Regulated cannabis industries are being brought to life in states across the US, each with its own unique structure. States are given the ability to create their cannabis program containing their own rules and regulations of operation in their specific state, like the Florida Medical Marijuana market for example. As a consumer, this means that purchase and possession limits may be different depending on what state we are shopping in. For companies operating in the cannabis industry, this means that standard seed-to-sale procedures change from state to state.
In Florida, the cannabis industry operates vertically. This means that medical marijuana license holders must control and execute every aspect of the chain of business from growing, packaging, and branding to selling the product in their dispensaries. This is in contrast to how other regulated states operate, like Nevada for example. In Nevada, a cannabis brand can partner with a cultivation company that grows the product, partner with another extraction company that creates oil and then sell their end product into every dispensary in Nevada. However, in Florida, all of these steps must be done by one company. They must grow and process the product, package it, and brand it, and then sell this product into their own dispensaries.
Florida company, Florigrown LLC, calls this structure unconstitutional. The company claims that enforcing vertical integration significantly reduces the amount of opportunity for people to enter the cannabis space. They argue that if there is only X amount of licenses and those licenses can only do business with themselves, it stunts the growth of a free market. Florigrown launched a legal battle against the State of Florida in hopes of amending the program. The lower courts ended up siding with Florigrown and so the case was elevated.
However, on July 1st, 2021, the Supreme Court sided with the State of Florida, saying that the current structure of the cannabis industry “is within the Legislature’s specific authority.” The court noted that the industry is thriving in Florida and therefore there is no need to disrupt how things currently operate.
While some cannabis companies agree with the Supreme Court and are relieved that their business models can move along as planned, others fear what this could mean for the future of Florida Medical Marijuana. Nikki Fried, the Florida Commissioner of Agriculture, says this could mean the industry will “remain closed-off, restricting freedom of opportunity, weakening the free market and leading to ever-higher prices for patients.”
With Florida being the third most populated state in the US, cannabis growth is inevitable. Already Florida has topped charts, bringing in more revenue than any other medical-only state and even surpassing some recreational states. The question is not whether the industry will thrive but will it be an open and level playing field for both big and small players?