Legalizing Florida Marijuana Flower Comes Down To Dollars And Sense

By Andre Borque, Forbes 2/2019

The Florida House of Representatives has passed a new bill that would allow the previously outlawed smoking of medical marijuana in the form of pre-rolled filtered cigarettes, representing the evolution of cannabis attitudes and policy.

Florida’s marijuana market

In 2016, Floridians overwhelmingly approved legal medical marijuana use, with 71% of voters in favor of Constitutional Amendment 2. Since then, Florida lawmakers and regulatory bodies have dragged their feet on creating a functioning medical marijuana industry. It took seven months after legalization in 2016 for the Florida State Senate to adopt regulations. Many advocates and patients were frustrated by the sluggish response and the restrictive regulations. Their primary concerns were the ban on smoking flowers and the requirement for vertically integrated cannabis companies coupled with a cap on the number of dispensaries. And though medical marijuana is now legal in Florida, its high cost puts it out of reach for many residents. Gaining access to the plant, alone, can run upwards of $500 a year. Florida’s St. Augustin Recordreports one office charges a $250 fee for a new patient evaluation, and $100 for an optional follow-up 70 days later. The 210-day re-certification requirement is another $250, and only two refills are allowed before the patient must be re-certified. In short, the country’s third most populous state made medical marijuana expensive, limited, and cumbersome to manage. In spite of this, Florida’s medical marijuana market is expanding quickly and has an astronomical ceiling, with projections estimating $1.3 billion in sales by 2021. At the start of 2019, the number of active medical marijuana patients grew to over 168,000, making it easily one of the biggest medical marijuana markets in the country. But it seems many of the difficulties facing the industry are set to change with the new Republican Governor, Ron DeSantis. In 2018, lawyer and activist John Morgan, who helped finance the campaign behind Amendment 2, filed suit to challenge the ban on smoking medical marijuana. The courts then overturned the ban on smoking medical marijuana, but former Governor Rick Scott’s administration appealed, threatening to drag the decision out for months or years. Shortly after taking office in 2019, newly-elected Governor Ron DeSantis announced he would drop that lawsuit and work to make smoking marijuana flowers legal. “What the Florida Legislature has done to implement the people’s will has not been done in accordance with what the amendment envisioned,” Gov. DeSantis said at a press conference on Jan. 17. “Whether they (patients) have to smoke it or not, who am I to judge that? I want people to be able to have their suffering relieved. I don’t think this law is up to snuff.”

Florida’s marijuana future

Currently, the only products available to medical marijuana patients are concentrates and oils. Not all cannabis consumption methods are made equal, though. The concentrates and oils currently available in Florida require more processing and, thus, cost more. Furthermore, the potency and delivery method of concentrates and oils provide different levels of relief with shorter durations than edibles or flowers. This is critical for medical marijuana patients, who may need the slow release of edibles to treat long-lasting symptoms or the fast-acting power of a vaporized concentrate. Following DeSantis’ announcement, medical marijuana patients will soon be able to purchase marijuana flower to smoke, in its most traditional form. Though, since the current guidelines in Florida don’t address how dispensaries should sell flowers, it may take some time to create those regulations. Richard Blau, a Tampa-lawyer who specializes in medical marijuana believes the Florida legislature may not have had the qualified personnel to do the appropriate marijuana research, advising, and input to structure more comprehensive laws when the medical program went into place. “Ultimately the (Florida) Office of Medical Marijuana Use has not functioned the way that people expected and it’s hard to say why,” Blau said. “But it seems like there is now a great deal of pressure from the governor’s office on the Legislature and the agencies making the rules. I would think we may see some changes very soon.” The removal of the ban on smoking marijuana is not the only change coming to the Florida medical marijuana industry. DeSantis also intimated that he’d like to change the rules governing the way the industry works. Currently, Florida’s medical marijuana market is vertically integrated, meaning the grower produces the products, distributes them, and controls the retail locations. The result is a handful of companies controlling almost all the state’s production and retail locations. Thereby yielding to the very antithesis of competition, and denying consumers a broader choice in products.

