Navigating the Expanding Florida Cannabis Market: A Closer Look
Florida has one of the largest medical cannabis industries, supporting over 800,000 patients and tallying up a massive net worth of $1.75 billion— projected to reach $2.4 billion by 2026.
Right now, multistate operators (MSOs) are racing to expand their retail presence in the state’s lucrative market by strategically positioning themselves in anticipation of potential adult-use legalization. This move could bring about a lot of huge opportunities in the retail space.
However, investing in it is still questionable.
Medical dispensaries are currently creating fierce competition and toeing the line of saturating Florida cannabis market. As a result, current license holders are discounting their products deeply to compete, even though many companies are reporting flatlining sales at the end of the quarter on June 30th.
Even though prices are getting cut left and right and analysts see all the signs of saturation, representatives of these companies believe that the store saturation point hasn’t been hit yet— especially if full recreational legalization is on the horizon.
Verano Holdings, an MSO based in Chicago, just opened its 70th store and is now the second-largest company in Florida regarding the number of stores. They’re right behind Trulieve Cannabis, which opened its 126th store in August. Other MSOs like Curaleaf Holdings and Ayr Wellness are also growing in Florida, with Ayr Wellness opening ten new stores in Florida just this year and Curaleaf taking the steps to follow suit.
To make matters worse, more competition is about to enter the space. Right now, 22 companies hold licenses in Florida. While regulators can limit the number of licenses awarded, they don’t place a cap on how many dispensaries a license holder can open. Regulators are actively reviewing new applications for an additional 22 licenses that will allow for vertically-integrated Medical Marijuana Treatment Centers (MMTCs).
Are there too many dispensaries in Florida?
While more dispensaries appear in Florida, the medical market continues growing despite slowing down a bit. Registered patients have increased by more than 7% since January, according to the OMMU.
Each license holder has a different strategy for competition, and even if it may seem the market is saturating, these different strategies are positioning each company for both recreational legalization and competition within the current atmosphere.
For example, even though Verano’s MUV sales may be flattening out, its strategy is to avoid the deep discounts and promotions other stores are offering. As more stores open, each store takes a smaller piece of the market. In the long term, they do become accretive, though.
On the other hand, Curaleaf is focusing on rapid expansion. The company already has 60 retail locations in Florida and plans to continue opening stores. However, Curaleaf is also avoiding deep discounts and instead focusing on curating a winning product selection that naturally increases store traffic. Ayr is following suit, and while they are discounting, their spokesperson says that their Florida stores aren’t discounting as drastically as other competitors.
Is recreational weed on the horizon?
While it seems like a lot of license holders are banking on recreational weed hitting Florida next, it’s hardly guaranteed. Many MSOs are pumping out dispensaries left and right in Florida, hoping the larger adult-use market will hit the scene. It’s worked in other states historically. Take Maryland, for example; medical license holders made a mad dash to acquire or open more dispensaries in time for adult use sales going live on July 1st. It makes sense for them to want to be ready in Florida.
The problem is that the Florida attorney general is actively trying to block putting the recreational measure on the November ballot in 2024. Trulieve backed the Smart & Safe Florida adult-use campaign and collected over 900,000 signatures which are more than enough to get the amendment in front of voters.
However, it’s still unclear whether or not a recreational vote in Florida will make it, or if it would receive the majority vote and get approved.
The amendment would allow anyone over the age of 21 to possess, buy, and use cannabis and cannabis accessories for no other reason than for fun. But it’s facing some backlash. The Florida Chamber of Commerce and the Drug-Free America Foundation are trying to block the effort, claiming it’s unconstitutional. Since Trulieve is heavily involved, they’ve accused Trulieve of attempting to monopolize the recreational market.
They also don’t like that the amendment would encourage Floridians to violate federal law, which still places cannabis as a Schedule I substance. The belief is also that it would mislead people into thinking that just anyone could sell it, not just licensed MMTCs.
Obviously, Trulieve disagrees. In a statement to WUSF Public Media, they say:
“The ballot language is clear, states the chief purpose of the amendment, and – without a doubt – covers one and only one subject. For these reasons, we trust the court will agree that the voters of Florida should have the opportunity to vote to allow adults in Florida the freedom to use cannabis for their personal consumption.”
All that said, it’s still up in the air whether or not voters will have the chance to decide on recreational weed. That’s part of the reason Verano is building their business to stay sustainable in the medical market. On the other hand, Ayr is betting rec. The more dispensaries they open, the more potential they have to gain footing in the proposed recreational space.
Only time will tell what’ll happen. As long as these large MSOs continue to foster a sustainable medical market, things look good for patients in terms of accessibility and great prices. If recreational stores hit the scene, we might be looking at a quick adoption and a functional rec program by the end of 2025.
