Florida appeals court nixes medical marijuana caps, vertical integration

A Florida appellate court ruled that the state’s medical cannabis licensing system is unconstitutional, setting the stage for greatly expanded business opportunities in one of the country’s fastest-growing markets.

Found unconstitutional were legislative measures that imposed license caps and vertical integration.

“The takeaway here is that while the decision will most likely be appealed to the Florida Supreme Court, this opens the door to the possibility of the Florida market opening up to more players, with the barriers to entry being lowered,” Sally Peebles, a cannabis attorney with Vicente Sederberg LLP in Florida, wrote in an email to Marijuana Business Daily.

Peebles added that if vertical integration is eliminated, it will be less expensive to enter the market, “allowing more mom-and-pops to enter the market.

In addition, more licenses will be issued if the cap is lifted, according to Peebles.

That would create a “more competitive environment,” leading to more innovative products and, eventually, lower prices, she contends.

Jeffrey Sharkey, executive director of the Medical Marijuana Business Association of Florida, concurred.

“If upheld, this ruling could dramatically change the medical marijuana regulatory landscape in Florida,” he wrote in an email to MJBizDaily.

As of July 5, six vertically integrated MMJ businesses operated 120 of the state’s 142 dispensaries.

The 2019 Marijuana Business Factbook projects that MMJ sales in Florida will reach $425 million-$525 million this year, up from $225 million-$300 million in 2018.

The ruling by the First District Court of Appeal won’t have an immediate impact, even if the state decides not to challenge the decision.

While the appellate court affirmed a lower-court decision, it differed in that it allows the Florida health department time to establish various standards before issuing additional MMJ licenses.