Although Florida is dragging its proverbial behind when it comes to legalizing marijuana for adult use, that isn’t stopping one of the largest cannabis companies in the U.S. from moving in anyway.
Las Vegas-based luxury cannabis firm Planet 13 recently agreed to purchase a medical marijuana license from Florida-based Harvest Health & Recreation for a cool $55 million. It wants to lay claims to a spot on the fully legal scene before it takes hold.
The plan, pending licensing approval, of course, is to eventually set up superstores, similar to its Vegas digs, in various high tourism areas, including Miami and Orlando, to get a jump start on slinging weed to the 21 and over masses. In the interim, however, Planet 13 will set up smaller dispensaries to service the state’s medical marijuana clientele.
Although Florida’s fully legal cannabis trade could take a few more years to come to fruition, the company believes dropping ridiculous amounts of cash on a license is a viable strategy when playing the American Weed Wars.
"Florida has long been one of our most coveted markets with over 20 million residents, 130 million annual visitors and incredible consumer demand already demonstrated in the medical program," Larry Scheffler, co-CEO of Planet 13, said in a press release. "It was important for us to enter the market prior to a transition to adult-use to put the pieces in place to capitalize on this market in both the short and long term."
Will Planet 13's Strategy Pay Off?
The kicker to this wild development is that Florida is a vertically integrated state. This means cannabis companies are responsible for growing and processing the crop and handling all distribution without subcontracting labor and services. Only in some instances are outside pot products permitted to be sold.
Planet 13 cannot just swoop into Florida and start selling a surplus of weed it already has on hand. It's going to have to play Florida's game, a system that some believe was designed to cater exclusively to companies with deep pockets, thereby keeping a tighter leash on the industry and its players.
Planet 13 certainly has deep pockets – raking in more than $70 million in total revenue in 2020 – so it will fit right in with Florida’s regulatory model.
Meanwhile, Florida's medical marijuana market, officially launched in 2018, is finally starting to flourish.
The original framework didn't allow patients to smoke cannabis. However, the no-smoking rule was overturned in 2019 by Governor Ron DeSantis.
But the state's 607,132 registered patients still aren’t enough to support an entire industry – presumably one of the main reasons Harvest Health & Recreation was looking for the eject button in the first place.
Therefore, some cannabis advocates think it is borderline lunacy for Planet 13 to drop millions of dollars to slip into Florida's current MMJ market, one with only a sliver of hope of becoming something more substantial and profitable in the near future.
"To me... that makes this a mildly puzzling choice," wrote cannabis industry leader Brett Puffenbarger in a recent post on LinkedIn. "I'm just trying to point out that it's a lot less straightforward for them than the headlines make it appear."
It probably is.
The Potential for Adult-Use Cannabis in Florida
The only way for recreational marijuana to take hold in Florida is for lawmakers to step up and pass legislation.
Either that, or a cannabis advocacy group needs to pour millions of dollars into a ballot measure campaign – the same way the Florida Medical Marijuana Legalization Initiative, also known as Amendment 2 was made possible – and hope like hell it gains enough public support to go the distance.
But Florida lawmakers are none too keen on passing legislation that allows residents and tourists to buy and consume legal weed. Well, at least some aren’t. It's the same old broken record: Democrats keep pushing to legalize the leaf every session while Republicans, with control over both legislative chambers, continue to oppose and block.
Still, the best chance for legalization in Florida is through a ballot measure.
But whatever ballsy group of cannabis superheroes decides to push a ballot measure to legalize the leaf is going to have to come loaded for bear. All ballot measures designed to amend the state constitution must be granted permission to move forward by the state Supreme Court.
If one is cleared for phase two – not an easy task – hundreds of thousands of verified signatures must be collected within a short amount of time to claim a spot on the ballot. That's when beaucoup bucks from pot-friendly donors will need to be poured into aggressive advertising and marketing campaigns to ensure the average voter is fully aware of the proposal and what it entails. Remember, it will take at least 60 percent of Floridians to vote “yes” on any marijuana measure to pass.
Make no mistake about it; most Florida voters are prepared to do that. They want to see a fully legalized cannabis market take shape in their neck of the woods.
A poll taken earlier this year by Florida For Care finds that 76 percent of the state's voting public believes in establishing a taxed and regulated cannabis market for adults 21 and older. They could get their wish, too, by 2023, according to a market report from BDS Analytics, giving way to the third-largest cannabis market in the United States by 2026.
Planet 13 appears to be investing based on these optimistic projections. The company seems to understand the value of Florida's market potential and is staking its claim before governmental controls and changing laws make such a leap more challenging.
If you’re worried that Planet 13 is taking an enormous, financially devastating risk by spending $55 million on a piece of paper for permission to peddle pot, don’t be. We’re certainly not.
For starters, the company’s stock is up nearly 300% from last year. It continues to open new locations nationwide and it breaks sales records month after month.
To that end, Florida’s medical marijuana market could be worth more than $1.5 billion in 2021, even without adult use.
Rest assured, there is more than enough opportunity in this equation for success. According to cannabis market analyst Melissa Pistilli, “Regardless of whether adult use gets the green light” by 2023, “investors should still consider the Sunshine State as a premier cannabis jurisdiction.”
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