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Florida Cannabis: Taking a Florida Cannabis Business from Licensed to Operational

Updated: Jul 5, 2023

Florida has emerged as a thriving hub for cannabis businesses following the acceptance of a second round of cannabis business license applications earlier this year. With the application window closing in April, a select 22 lucky applicants will soon be awarded the highly sought-after Florida cannabis business licenses. In this article, we will delve into the details of the cannabis business operation rules in Florida and shed light on the exciting prospects that lie ahead for new licensed businesses in the state.

Cannabis Business License Application Process 2023

In early 2023, Florida opened its doors to cannabis entrepreneurs, inviting them to apply for cannabis business licenses, known in Florida as Medical Marijuana Treatment Center or "MMTC" licenses. The application process was rigorous, ensuring that only the most qualified and dedicated individuals or entities were considered. After a comprehensive evaluation, 22 applicants will be granted the coveted Florida cannabis business licenses in August by the Office of Medical Marijuana Use.

Market Outlook

The new licensees will proceed to the challenge of setting up, launching, and operating their vertically integrated cannabis businesses which is a promising yet complex venture even for experienced cannabis companies.

As the medical cannabis market continues to burgeon in the Sunshine State, businesses are bestowed with exciting growth opportunities, including confident whispers that adult use legalization is coming down the pipeline in Florida for 2024 or 2025. Though it may seem that the sooner the adult use legalization occurs, the better. The 22 new cannabis businesses would be best served by a 2025 timeline so they have the time to build out their facilities and establish their operations in the medical space before taking on the onslaught of demand that adult use will inevitably bring.

Florida has a population of 22.6 million and a recorded 137.6 million visitors in 2022. That’s a huge jump in potential customers that the cannabis market in Florida will see compared to the approximately 900,000 medical patients they serve currently.

Operating successfully will require a deep understanding of the unique characteristics and stipulations of Florida's cannabis industry.

Cannabis Business Operation in Florida

Operating a cannabis business in Florida is a promising yet complex venture. As the medical cannabis market continues to burgeon in the Sunshine State, businesses are bestowed with exciting growth opportunities. However, capitalizing on these prospects requires a deep understanding of the unique characteristics and stipulations of Florida's cannabis industry.

Navigating the intricacies of a vertically integrated business model, tapping into the generous store expansion opportunities, and maintaining unwavering compliance with the Office of Medical Marijuana Use (OMMU) - these are the cornerstones of a flourishing cannabis business in Florida.

Compliance with the Office of Medical Marijuana Use (OMMU)

The Office of Medical Marijuana Use is charged with writing and implementing the Department of Health’s rules for medical marijuana; overseeing the statewide Medical Marijuana Use Registry; licensing Florida businesses to cultivate, process and dispense medical marijuana to qualified patients; and certifying marijuana testing laboratories to ensure the health and safety of the public as it relates to marijuana.

Regulatory bodies hold significant influence over what businesses can and cannot do, including rules related to production, marketing, sales, and even the financial aspects of the business. Any failure to adhere to these regulations can lead to penalties, license revocation, and potential legal action. Therefore, understanding and aligning business operations with these guidelines can enable businesses to not only avoid legal pitfalls, but also to demonstrate their commitment to ensuring public safety and the highest standards of product quality. This, in turn, helps them build trust with their customers, making compliance a critical aspect of achieving success in the cannabis business.

Vertically Integrated Business Model

Operating a cannabis business in Florida requires adopting a vertically integrated approach, meaning that companies are required to have control over every stage of the cannabis supply chain, including cultivation, processing, dispensary operations, and delivery. The theory is that this business model ensures that quality and safety standards are maintained throughout the entire process. On the flip side, it requires every company to be good at four separate business lines each of which require different core competencies.

Managing multiple aspects of the supply chain requires careful coordination and expertise. It involves overseeing cultivation operations, ensuring proper processing and packaging of products, managing dispensary inventories, and coordinating efficient delivery services. Complying with the extensive regulatory framework adds an additional layer of intricacy, making it crucial for businesses to approach this venture with a thoughtful strategy and a willingness to invest resources in each piece of the business.

Many businesses in the state have struggled to excel across their supply chain. For instance, Florida has been known for selling notoriously sub par cannabis flower to its medical card holders, and customers have described the demeanor of employees at some dispensaries as if they “are absolutely miserable.” Good news for new businesses is that there is definitely room for improvement. Perhaps the new operators will come on the scene with improved performance, or perhaps they will face the same hurdles to achieving quality that the existing operators have faced.

Store Expansion Opportunities

From our perspective, one of the most exciting features of Florida’s cannabis regulatory model is the Store Expansion Opportunities. Florida provides a unique platform for cannabis businesses to grow and expand, exceedingly further than most other legalized states allow. License holders are permitted to open as many dispensaries as their company can adequately supply with cannabis products. This flexibility allows for strategic market penetration and ensures that businesses can cater to the demands of consumers across the state effectively.

