Are there big changes on the way for Florida’s cannabis industry, or will big business win out?
There have been some big changes in the Florida Cannabis industry of late. A Florida court has ruled that vertical integration was ‘unconstitutional.’ In a press conference, Governor Ron DeSantis announced that he believed that the way vertical integration had been established was ‘not based on free-market principals.’ This could be very exciting news for new operators looking to establish medical marijuana businesses in Florida.
What Is Vertical Integration and Why Are People Against It?
Vertical Integration is commonly used in the cannabis industry to describe companies which operate multiple parts of a supply chain. For example, one company may grow, cultivate, distribute, and sell cannabis rather than focusing on just one specific part of the industry.
The problem with vertical integration is that it prevents new companies, particularly small operators, from entering the market. This means that consumers suffer from not only a lack of choice when it comes to products, it also creates less competition which traditionally pushes prices down and forces companies to pursue innovation.
Currently, cannabis companies can only sell the products which they produce themselves and can’t sell competitors’ products or products made by other manufacturers.
Most states in the U.S. operate on horizontal integration. This means that companies must apply for a different license for each part of the operation. (ex. Distribution, Delivery, Retail, Cultivation, Manufacturing etc.) You could end up with a version of vertical integration if companies possess multiple licenses. However, in Florida, a license automatically allows a company to operate all links in the supply chain.
Recent Ruling Found Vertical Integration Unconstitutional
A recent ruling by the 1st District Court of Appeal in Tallahassee has called the current vertically integrated medical marijuana system unconstitutional. Because this deals with the constitutionality of a state statute, the next step will be the Florida Supreme Court. This process could take anywhere from 1-2 years to complete. This may be the pathway that leads to the issuance of additional cannabis business licenses in Florida.
Big Marijuana Businesses Apply Pressure
There is no denying that cannabis is a big business in Florida. For example, Truelieve generates a large percentage of their income from the medical marijuana industry in Florida, and they are one of the largest cannabis companies in the United States.
Just six vertically integrated cannabis businesses in Florida currently operate 122 of the 144 dispensaries in the state. These businesses likely do not want to see is more licenses being granted, which would allow for more competition.
Evidence of their lobbying could be behind Governor DeSantis’ recent change in position regarding vertical integration. His office recently asked the appellate court to reconsider their ruling. There is no denying that the current operators in the Florida cannabis industry would like things to remain exactly as they are.
want to apply for a florida cannabis business license?
If you are seeking professional legal advice regarding cannabis laws, don’t hesitate to contact our office directly.