Banned marijuana products reconsidered

Florida’s legislature is also working to create rules for edibles, which, like flowers, are currently banned from sale at dispensaries. As The Miami Herald reports, “Agriculture Commissioner-elect Nicole ‘Nikki’ Fried, a former medical marijuana lobbyist, said her team is ‘ready to implement edibles rules’ to help bring more access to patients across the state.” And cannabis companies are already preparing for what they believe to be an inevitable change in Florida marijuana laws. Just this week, medical marijuana company Trulieve announced a partnership with Colorado company Love’s Oven to bring cannabis-infused edibles to Florida, even though laws to sell in the state do not yet exist. With the proposed changes from Gov. DeSantis and his team, the future of Florida’s medical marijuana market is bright: more competition, more products, more choices for medical patients. With the addition of flowers and edibles to dispensary shelves, Florida will be able to provide the products cannabis users desire. According to a survey from MJ Freeway and New Frontier Data, flowers are still the most popular way to consume cannabis, though concentrates are closing the gap. Flowers remain the simplest way to consume cannabis, with minimal processing, though for many the smoke is a drawback. In recreational states like California and Colorado, edibles and drinkable cannabis products are quickly becoming the preferred delivery method for many users. Taken altogether, I expect prices for medical marijuana patients to go down while sales continue to increase at an exponential pace, driven in 2019 by access to flowers and edibles. Access to marijuana in its raw flower form may bring about greater participation in the state’s program, as well. “States that allow flower in their medical marijuana program see a much greater percentage of patients,” James Yagielo, Chief Executive Officer of HempStaff told me in a written interview. His logic is based in the fact that most black market cannabis users use marijuana flower. Without it being available in Florida dispensaries, the black market will continue to thrive – even for those that are willing to pay the higher prices to legally obtain cannabis “From a medicinal purpose smoking flower is the best source of relief for some patients, that can not be achieved any other way,” Yagielo continued. “Once we see flower added, we expect the patient count in Florida to rise exponentially.” This move would instantly make the new governor popular with much of the state, as 72% voted for medical marijuana, and recent polls show most of them want flower sold as well in dispensaries.  While there is not much monetary gain for the State of Florida towards flower since there are no taxes on medical marijuana in Florida, what it may lead to is an increase of licenses the state issues, so money could be made by the state from license fees from additional licensed cannabis businesses in the future.

Recreational marijuana: A savior for Florida’s environment?

The outstanding question for many Florida residents who don’t have one of the qualifying conditions to receive a medical marijuana license is when Florida will legalize adult recreational use. If John Morgan, the attorney behind 2016’s Amendment 2, has his way, Florida will have another amendment on its ballot in 2020 to legalize recreational use. The prospect of recreational use in Florida certainly has cannabis companies salivating. Another market to rival California means a huge portion of the U.S. population would be living in a recreational use state, putting further pressure on the federal government to relent and reschedule marijuana.

For Florida, the prospect of recreational marijuana has an extra incentive: taxes. Currently, medical marijuana sales are not subject to sales tax—which is good, since these patients already face sky-high costs for monthly care.

Recreational marijuana, however, would be subject to sales tax of at least 6%. Even in California, where recreational sales have failed to live up to projections in 2018, the state still raked in hundreds of millions in taxes. As of May 2018, Florida had made just over $17 million off medical marijuana. If Florida’s future recreational market is anything like California’s it could rake in hundreds of millions more per year. Florida is going to need all of the money it can get to deal with its unfolding environmental disasters. Months after the lethal algae blooms killed an untold number of aquatic life and cost local communities millions in tourism dollars, Gov. DeSantis demanded that the entire governing body of South Florida Water Management resign, citing their cozy relationship with special interests—namely, the sugar industry. Many critics point to the sugar industry’s effect on the environment as a primary driver of the long and lethal algae blooms along the state’s coastlines and lakes. At the same time, Gov. DeSantis signed an executive order, which, according to ABC Action News, will allocate “$2.5 billion over the next four years for Everglades restoration, the establishment of a Blue-Green Algae Task Force, the creation of the Office of Environmental Accountability and Transparency, the appointment of a Chief Science Officer and instruction to the South Florida Water Management District to start the next phase of the Everglades Agricultural Area Storage Reservoir Project design.” The executive order will help counter the $700 million in cuts to water management during Rick Scott’s tenure as Governor and the EPA’s continuous budget and regulatory rollbacks. While Florida currently has a surplus of over $200 million, the Legislative Budget Commission warns of future budget shortfalls next year that may require spending cuts to address. The changes Gov. DeSantis has made to the medical marijuana industry will help create more jobs which, in turn, will create more economic activity in the state. However, without sales tax on medical marijuana, the state is missing out on a potentially massive revenue stream that can help the state address the ever-increasing costs of addressing climate change and health care. Recreational marijuana can unlock new revenue in a tax-averse state at a time when billions of new dollars are needed to help repair the state’s waterways. It’s by no means the only reason for recreational marijuana in Florida, but in fiscally-conservative Florida, the opportunity for more tax revenue is a better alternative to the traditional budget cuts. Changes to controversial medical marijuana regulations have advocates cheering, but the ultimate prize of legal adult recreational use makes sense for a state that needs new revenue to address monumental climate concerns. Let’s hope the changes to medical marijuana laws in Florida are a sign of more to come.