For reference, Illinois only allows 10 dispensaries per company and the company has to compete for every license separately, New York will allow 3 dispensary licenses per company, and Ohio allows a total of 5 dispensaries per company with each license being competed for separately. Each of those states has a limit on the total number of dispensaries in their state, whereas Florida simply has a cap on the number of license holders, but doesn’t strictly limit the store count to the same extent. For comparison, Florida licensees compete once for their license and then under that license have the opportunity to scale their retail dispensary footprint as far as is feasible for their business. The company with the largest market share in Florida has 125 dispensaries listed on their company website as of July 2023.

With existing operators who have taken advantage of scaling their dispensary footprint across the state for the past 9 years, new operators will have to figure out how to thrive and establish market share in a state that already has a substantial number of cannabis dispensaries. What will it take to succeed?

Keys to Successful Cannabis Business Operation in Florida

After the rewarding yet challenging phase of obtaining a cannabis license in Florida, the path to operating a successful business begins. At Cann Strategy, we know that certain elements are key to the effective establishment and growth of your cannabis venture in Florida. Our comprehensive and tailored consulting services ensure you have all bases covered as you delve into the medical cannabis market and even prepare for future adult use sales. Here are the keys to success for your cannabis business in the Sunshine State.

1. Coordinated Project Management

Project management refers to the process of planning, organizing, executing, and overseeing a project to ensure it is completed efficiently and successfully. It involves a wide array of tasks, including defining project goals and objectives, establishing timelines and budgets, allocating resources, managing teams, and tracking progress against the defined goals.

When initiating a significant endeavor such as starting a Medical Marijuana Treatment Center, effective project management is indispensable. This sector, laden with numerous tasks ranging from regulatory compliance, facility setup, staffing, product development to marketing and sales, demands meticulous organization and coordination. Good project management helps synchronize these elements, streamlining operations and meeting crucial deadlines. Moreover, it aids in the efficient utilization of resources and effective risk mitigation, ensuring that the entire startup process aligns with the business goals.

Without skilled project management, there's a risk of projects going over budget, missing critical deadlines, or failing to meet the established objectives, hindering the success of your cannabis business.

2. Selecting a Quality General Contractor

The role of a general contractor extends beyond mere construction; they serve as valuable guides in navigating the intricate landscape of cannabis-related building codes and zoning requirements. This includes understanding the regulations specific to the cannabis industry, such as ventilation standards, security requirements, waste disposal regulations, and more. Their knowledge can help avoid legal complications and ensure that your facility is compliant from the start.

Selecting a good general contractor is thus a critical decision. There are several factors to consider in making this choice. First, look at their experience in the cannabis industry. Do they understand its unique challenges and regulatory landscape? Have they successfully completed similar projects? Examining their portfolio and asking for client references can provide valuable insight.

3. Selecting and Implementing Top-Tier Technology Systems

In today's rapidly evolving, tech-driven landscape, the implementation of robust and adaptable technology systems is an absolute necessity for managing a cannabis business effectively. These systems span multiple aspects of operations, including inventory management, sales, customer relations, and compliance reporting. When correctly chosen and effectively utilized, this technology can provide a substantial competitive advantage, optimizing business efficiency, productivity, and maintaining regulatory compliance within the stringent cannabis industry.

Inventory management, for instance, can be dramatically improved through sophisticated technology systems, allowing real-time tracking of stock levels and precise forecasting of future needs. Sales and customer relationship management (CRM) platforms can offer valuable insights into customer behavior, streamline sales processes, and foster stronger relationships through personalized customer interactions.

Furthermore, technology plays an essential role in compliance reporting in the cannabis industry, where businesses must navigate a complex web of regulatory requirements. Advanced software can automate the compilation and submission of compliance reports, reducing the risk of human error and ensuring timely reporting. Hence, selecting the right technology systems and harnessing them effectively is paramount in driving growth and success in the competitive cannabis industry.

4. Brand Development

Creating a powerful and distinctive brand is crucial for success in the increasingly competitive cannabis market. A brand is much more than a logo or tagline—it embodies your company's values, mission, and the unique customer experience you provide. Your brand should convey your guiding principles and unique value proposition consistently across all communication channels. This could be the exceptional quality of your products, the extent of your product range, superior customer service, or a commitment to social responsibility. Customer experience, extending beyond mere transactions to every interaction with your business, is also a vital part of your brand.

Design elements, such as logo, packaging, and website aesthetics, should echo your brand's persona and captivate your target audience. Moreover, developing a compelling brand voice and leveraging storytelling can make your brand more relatable and memorable, forging strong emotional connections with your customers. Whether it's the story behind your company's creation, your team's personal journeys, or testimonials from satisfied customers, storytelling can significantly enrich your branding strategy. I

5. Cannabis Dispensary, Cultivation and Processing Facility Design

Dispensary design can greatly impact customer experience and, by extension, your business's success. A well-thought-out design should facilitate efficient operations, display products in a compelling manner, and create a welcoming, engaging atmosphere for customers. Ensuring ADA compliance and considering customer flow and safety can also boost customer satisfaction and business reputation.

Similarly, every facet of facility design for cultivation and production - from layout and space allocation to lighting, temperature control, and air filtration systems - can significantly impact both operational efficiency and the quality of the cannabis and cannabis products.

