For those of you new to Florida or new to cannabis, your underlying belief would probably be that when you are discussing a new crop, federally legal if grown a specific way with a specific group of genetics and a federally illegal crop, with mandatory verticality, that those were two different naturally grown plants.
And, you would be wrong.
First let’s talk about regulations:
Hemp - Federally legal, per the 2014 and eventually 2018 Farm Bills. Still only legal as long as its not food per the Food and Drug Administration (FDA), and if you are on social media there is very little difference (check out last month’s article on shadow banning). To add to the confusion, in Florida, hemp is a food per state law. Seeds are scarce due to regulations, mainly because of the instability of the genetics. Many folks are saying there are no hemp genetics, it’s just marijuana harvested two weeks early. While that may be the case, genetics companies are pouncing on the opportunity to fill the void of high CBD genetics that are THC compliant.
In Florida, horizontal but regulated markets abound. You can grow with a license, process and manufacture with a license, and wholesale or retail with a license. The fees for the licenses are reasonable: zero for farmers and $650/year for everyone else. Also, consumers do not need a license to consume.
Within six months of Florida starting the hemp program, over 6,000 retail locations indicated they want to sell hemp products, over 240 manufacturers said they want to make products and over 450 farmers said they want to grow the plant. The state has adopted rules for each, passed a bill to fix some language and established testing requirements.
Medical Marijuana – Federally illegal, state legal. Vertical requirement means the barrier to entry was going to be high to begin with, coupled with nursery restrictions initially that ballooned the valuation of the licenses up into the $60-70M before dropping recently. Hampered by lawsuits, initially contesting the way licenses were awarded but most recently contesting the vertical requirement the industry was created under. Florigrown v State of Florida is having more arguments heard this fall. Adam Elend, CEO of Florigrown, shared with me, “A horizontal system serves the patient better because it is more functional and promotes diversity. Horizontal regulations already exist in the marijuana law with cultivation authorization, processing authorization and dispensing authorization. All they have to do is open it up and allow wholesale transactions. The legislature could also raise much needed revenue through excise taxes that don’t reach the consumer. Most importantly, a horizontal system is much safer. The current system is basically lawless except for limiting the licenses. The hemp regulations are not perfect, but they capture a lot of benefits of a free market system. It’s the way businesses have been regulated in this state for more than 80 years. Our Florida liquor laws call vertical integration “tied-house evil” because the legislature knew way back then that the system was inherently poor, inefficient, and ripe for corruption.”
There are over 2,000 doctors able to prescribe medical marijuana with virtually no education or training. Medical schools did not teach cannabis and continued education is limited.
All that being said, marijuana is a schedule 1 drug which means, per the federal government, it has no medicinal value. Patients must be issued a recommendation by one of these registered doctors and then proceed to a location that has one brand of product. Each licensee, known as a Medical Marijuana Treatment Center (MMTC), can only carry the products that they have grown, processed and packaged.
Over and above that, the testing requirements have only recently been adopted for the medical marijuana industry in Florida. What took 6 months on the hemp side took 3 years on the medical marijuana side.
Now let’s talk about science...
The cannabis plant with over 140 different cannabinoids is broken into two camps by one or two of these: Delta 9-THC and THCa. The levels of THC or total THC varies by state and country but at its core, the difference between hemp and marijuana is an arbitrary assessment of THC based on what is scientifically determined to make the average person’s psychotropic ability affected (high). This differs greatly from synthetics that attempt to mimic this “high”. Synthetics are a chemical attempt to replicate the feeling, skirt the regulations and get to market fast and furiously. Almost all synthetics are meant as party drugs and not to cope with a medical condition.
Now let’s talk about farming…
Hemp farmers are frustrated due to the supply glut that has happened nationwide. With the price of biomass, flower and processed raw materials down as much as 500% cheaper than it was three years ago, and in some cases in the last year, this will most likely lead to lower market prices, new products and more opportunity. The problem is in part the pandemic, in part market suppression due to media and social media and in part technology. It is widely accepted that 25,000 products can be made from hemp, however the problem with that statement is that without manufacturing you can only grow one product and that is biomass/flower. Every other product requires either extraction, decortication, or some other way to process the plant. This can be almost any product that currently uses tobacco, plastic, paper, grain, fiber and medication to facilitate its consumer use.
Medical marijuana farmers are again, only those that have one of the vertical licenses and must be indoor only. Indoor farming is more expensive and carries different potential environmental and man-made issues to facilitate a clean grow to include mold/mildew or pests that manage to invade the space. Grow facilities are only able to have their products sold at company-owned retail stores.
Finally retail …
Hemp can be sold in any location registered with the state that has been inspected and has paid the $650 fee. This has ballooned to over 6,000 locations in Florida. Products must overcome legacy regulations in their competitive spaces: building supplies, plastics, nutrition products and tobacco alternatives.
For medical marijuana, retail is limited to only where medical marijuana licensees can get a permit and generally follows the same guidelines as pharmacies. This means a location that could be a CVS Pharmacy or Pill Box Pharmacy can now carry only the products the licensee can manufacture.
Arguably the only competition to the medical marijuana industry is the black market. And a legal product should certainly be more economical.
Bottom line, hemp has made THC legal in this country. The matter of how much THC is up for debate. Consumers are certainly going to be able to get more products going forward. Medical marijuana may follow the hemp model if Florigrown is successful in their lawsuit. Florida is leading the country in hemp regulation and as soon as we can all leave the house, if not sooner, I expect everyone will be able to use some cannabinoids to calm them down.