Florida's Medical Marijuana Cartel Is Cashing in, and Patients Will Suffer

There are 21 million people in Florida, millions of whom will eventually qualify for the medical-grade marijuana that voters approved in November. Very soon, a hell of a lot of weed will be legally sold in the Sunshine State. And so far, lawmakers have given exactly seven companies the right to grow and sell all of that pot.

While Tallahassee might yet hand out a few more licenses by the end of the session, the seven-member pot cartel is already cashing in big-time on its advantage. Yesterday Canadian firm Aphria paid $25 million to buy out Chestnut Hill Tree Farm, an Alachua nursery with one of those licenses. And last year, Massachusetts-based Palliatech bought a minority stake in Miami's only legal pot grower, Costa Nursery Farms.

As millions of dollars flow into those lucky license-holders, critics say the state is letting a de facto monopoly rake in major cash at the expense of the patients who need that medical pot.

"The Legislature may ultimately act to sanction what will be the creation of the largest marijuana growers in the world outside the Sinaloa cartel," says Ben Pollara, head of United for Care, which spearheaded Florida's successful medical marijuana campaign. "Which begs the question: Which licensee is El Chapo looking at buying?"

Florida's approach to creating a regulated medical marijuana industry flies in the face of what's worked nationally, industry insiders say. Massachusetts, with less than a fourth of Florida's population, will soon have hundreds of license-holders. More than 500 are allowed to grow and sell in Colorado. And even tiny Vermont, with all of 670,000 residents, has eight licensed growers.

But Florida has highly restricted its licensing since first allowing non-THC strains to be grown in 2015. Even after voters approved full-blown medical weed last November, there's been opposition to efforts to bring more farms and potential retailers into the mix.

Sen. Jeff Brandes has proposed a rules overhaul that would open up more licenses, but he has faced heavy pushback. (And don't even ask what nonsense the House is up to.) Why?

"I've never seen anything like the absolute greed going on here," says one medical marijuana industry insider who asked not to be named. "I've never seen anything as bald-faced."

That's why we're seeing gigantic deals like Aphria's purchase, which market analysts say puts a value of close to $200 million on a single pot license. And it explains why those seven license-holders are fighting like hell to hang on to their share of the pie.

"Behind the scenes, these seven guys have hired an army of the best lobbyists in the state," the insider says. "These guys are trying to justify outrageous valuations for their licenses as they raise capital. And their message has been 'Look, it's game over; we're going to be the only seven license-holders in the state.'"

If only a tiny group of companies controlled the market, patients would pay a hefty price and might lack ready access to the marijuana they voted overwhelmingly to approve.

"At the Senate Health Policy committee earlier this week, at least one senator used the need to protect the investments these companies have made in Florida as a rationale against expanding patient access by issuing new licenses," Pollara says. "Yet while these companies' lobbyists press members with protectionist sob stories, they're out raising money hand-over-fist from big foreign investors."

Among those investors: PalliaTech, the company that now controls a minority stake of the only firm licensed in Miami, is chaired by Boris Jordan, a Russian-American investor with deep ties to Moscow's regime. (Just check out the glowing op-eds Jordan has penned in support of the dictatorial Russian leader.)

If lawmakers cared about getting pot to the patients who need it, they wouldn't be kowtowing to the millionaires trying to corner the market.

"What drives me crazy is the simple question 'What is your priority here?' This is supposed to be about the patients," the industry insider says. "We've seen this all around the country: The more license-holders that a state allows, the better the products and the prices to the patient that come with that competition. So why do legislators want to keep restricting the number of license-holders? It's certainly not about the patients."

Correction: An earlier version of this story incorrectly described the stake Palliatech has purchased in Costa Nursery Farms.
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Tim Elfrink is a former investigative reporter and managing editor for Miami New Times. He has won the George Polk Award and was a finalist for the Goldsmith Prize for Investigative Reporting.
Contact: Tim Elfrink