Florida’s top multi-state operators are poised to cash in now that the state Supreme Court has made it official that voters will get the chance this November to legalize adult-use cannabis in the Sunshine State.
Trulieve (TCNNF:OTCMKTS) was basically the sole financier of the Smart & Safe Florida political action campaign, providing $40.05 million, prior to the court ruling, according to the Florida’s Division of Elections campaign finance database. The only other listed contributors were two individuals that gave a combined $124.58.
Two days after the court’s April 1 ruling, the Smart & Safe campaign announced that some of the state’s other MSOs had joined the political fray with $15 million more in funding, including Verano Holdings Corp. (VRNOF:OTCMKTS), Curaleaf Inc. (CURLF: OTCMKTS), AYR Wellness Inc. (AYR A:CNSX), Cresco Labs Inc. (CRLBF: OTCMKTS), Green Thumb Industries (GTBIF: OTCMKTS) and INSA.
Legalization has consistently polled close to if not exceeding the 60% required to pass, meaning there is a strong possibility that Florida becomes a major cash boon to established operators in the medical market that plan to cross over to adult use.
If the ballot measure passes, the state legislature would still have to write the actual laws that would govern a commercial market, and there is no guarantee the market would include new cannabis operators.
Licensed MSOs corner the medical market
Unlike most states with legal cannabis markets, Florida licenses operators rather than the operations themselves. The state currently has 24 license holders in operation, according to the CRB Monitor database.
There were 877,954 registered medical patients in the state as of March 29, according to the latest weekly report from the Office of Medical Marijuana Use. Of the 24 license holders, 19 operate 627 dispensaries. Those dispensaries sold over 111,000 ounces of flower from March 22 to March 28.
Trulieve owns 134 dispensaries in Florida, according to the CRB Monitor database, cornering 21% of the total market, while Verano has 74 operating as MUV, Ayr Wellness has 63 and Curaleaf owns 61. In the mid-range, Surterra Wellness has 45, Green Dragon has 37 and FLUENT has 35, while GTI has 33.
“I think that there is no doubt that there will be an increase in acquisitions,” said John Hickey, lead partner for Hall Estill’s cannabis law practice group. “Florida is a big market. This could have a significant impact on the extent of the availability of marijuana for the citizens of this state, in perhaps one of the largest markets in the country.”
Legal fight over ballot language
The fight to legalize cannabis on the ballot in Florida was drawn out as Attorney General Ashley Moody took the question to court, ultimately landing in front of the Supreme Court of Florida, which upheld the legitimacy of the question.
“Our role is narrow — we assess only whether the amendment conforms to the constitutionally mandated single-subject requirement, whether the ballot summary meets the statutory standard for clarity, and whether the amendment is facially invalid under the federal constitution,” wrote Justice Jamie Grosshans in the 5-2 ruling. “In light of those limited considerations, we approve the proposed amendment for placement on the ballot.”
Moody argued that the question actually covered two separate legal issues, decriminalizing cannabis and commercializing cannabis. She also argued that the wording of the question was too vague and that it subverted federal law. The state supreme court was not convinced by this.
“We, however, disagree. Allowing businesses to distribute personal-use marijuana, and authorizing individuals to possess it, are logically and naturally related as part of a dominant plan or scheme,” wrote Grosshans.
The opinion also noted that the language of the ballot question allows for the legislature to follow up on its passage with specific language to govern the adult-use market, as opposed to the attorney general’s claim that the success at the ballot box would allow all existing medical dispensaries to immediately start selling adult-use cannabis without any regulatory oversight.
Justices Renatha Francis and Meredith Sasso dissented for separate reasons. Francis agreed the question encompassed more than one subject, while Sasso challenged the clarity of the question’s language.
“As it relates to this case, personal use and commercialization of marijuana aren’t even two sides of the same coin. If the matters directly connected to the “subjects” are different, it’s plain to me that the subjects themselves are different,” wrote Francis. “At bottom, using marijuana as an individual and growing it for commercial sale and consumption implicate different criminal and regulatory schemes.”
Separately, Sasso said she agreed with the majority that the ballot question was properly confined to a single subject, but that the question’s ballot summary was misleading in that it “allows” existing medical dispensaries and “other state licensed entities” to enter the adult-use market. Sasso said voters might read that and assume legalization would mean more licensing opportunities when there is no guarantee that will happen. In the event of a successful vote, the state legislature could still opt to only open adult-use to existing medical operators.
