Medical marijuana-related businesses have been cropping up throughout South Florida – and eagerly await results of Tuesday’s vote on Amendment 2.
From a seed-to-sale tracking company to a specialty staffing business to law firms that focus on medical marijuana-related cases, there is a lot of money to be made if the constitutional amendment passes. Medical marijuana legalization would generate an estimated $109 million in sales in Florida by 2018, experts say, but the biggest growth will be in related businesses.
Howard Wander, who heads a division for Kelley Kronenberg law firm in Fort Lauderdale that focuses on medical marijuana-related businesses, likens the industry potential to America’s Gold Rush in the 1800s: "Who got wealthy? It wasn’t the guys digging the gold. It was the guys selling the pans and the jeans," he said.
He called it "a tremendous business opportunity." All medical marijuana-related businesses, such as testing labs and real estate firms, are going to need legal help, he said.
Kelley Kronenberg opened its division in 2014 as a resource for those who want to get into the business. Law firms including Katz & Associates, GrayRobinson, Akerman and Cohen Kotler, which have offices in South Florida, have similar practices.
If the amendment passes, medical marijuana then becomes "an economically viable opportunity in Florida," said Larry Schnurmacher, who has a venture capital fund investing in related businesses. Because marijuana use is illegal on a federal level, all cultivation, testing, manufacture of oils and other medicinal products, and related services would have to be located in Florida.
In 2015, Schnurmacher left a major investment firm to start the Boca Raton-based Phyto Partners, a venture capital fund that invests in companies related to cannabis. Phyto, which is raising $15 million, has a portfolio that includes a laboratory testing company, a grow-house technology system, a secure packaging company, electronic exchange, and an app that allows users to pre-order from a dispensary.
While none of his investment companies are yet operating in Florida, all will enter the state that legalizes medical marijuana, Schnurmacher said.
"The medical marijuana business is 10 times the adult-use [market]," Schnurmacher said.
Florida – with its 20 million population and demographics that include seniors, baby boomers, veterans and tourists – would be a particularly strong market, if Amendment 2 were to pass, he said.
A 2014 law made it so that only low-THC cannabis could legally be used by Florida residents who suffer from epilepsy, seizure disorders or certain cancers. In March, Gov. Rick Scott signed into law a bill that gives access to terminally ill patients.
The latest constitutional amendment, however, was designed to broaden the market of those who qualify for legal medical marijuana use, allowing patients with a wide variety of medical conditions to use full-strength marijuana, if they get physician approval. Besides those with cancer and epilepsy, the amendment includes patients with glaucoma, post-traumatic stress disorder, ALS, Crohn’s disease, Parkinson’s disease, multiple sclerosis, and those who are HIV positive or have AIDS.
That would mean an estimated 450,000 patients, according to the Florida Department of Health. Florida’s medical marijuana sales could reach $109 million by 2018 and $1.62 billion by 2020, according to John Kagia, director of industry analytics for New Frontier Data, which collects and provides data on the sector.
To accommodate all this growth, medical marijuana businesses would need to hire professional growers and dispensary managers.
Rosie Yagielo saw the opportunity three years ago and launched her staffing business, HempStaff, which recruits master growers, processors and dispensary managers for new operations in states such as Maryland, which made medical marijuana legal in 2014.
"This is like the new frontier, like the dot-com industry 20 years ago," said Yagielo, a former Fort Lauderdale hotel staffing expert who started the business in Monroe County.
HempStaff currently has 15,000 people in its database, she said, and most are high-end positions such as master growers who can make six figures annually.
The company also is prepared to start training marijuana dispensary operators if Amendment 2 passes in Florida.
In addition to staffing and training, there’s also a need to track the plants, products and distribution.
BioTrackTHC In Fort Lauderdale originally developed software to help with the "pill mill" problem, in which pain clinic doctors illegally dispensed narcotics. With medical marijuana being legalized in more states, the company switched its focus in 2014 to tracking software for cultivators and government to track marijuana from seed to sale.