6. Recruiting and Training Staff

Your staff carry the success and efficiency of your business in how they operate on a daily basis. In the dispensaries, staff are the face of your cannabis business. Hiring knowledgeable, customer-centric personnel and providing them with comprehensive, up-to-date training on cannabis products, sales techniques, and compliance requirements can significantly enhance customer service quality and, ultimately, your bottom line.

In cultivation you’ll need truly skilled cultivars who understand plant health, how to optimize outcomes such as cannabinoid and terpene levels, and how to maintain exquisitely sanitary conditions.

In production you’ll need staff who are knowledgeable about the use and safe handling of equipment and products. Similar to cultivation you’ll need production staff who understand how to get the best outcomes for products and how to maintain an exquisite level of sanitation standards.

Your delivery drivers will need to be good drivers of course, and additionally be mindful of their surroundings to look out for any security risks while they are on their routes or conducting a delivery. Having a coordinator who understands route planning if a must.

Recruitment and hiring is often treated as a simple task when finding great talent that will stay with your company is an art which includes a mix of finding the people, asking the right types of questions, and sussing out their character and potential culture fit.

7. Working with Multiple Testing Facilities

Every cannabis business must have their products tested by a licensed lab to ensure the quality and purity of cannabis flower and extracts. Regular testing can prevent contamination issues, ensure dosage accuracy, and enhance consumer trust in your products. It also plays a critical role in staying compliant with Florida's stringent cannabis testing regulations.

Aligning with multiple reliable testing facilities ensures the consistent quality and safety of your cannabis products, and creates redundancy in your lab testing so if one lab is having issues that does not stall the flow of your company’s process. Multiple lab relationships will also be key when adult use is legalized and the labs have to deal with an onslaught of products to test which they will have never before had to handle.

8. Implementing SOPs

Standard Operating Procedures (SOPs) are a set of step-by-step instructions that guide your staff through essential tasks, functions, and operations within your business. They serve as an operational roadmap, detailing precisely how routine activities should be conducted to ensure efficiency, safety, and consistent quality.

Implementing comprehensive, easy-to-understand SOPs is vital to ensuring consistency in business operations. This means each process is carried out the same way each time, reducing the likelihood of errors and increasing the reliability of outcomes. Furthermore, SOPs can help standardize training procedures for new employees, helping them understand the job requirements more quickly and accurately.

A well-defined SOP can also enhance product quality. By following the same steps every time a task is performed, the variability in the process outcome can be significantly reduced.

9. Systemizing the Supply Chain

An efficient, systemized supply chain is vital to consistently and sustainably meet customer demand. A crucial component of this involves establishing strong, collaborative relationships with reliable suppliers. It's essential to have multiple sources for key products and materials, as this mitigates risks associated with supplier disruptions. This redundancy can ensure business continuity even when one source faces unexpected issues, thereby maintaining the stability of the supply chain.

Effective inventory management practices also play a critical role in an efficient supply chain. Businesses must balance maintaining sufficient stock to meet customer demand against the cost of holding excess inventory. Predictive analytics, demand forecasting, and just-in-time inventory systems can be invaluable tools for maintaining this balance. These techniques can help identify trends, predict future demand, and ensure products are available precisely when needed, thereby reducing storage costs and the risk of stockouts or overstocks.

Optimizing logistics and distribution strategies is another critical aspect. This involves not only selecting the most cost-effective methods for transporting goods but also considering how these methods can adapt to changing circumstances. In essence, the goal should be to create a flexible and resilient supply chain that can adapt to changing circumstances and withstand disruptions.

10. Working Closely with State and Local Regulators

Maintaining a positive, proactive relationship with state and local regulators is vital for navigating the regulatory landscape and staying abreast of changes that could impact your cannabis business. Regular communication can foster mutual understanding and cooperation, facilitating smoother business operations and reducing the risk of issues.

As you can see, setting up a successful cannabis business in Florida involves a combination of astute management, stringent quality control, robust technology systems, effective branding, and meticulous compliance with state and local regulations. That's where we, Cann Strategy, come in.

Cann Strategy: Your Partner in Cannabis Business Success

Navigating the complexities of the cannabis business requires expertise, foresight, and a deep understanding of the industry. At Cann Strategy, we offer comprehensive consulting services designed to guide cannabis business owners like you to success.

We take pride in our extensive industry knowledge, commitment to customer service, and hands-on approach. Our team of experts is equipped to assist you at every step of the journey – from initial setup and scaling your operations, to managing compliance and preparing your business for future opportunities in the adult-use market.

We understand that every cannabis business is unique, with its own set of challenges and opportunities. Our personalized approach ensures that your business receives the exact support it needs to thrive in Florida’s rapidly evolving cannabis market.

When you choose Cann Strategy, you are not just choosing a consulting firm – you're choosing a co-pilot committed to helping you succeed in the cannabis industry. Your success is our mission, and we will leverage the expertise of our various hand selected consultants to help you achieve your business goals.

Whether you are launching a start-up or looking to expand your existing cannabis business in Florida, we are here to guide you towards success. Start your journey today with Cann Strategy and make your mark in the thriving Florida cannabis industry.

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