Since 2014, a small group of companies has kept a tight hold on the state’s cannabis industry, leaving little room for local businesses.
Something smells funky in Florida’s medical marijuana industry — and it’s not coming from a smoldering joint.
Back in 2016, an agent for the Federal Bureau of Investigation (FBI) secretly recorded Tallahassee developer J.T. Burnette — who has since married Kim Rivers, CEO of the multimillion-dollar Florida-based cannabis giant Trulieve — boasting that he and his childhood friend, then-Florida house member Halsey Beshears (R-Monticello), cordoned off access to commercial cannabis licenses by tweaking a cannabis bill signed into law in 2014 that governed the state’s then-fledgling medical marijuana industry.
The bill mandated that licenses only be granted to nurseries with a 30-year-history in the state and the ability to post a $5 million bond. This was an advantage to Burnette’s then-girlfriend, Rivers, and to Beshears’ brother, Thad Beshears, who sits on Trulieve’s board of directors and co-owns Simpson Nurseries (which was founded in 1902).
“All we did is at the last minute said, ‘You need to be [a] 30-year nursery,'” Burnette tells the agent, according to the FBI transcript.
Burnette then professes that the state’s first handful of licenses was “fucking real valuable.”
“We didn’t have to know anything more than that,” Burnette says. “All we knew — we didn’t know how to — we didn’t know how to grow marijuana [but] we were in the ship.”
Set up when only low-THC medical marijuana was legal in Florida, the 2014 licensing arrangement gave a small group of companies a tight hold on Florida’s cannabis industry, which persists to this day and makes it seemingly impossible for smaller growers to even attempt to elbow their way into the market.
One of the first licenses went to a partnership involving the Beshears family’s nursery. That operation was rolled into Trulieve, now one of the largest cannabis companies in the United States and the most prominent marijuana producer in Florida, selling more than 2,000 pounds of smokeable products each week, according to state data. The company celebrated the opening of its 100th Sunshine State dispensary location in mid-October.
After Floridians voted to broadly legalize medical cannabis in 2016, the licensing rules loosened and the 30-year legacy requirement was removed. But the application process still required financial resources that most ground-level entrepreneurs don’t have: a $60,000 application fee and the requirement to post a multimillion-dollar bond remains.
Florida Commissioner of Agriculture Nikki Fried tells New Times that the licensing system needs to be overhauled immediately, in the current legislative session. A former cannabis industry lobbyist, Fried is planning a run for governor with her support for legalization as a key element in her campaign.
Fried advocates for doing away with the state’s so-called vertical integration rule, which requires cannabis companies in Florida to handle every major facet of the industry from cultivation to sales — from seed to weed. Vertical integration is mandated in a handful of medical marijuana programs nationwide, even in some states where recreational pot is legal, such as Massachusetts. The setup lends itself to the formation of cannabis oligopolies, wherein a small group of companies maintains control over the market.
“It is really expensive to run these vertical operations. These companies are expected to grow, manufacture, deliver, open up retail spots,” Fried tells New Times. “That is a tremendous financial undertaking, which is why we have to break up vertical, giving more small businesses an opportunity to get into this industry.”
(Fried has her own complicated personal and political ties to the marijuana business. Her fiancé, Jake Bergmann, is the founder and former CEO of Surterra, a top player in the cannabis industry. And the 2014 bill Burnette boasted about manipulating was sponsored by Florida Rep. Matt Caldwell, who challenged Fried in the 2018 race for agricultural commissioner. Caldwell is now the Lee County property appraiser.)
The idea of breaking up Florida’s weed oligopoly has garnered bipartisan support, but bills to that end have fizzled out. Separate bills aimed at dismantling the cannabis licensing system — filed by Democratic Sen. Perry Thurston and Republican Rep. Anthony Sabatini — died in health policy committees in previous legislative sessions.
On November 2, Republican State Sen. Jeff Brandes filed a new bill — SB 776: Availability of Marijuana for Adult Use — that would revamp the licensing system so that smaller, local businesses have a better chance of participating in the marijuana market. If passed, the legislation would separate licensing types into cultivation, processing, retail sales, and transportation. It would also remove an existing regulation that requires companies to have been operating in the state for five years before they apply for a commercial cannabis license.
According to Florida State Sen. Shevrin Jones, whose district includes Miami Gardens and Opa-locka, voters should not count on the legislature to level the playing field.
