HOLLYWOOD, Fla. — The first ballots are months from being cast in the November election, but people in the cannabis industry are already setting their sights on growing their business in Florida.
The Benzinga Cannabis Capital Conference is where investors come to check out businesses on all ends of the cannabis industry. The conference, set in Hollywood, welcomed hundreds of attendees, with many of them discussing the prospect of Florida voters approving recreational marijuana on a November ballot measure.
Whether a business is involved in growing marijuana, selling it or complying with the patchwork of differing state regulations, the cannabis industry is a tough one to be in.
"It's such an infantile industry, so you don’t have folks who’ve grown up in it for generations and generations," Michael Johnson, CEO of Metrc, a Florida-based company that makes regulatory technology for the cannabis industry, said Tuesday. "You've got a lot of lessons that are being learned for the first time. You’ve got brand new commerce that pops up simply because now it’s allowed to."
Johnson explained that Florida’s large population and popularity among tourists make it an attractive place for the marijuana business to set up shop.
However, there are still a lot of remaining questions about what Florida’s regulatory landscape will look like if more than 60% of voters approve the ballot initiative to legalize marijuana use for all adults over 21.
For example, Johnson said, those currently licensed to sell marijuana for medical purposes in Florida must cultivate, process, package and sell the product themselves. Other states issue more licenses and don’t require licensees to vertically integrate every step of the process.
"There’s a lot of work that happens in addition to the ballot initiative. It’s not as simple as it passes and tomorrow the whole world changes. There’s a lot of legislative activity that has to happen to build out the rules and the laws for how the regulated market will work," Johnson said. "Folks are thinking quite a bit about evaluating whether Florida is going to continue down a similar path that has, from a medical perspective, into recreation use, or whether it's going to adapt a model that’s a little bit more in line with what other states have done."
Those uncertainties are what have investors like Matt Hawkins hanging on to their funding, for now.
"We typically wait until it's recreational legal to invest," Hawkins, founder of Entourage Effect Capital, said.
According to the firm’s website, Entourage Effect has invested more than $140 million into the cannabis industry. Hawkins said none of that capital has been directly invested in Florida.
"If you invest before, there's a lot more upside, potentially, because the licenses are more valuable. But at this stage of the game, we feel like it's best to wait," he said.
Still, he said he sees tremendous potential in the Sunshine State.
"I think people realize what the upside is," Hawkins said. "We're moving away from the illicit market, which has been a lot more challenging than any of us thought. But at the end of the day, this is already arguably a $30 billion domestic industry — that has the opportunity to be close to 60 or 70."
Conference attendees were also anticipating a decision by the U.S. Drug Enforcement Administration, following a recommendation from the U.S. Department of Health and Human Services to reschedule the legal classification of marijuana. If the DEA decides to adopt the recommendation, marijuana would no longer be outlawed as a dangerous, addictive drug, and could instead be regulated similarly to certain prescription medications. That decision is expected this spring.
