Although the November election is still months away, people in the cannabis industry are already planning to expand their business in Florida.
The Benzinga Cannabis Capital Conference is a place where investors can explore various businesses in the cannabis industry. The conference took place in Hollywood and had many attendees. A lot of them were talking about the possibility of Florida voters approving recreational marijuana on a ballot measure in November. The cannabis industry is challenging for businesses involved in growing marijuana, selling it, or complying with varying state regulations.
“The cannabis industry is relatively new, so there aren’t many people who have been involved in it for multiple generations,” explained Michael Johnson, the CEO of Metrc, a Florida-based company that creates technology to help with cannabis regulations. He made this statement on Tuesday. “You have many lessons that are being learned for the first time.” You have new businesses that are emerging because they are now allowed to.
Johnson said that Florida’s high population and popularity among tourists make it a desirable location for the marijuana industry to establish itself. However, there are still many unanswered questions about what regulations will be in place in Florida if the ballot initiative to legalize marijuana use for all adults over 21 is approved by more than 60% of voters.
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For instance, Johnson explained that in Florida, those who are currently licensed to sell medical marijuana must do everything themselves, including growing, processing, packaging, and selling the product. Some states issue more licenses and don’t require licensees to handle every step of the process themselves.
“There is a lot of work that takes place in addition to the ballot initiative.” It’s not as simple as it seems, and tomorrow everything can change. Johnson said that there is a lot of legislative activity that needs to take place in order to create the rules and laws for the regulated market to function. “Many people are considering whether Florida will follow a similar path as other states in terms of allowing recreational use of marijuana, or if it will adopt a different model.”
Investors like Matt Hawkins are keeping their funding for now because of these uncertainties. “We usually wait until it becomes legal for recreational use before we invest,” said Hawkins, the founder of Entourage Effect Capital.
Entourage Effect has invested over $140 million into the cannabis industry, as stated on the company’s website. Hawkins stated that none of the capital has been invested directly in Florida.
“If you invest earlier, there is a higher potential for profit because the licenses become more valuable.” “But right now, we think it’s better to wait,” he said. However, he mentioned that he believes there is a lot of potential in the state of Florida.
“I believe people understand the potential benefits,” Hawkins said. “We are transitioning away from the illegal market, and it has been more difficult than we anticipated.” But ultimately, this is already a domestic industry worth around $30 billion, and it has the potential to reach $60 or $70 billion.
People at the conference were also waiting for a decision from the U.S. Drug Enforcement Administration. The decision was about changing the legal classification of marijuana, based on a recommendation from the U.S. Department of Health and Human Services. If the DEA agrees with the recommendation, marijuana would no longer be illegal as a dangerous and addictive drug. Instead, it would be regulated in a similar way to certain prescription medications. The decision is anticipated to be made this spring.
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