“The legislature, when it comes to the licenses, has offered no parity. There’s a separation of the haves and the have-nots,” Jones tells New Times. “Are we really trying to say that this is an open market — that Florida is open for business for everyone? Or do we want to continue to tie people’s hands and not allow them to be part of the American Dream?”
Under the current framework, the Florida Department of Health is supposed to issue a batch of four licenses for every 100,000 new medical marijuana cardholders. But the process was held up pending a court case in which a company known as Florigrown challenged the licensing system. The Florida Supreme Court ruled against Florigrown in May, prompting the health department to move forward with applications for a new block of licenses, which could nearly double the number of Florida cannabis operators — though independent dispensaries would continue to be prohibited.
As it stands, existing licenses are essentially golden tickets to Florida’s marijuana market. They have been selling for tens of millions of dollars. Several license holders, including Trulieve, are part of multistate operations, publicly traded, and valued in the billions of dollars. Trulieve recently acquired fellow cannabis company Harvest Health & Recreation in a $2.1 billion merger and has rebranded that company’s stores under the Trulieve name. In conjunction with the deal, Harvest said it was selling its Florida license to Planet 13, a Las Vegas-based cannabis firm, for $55 million.
Fried’s financial disclosures note that she held a $130,000 stake in Harvest Health & Recreation in 2020, according to a Tampa Bay Times report. She used to work as a lobbyist for its predecessor, San Felasco Nurseries, one of the first commercial cannabis license holders in the state.
While celebrating the opening of its 100th Florida store, Trulieve said it welcomes new competition. The firm told Capitol News Service that it’s also backing a proposed ballot initiative that would legalize homegrown marijuana for personal use.
“One of our core values for Trulieve is absolutely accessibility to all patients and with that we support home grow,” the company’s chief marketing officer said.
Trulieve has stood by its CEO Kim Rivers in the midst of her husband J.T. Burnette’s legal troubles. Burnette, a Tallahassee developer, was convicted in August on federal fraud and extortion charges. He was accused of a scheme to siphon bribes to then-Tallahassee City Commissioner Scott Maddox in connection with real estate development deals. On November 9, Burnette was sentenced to three years in federal prison; Maddox is serving a five-year term after pleading guilty to fraud in connection with the bribery investigation.
“We have consistently maintained that neither Trulieve nor our CEO are involved in the case,” reads a company statement released on the heels of Burnette’s conviction. “The Board of Directors continues its strong support of Kim Rivers…and the strategic vision for the Company that Kim has designed in concert with the board.”
Burnette’s discussion with the undercover agent about tweaking early medical marijuana regulations was played for jurors at trial as a piece of tangential evidence dug up in the FBI probe. His defense team passed off his comments as puffery — an attempt to impress the would-be business associate. Burnette’s childhood friend Halsey Beshears, who was implicated in the recording, was not a defendant in the trial and has not been charged with any crime in connection with Burnette. Beshears, who has been linked to the web of troubles surrounding Florida Congressman Matt Gaetz, stepped down as secretary of the Florida Department of Business and Professional Regulation in January 2021, citing health issues.
As it stands, Florida operates one of the most tightly held medical marijuana industries among heavily populated states where recreational pot is not yet legal. Florida has 22 current cultivation licenses for more than 630,000 medical marijuana cardholders. To put that in perspective, Pennsylvania and Ohio have 25 and 27 cultivation licenses, respectively, with much smaller patient populations. While both of those states maintain a pricey general-licensing scheme for growers, they have lower-cost opportunities for smaller businesses, including the chance to run an independent dispensary, and in Ohio’s case, the ability to register as a small-scale grower for an initial $18,000 licensing fee.
The Florida Department of Health has justified the licensing rules by claiming they ensure product safety and that supply is not illegally diverted to other states.
The Flowery is a Miami-area medical marijuana company and, as a cannabis producer that is locally owned, family-operated, and not controlled by a massive corporation, is somewhat of a rarity in Florida. It obtained its license after an extended legal battle with the state and is currently expanding to a new warehouse space, where it plans to focus on high-grade harvests.
The Flowery’s executive administrator, Sabina Osman, tells New Times she’s confident that if given the opportunity, more craft cultivators can prosper in South Florida despite large companies’ dominance of the dispensary system and market.
“You never know what’s going to happen with cannabis. We’re all trying to provide a medicine for people,” Osman says. “It depends on the patient or what they prefer, if they want to spend money on something that’s a little more of a craft or save money and get something from basically the Walgreens of weed.”
