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Florida's Marijuana Market Is About to Explode

Several strong indicators demonstrate that The Sunshine State is poised for big things.

Opinions expressed by Entrepreneur contributors are their own.

Florida's marijuana market consists of 22 Medical Marijuana Treatment Centers (MMTCs). Each center owns a vertically-integrated license that allows and requires them to grow, process, dispense, and deliver medical marijuana. Also, five laboratories are licensed to perform third-party testing of medical marijuana. 

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In Florida, the medical marijuana license allows the current MMTCs to build out as big of a footprint as possible in preparation for adult use (recreational) legalization. This regulatory framework is unique from most other states, which provide specialized licenses and have a cap on the production of marijuana per license-holder.

Florida's market potential

The Total Available Market, or TAM, is one of the most critical factors for any industry. Due to marijuana being federally illegal, marijuana companies cannot ship marijuana across state lines. Thus, in the marijuana industry, the TAM is limited to the company's state. Florida's marijuana industry happens to have one of the strongest TAMs in the world.

As of December of 2020, Florida has more than 450,000 qualified patients, consistently increasing by almost 3,000 patients per week. Patient growth has made Florida the largest medical-marijuana market in the country by sales. More importantly, Florida has a population of more than 20 million and a tourist population of almost 150 million, which means it is positioned to be one of the largest marijuana markets in the world once adult-use regulations go into effect. Currently, there are almost 300 retail locations, with an expected 500 locations by the end of 2022, which will make Florida one of the most dominant markets in the world.

A full arsenal of products

In mid-2019, Senate Bill 182 became effective and allowed for the possession, use, or administration of smokable marijuana flower in Florida. In 2020, Florida established rules for the production of edibles. Demand for marijuana edibles is growing across the country due to the rise in product offerings, a smoke-free method of consumption, and a more sanitary consumption method when compared to smoking dried flower in a joint or bowl.

Now that the Florida market has smokable flower and edibles, the current MMTCs and labs have a whole arsenal of products to license, develop, formulate, produce and sell. Due to the size of the medical marijuana market and the growing demand for edibles nationwide, marijuana edibles sales are projected to reach $250 million in Florida in the year 2021. These numbers will exponentially grow when Florida approves adult-use, allowing the current MMTCs and labs to tap into the full total market available of the adult-use market.

What's next for Florida? 

In 2020, Regulate Florida and Make it Legal Florida fell short of obtaining sufficient signatures to get their ballot initiatives. This was due to a late start and a lack of funding. However, there is potential that these initiatives will make it to the ballot in 2022.

When a state passes adult-use, it generally opens up the first round of licensing to current medical marijuana license-holders. So, the current MMTCs and labs, which will already have a massive footprint based on the current regulations, will be able to quickly shift from serving a limited TAM of qualified patients to a vast TAM of the entire Florida population, including tourists. This will be a massive windfall for the current MMTCs and labs and may cause revenues, profits, and valuations to sour.

The outcome of the highly anticipated Florida Supreme Court case, Florigrown, LLC v. Florida Department of Health, may result in more licenses eventually being issued. However, the process of issuing any license will likely take quite some time. Additionally, depending on the Supreme Court's decision, the future licenses may come with much different rights than the vertically integrated license owned by the 22 Licensees. As a result, the 22 Licensees are in a great position to build multi-billion-dollar companies in Florida's growing marijuana industry regardless of the decision in Florigrown. The future of the Sunshine State is looking bright after all!