Florida’s burgeoning medical marijuana market is about to get even bigger and far more expensive to stay in.
The state’s Department of Health announced new rules Monday morning that open a general application process for up to 22 new medical marijuana treatment center (MMTC) licenses.
“After years of waiting, (the Office Of Medical Marijuana Use) has published an emergency rule for the application process to license new MMTCs. Over the next few weeks, we expect OMMU to publish follow-up rules outlining more details,” said Dustin Robinson, founding partner of Mr. Cannabis Law.
In addition, regulators are raising the license renewal fee from $60,000 to more than $1 million, making the price to remain in one of the most promising vertical cannabis markets one of the most expensive.
The medical marijuana statute, which was last revised in 2017, posited that the department would need to issue four more additional licenses every time the state’s patient population increased by 100,000 new entrants. The department was expected to begin another application process in 2018, but the issue was tabled.
The department has spent years litigating the terms of the limited market, most recently issuing a long-awaited business license to the state’s first Black marijuana operator after Florida law promised one license to a class member of Pigford v. Glickman, the largest civil rights settlement in U.S. history. The state is still battling lawsuits over the logic of its awarding process.
Five years later, the state will finally move forward with the general application process and begin soliciting new applications to enter the rapidly growing market.
The department plans to issue future licenses via “batching cycles” instead of a single application round. It will issue an additional informative rule at some point laying out the application window for the batching cycles and the available number of MMTC licenses to be issued each round.
For new entrants, the department will require the same nonrefundable application fee of $146,000, though preparing to apply for one can cost up to $400,000 with an additional $10 million-$15 million likely needed after actually securing the license, the Miami Herald reported.
Steep Price for Limited No. of Licenses
The new renewal fee is based on a formula that includes the amount of money it costs the state to regulate the industry. The renewal fee in 2022 would come out to $1.33 million, a health department spokesman told the News Service of Florida on Monday.
Green Market Report in September reported rumors swirling around Tallahassee that the state would issue a sharp hike in licensing fees.
And while newly reelected Florida Gov. Ron DeSantis told reporters that the state “should charge these people more,” the governor did not specify whether he was referring to medical cannabis companies currently active in Florida or newcomers trying to enter the fold.
The governor made his public comment the same week that MedMen completed its Florida exodus by closing the $63-million-dollar sale of its stores and greenhouse to Green Sentry Holdings.
Still, companies have flipped licenses in the secondary market for tens of millions of dollars. Cookies purchased a license from Tree King-Tree Farm Inc. in 2020 to the tune of $80 million dollars, and Green Dragon coughed up around the same amount when it entered, according to a person familiar with the purchase price who disclosed it on the condition of anonymity.
The Cookies deal was struck in September 2020 after Michigan company Green Peak Innovations announced it had signed an agreement to purchase Tree King-Tree Farm Inc.’s license for $48 million in July 2019.
Tree King-Tree Farm Inc. had not dispensed any medical marijuana since it acquired its license in May 2019, illustrating the lucrative upside to acquiring a new license.