As of November 10, the Sunshine State’s three biggest medical marijuana companies by number of dispensaries are Trulieve, Liberty Health Sciences, and Surterra, according to state data. Each of these companies is operating with a cannabis license from the original 2014 regulatory scheme.
Karen Goldstein, executive director of legalization advocacy group NORML Florida, claims state restriction on the number of growers has limited the variety of cannabis strains available for patients. She says a concerned dad recently contacted her and told her he feels forced to grow at home because he cannot find a dispensary that carries the marijuana strain reputed to best treat his son’s psychiatric condition.
Goldstein has criticized nurseries that she claims have obtained cannabis licenses with an eye solely toward reselling them for a profit.
“Growers knew what was going to be expected of them. I think some of them just got their licenses to flip them at the right time,” she says.
The NORML Florida director says that some Republican members of the state legislature are looking to further regulate and restrict the cannabis market rather than instituting much-needed reform. She points to past efforts by lawmakers to cap the content of THC, the psychoactive compound in cannabis flower.
“The Florida legislature has done anything they can to stymie progress with marijuana reform. I’m not sure what drives that mindset,” Goldstein says. “There are still a few states still stuck in the ‘Reefer Madness’ mindset that permeates the thinking of certain demographics.”
While Florida’s biggest medical marijuana companies have spent the last few years building up their dispensary network, communities hit hardest by cannabis prohibition have been sidelined from the industry.
The American Civil Liberties Union noted that between 2010 and 2018, Black people nationwide were more than three times more likely to be arrested for marijuana possession than whites, despite similar rates of cannabis usage. New Times reported that after Miami-Dade County sought to decriminalize marijuana possession, Black people were getting hauled off to jail by local police departments at disproportionate rates for misdemeanor pot offenses.
Florida’s 2017 medical marijuana law set aside one commercial cannabis license for a Black farmer applicant from a class of plaintiffs in the lawsuit known as Pigford v. Glickman. That case accused the federal government of discriminating against Black farmers in the issuance of agriculture loans dating back to the 1980s.
But the so-called Pigford license has yet to be issued and, with an application fee of $146,000, is priced at more than twice the approximately $60,000 the initial round of applicants paid to vie for the 22 original licenses According to the Florida Department of Health, the rulemaking process for the license was held up by the Florigrown litigation.
To date, there are no Black medical marijuana operators in Florida. Cannabis equity programs — common in other states as a means to spur industry participation — are absent in Florida. The programs typically offer grants or low- to no-interest loans to cannabis entrepreneurs from communities where marijuana arrest rates were high under prohibition. While Florida law calls for diversity in the workforce of cannabis companies, the seed-to-sale licensing system leaves no room for local equity programs.
State Sen. Shevrin Jones tells New Times that even if Florida reshapes its law so to create a social-equity program, he’s wary that the legislature would erect more barriers and legal red tape.
“We need to define what social equity means to us as a state. These buzzwords that so often get tossed around still place people of color outside of the sandbox of being able to participate,” Jones says. “We have to make sure we have the right people sitting at the table who are the decisionmakers. Show me who’s at the table and I can tell you whether we’re serious about having or continuing any social-equity program.”
Fried says she supports a program that would provide funding to aspiring cannabis business owners with minor marijuana charges in their past. She pointed to Virginia as a model state that offers financial assistance to cannabis companies run by people who have been (or whose immediate family members have been) convicted of marijuana-related misdemeanors.
“If we are going to truly fix society on this issue, we have to recognize the historical implications of [prohibition] laws on these communities,” Fried says.
On the federal level, marijuana reform legislation is making its way through Congress. A decriminalization bill sponsored by Rep. Jerry Nadler of New York was advanced by the House Judiciary Committee in September.
Outside the legislature, recent ballot initiatives on marijuana reform have floundered in court. The Florida Supreme Court ruled in June that a proposed ballot measure aimed at legalizing recreational marijuana used misleading language by stating that it would allow only “limited” cannabis use among adults.
New proposed voter initiatives for the 2022 election include the narrow proposal to legalize homegrown recreational marijuana (the measure Trulieve says it supports). The sponsor, Sensible Florida, is in the process of gathering the hundreds of thousands of signatures needed to get the initiative on the ballot.
If passed by a 60 percent majority, the measure would allow an adult, 21 or older, to grow up to nine marijuana plants, with a maximum of 18 per household. No selling of recreational marijuana would be permitted.