult recreational use.