BioTrackTHS employs 60 people, mostly in Fort Lauderdale, and has raised $5 million in funding. The company already has government contracts in several states including Washington state, New Mexico, Illinois and New York.
CEO Patrick Vo said he has seen the company grow nationally from 1,000 licensed cultivators and one government contract to almost 2,000 licenses and nearly seven government entities using or expected to use its software.
"The software system is designed to provide transparency and, through that transparency, accountability," he said.
For example, if law enforcement officers knock on a grower’s door, after catching someone in the area with pot, the legal cultivator could then produce records via BioTrackTHC that would account for its product, Vo said. The software also could help ensure legal product isn’t stolen or sold on the street, or mixed in with illegal products, he said.
The system "provides comfort even to those who are naysayers but realize cannabis is here to stay. They say, ‘If it’s going to be available, I want to make sure it’s properly tracked, that businesses are being kept honest,’ " Vo said.
Tracking systems also protect the consumer, he said, pointing to product recalls in other states. "In one incident, the product was an infused soda pop. The cannabis was fine, but the soda [wasn’t cooked properly] and the contents were under pressure. It was prone to explosion," Vo said.
BioTrackTHC was able to trace back the bad batch to every bottle being sold in dispensaries. "We were able to prevent their sale to patients," he said.
One of BioTrackTHC’s customers is Modern Health Concepts, which is affiliated with Costa Farms, a third-generation family company in Miami that grows houseplants and garden plants for national retailers.
Modern Health Concepts holds a dispensary license to cultivate low-THC cannabis and medical cannabis. Its specialty is Haleigh’s Hope cannabis oil, designed to help patients suffering from epilepsy.
If Amendment 2 passes, Modern Health Concepts of Miami plans to make medical marijuana in the form of capsules, oils and vaporizing cartridges, which are similar to nebulizers where a patient inhales the medicinal drug.
CEO Richard Young said the market for medical marijuana would be "significant" in Florida and that Modern Health Concepts would expand accordingly. He declined to say how much its private owners have invested in the new operation, which began in January after receiving its state license in November.
Besides opening dispensaries, Modern Health Concepts would start mobile delivery around South Florida to qualified patients, Young said. It also is providing a free toolkit for physicians, providing information about the effectiveness, potential medical interactions and the regulations surrounding medical marijuana for their patients, Young said.
"Like any new industry, we must first educate," he said. "There’s a strong level of interest and hunger for information [among physicians]."
Other entrepreneurs see opportunities in new media for medical marijuana consumers.
Darren Roberts initially launched the High There! app, a social network where people share their experiences with cannabis, in Denver, Colo., where even adult-use recreational marijuana is legal. But he recently brought the social network home to Boca Raton, and it has over the past 16 months garnered "hundreds of thousands of downloads," said Roberts, who co-founded the social network with businessman Kenny Frisman.
"People meet individually or post videos. Some people have labeled us the ‘Tinder for tokers’ because of the love- interest side. I was in Las Vegas and a couple came up to me and said, ‘We met on your app and we’re getting married,’" Roberts said.
But the main purpose is sharing. Veterans suffering from post-traumatic stress disorder talk about how medical marijuana "has played a huge role in their lives," he said. People with terminal cancer who use medical marijuana to combat the pain share their experiences.
High There! is currently focusing on expanding its social network, then will add premium content and targeted advertising, Roberts said. He and other investors have put more than $1 million into the venture so far.
So, what happens to all these businesses and all these plans if Amendment 2 fails in Florida?
No worries, the new-frontier entrepreneurs say.
All the businesses have been savvy enough to mitigate their risks: Either they have operations in other states that have legalized medical marijuana, or they have products outside the industry that pay the bills.
News Moderator: Katelyn Baker
Full Article: As They Await Election Result, Entrepreneurs Poised For Medical Marijuana Market
Author: Marcia Heroux Pounds
Contact: (954) 356-4000
Photo Credit: Carline Jean
Website: Sun Sentinel
