Florida Medical Marijuana Rules For New Businesses
FAS CPA & Consultants
After waiting many years, the Florida Department of Health released rules to guide applicants into the cannabis industry. The Department of Health announced two emergency regulations for applicants seeking a license to operate a medical cannabis treatment center to cultivate, process, and dispense medical cannabis.
⇒ The state will issue licenses gradually in batches.
⇒ Insiders say that batching licenses will help the state avoid the heavy litigation of the past.
⇒ Unsuccessful applicants will get another chance with the next batch, so litigation will not be their default reaction.
⇒ It is unclear when and how many licenses the state will issue in the first batch.
⇒ Applicants who plan to convert citrus processing facilities into cannabis processing will get preference.
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Medical Cannabis Licenses are very valuable. Successful candidates can sell their licenses for tens of millions of dollars.
⇒ A 2017 “Pigford” Bill requires the State of Florida to set aside one license for black farmers that the US Department of Agriculture sidelined.
⇒ As a result, in 2022, the state awarded a license to Gwinn Brothers Medicinals
⇒ Twenty-two licensed firms currently control the Florida medical cannabis industry, of which only nineteen have set up stores.
⇒ Incessant litigation and regulatory inertia constipate the market. For example, the license awarded to Gwin Brothers is already subject to litigation.
Florida Law mandates four new treatment center licenses for every 100,000 new patients that enter the market. Still, since 2015 only one new license has been issued.
⇒ The state must allow twenty-two new operators to commence business to serve the 776,000 patients in Florida.
⇒ The highest-rated applicant, Hatchett Creek Farms, failed to secure a license because its majority shareholder died during the process.
⇒ Unsurprisingly, the deceased shareholder’s family is now the litigant against the Gwin Brothers, claiming they should get the so-called “Pigford” License.
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Applications cost money: most applicants, excluding the Pigford License applicants, will pay a nonrefundable application fee of $146,000.
⇒ The second new rule makes it even more expensive for cannabis enterprises to renew their licenses every two years. The renewal cost increased from $60,000 to more than $1 million.
⇒ The high application and renewal fees might sideline small farmers. Only wealthy individuals and groups can apply.
⇒ Some insiders advocate for an open market that will not obstruct entrance to the market.
Republican politicians want to reform the entire process. Senator Joe Gruters, R-Sarasota, reckons the market would be well-served by increased competition.
⇒ Some believe an application process based on an artificial designation like ‘market need’ is ripe for abuse. The state can merely determine that no need exists. It is easy for Florida not to issue licenses if that is their agenda.
⇒ Some believe that increasing applications signal more competition, which will benefit patients.
Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.
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