Florida’s medical cannabis market is facing mounting pressure as Governor Ron DeSantis approaches the end of his tenure, leaving businesses and investors uncertain about the direction of the state’s multibillion-dollar sector.
The industry has been hit by stricter advertising rules, facility closures, layoffs and financial pressure from steep licensing costs. Florida currently has 28 licensed medical cannabis companies running 778 dispensaries statewide.
The latest concern stems from proposed regulations from the Office of Medical Marijuana Use (OMMU). Among other changes, the rules would prevent cannabis companies from using celebrities to promote their products. They would also impose tighter controls on roadside advertising, social media campaigns, and material distributed inside dispensaries.
The restrictions could pose particular challenges for newer businesses. Joe Puglise, chief executive of Fino Cannabis, noted that startups have limited time and resources to establish themselves and attract patients. Fino opened its first dispensary in Clermont this year and intends to add two more locations.
For new entrants, establishing a vertically integrated operation can require close to $30 million upfront, including spending on cultivation facilities, dispensaries, manufacturing, employees, and early operating expenses.
The regulatory changes follow a broader tightening of Florida’s cannabis policies under DeSantis. The governor raised license renewal costs by over 2,000% and campaigned against a 2024 constitutional amendment that would have legalized recreational marijuana. The measure failed to secure enough support from voters.
Meanwhile, established operators are also pulling back. Surterra, among the earliest companies licensed to cultivate and sell medical cannabis in the state, recently shut two large cultivation sites and has eliminated more than 100 jobs.
Several licensed medical cannabis operators have turned to Tallahassee-based attorney John Lockwood to push back against the state’s marketing policies. Lockwood has sought a meeting with state officials to give cannabis businesses an opportunity to voice their concerns. He said companies hope regulators will revise the proposals before they become final; otherwise, litigation could follow.
The stakes are substantial. Cannabis licenses that fetched over $50 million close to ten years ago are now valued at under $3 million. The collapse in valuations has been compounded by investor doubts following the failed recreational marijuana amendment.
DeSantis also increased the renewal charge from $60,000 in 2022. At the time, he argued that licensed operators could absorb the higher cost.
With the proposed regulations expected to take months to finalize, the debate could extend beyond DeSantis’ departure. The candidates seeking to succeed him, David Jolly (D) and Byron Donalds (R), have offered different positions on recreational cannabis, but neither campaign has said whether it would continue the current administration’s push for tighter rules.
For businesses such as Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) and Fino, the uncertainty remains. Puglise said he hopes regulators will listen to industry concerns but acknowledged that the latest proposals could further restrict an already heavily regulated market.
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