After a prolonged wait, Florida is set to issue a medical marijuana growing license to a single Black farmer
It’ll be a hard sell at $146,000 just to apply and with low prospects for majority stake—or advancing equity. Still, the license could be a passport into Florida’s billion-dollar cannabis market.
When Florida voters passed Amendment 2 legalizing and expanding access to medical marijuana in November 2016, Black farmers and advocates rejoiced.
Under the measure, one license, called the Pigford Black Farmer License (BFL), would be set aside for a claimant of the 1997 class action lawsuit, Pigford v. Glickman, which alleged sustained and ongoing discrimination by the U.S. Department of Agriculture.
One license may not seem cause for celebration or a meaningful step toward equity, but the license would afford the chosen farmer an entree into a lucrative business; Florida sales are projected to top $6 billion by 2030. It was to be one of only 10 licenses permitted under the legal change, but its granting was delayed by years of protracted legal wrangling over the structure and constitutionality of the law.
Now, more than five years after Amendment 2 passed, the state finally announced in December it would take applications for licenses between March 21-25. The number of total licenses available has grown to 19, due to a rise in eligible patients; the state is now the third-largest market for cannabis in the United States. But there’s still only one license guaranteed to go to a Black farmer. And advocates say a dramatic increase in the price to apply for the state’s medical marijuana treatment center (MMTC) license—from about $61,000 to $146,000—and a requirement that the licensee manage every part of the process from seed to sale, probably undermine Black farmers’ ability to secure a license without corporate partnership or control any proposed venture.
The average U.S. Black farmer nationwide earns about $5,000 from farm income annually and lacks access to sufficient lines of credit and technical resources.
When Florida’s first marijuana licenses were granted in 2015, they were only offered to nurseries that had conducted business in the state for 30 years or more and grew at least 400,000 plants annually. No Black farmers met the eligibility requirements.
Advocates “asked legislators to ensure that one license was set aside for a Black farmer,” said Roz McCarthy, director of Orlando-based Minorities for Medical Marijuana (M4MM). At that time, a single license seemed politically feasible. The Pigford/BFL carveout was proposed by Black farmers who were effectively shut out of Florida’s initial “Charlotte’s Web” compassionate use bill (its name refers to a popular strain of medical marijuana). That act legalized “noneuphoric, nonedible, and nonsmokable” cannabis for a small number of debilitating conditions such as severe epilepsy and cancer.
It’s unclear how many growers can meet today’s current licensing fees and requirements. The average U.S. Black farmer nationwide earns about $5,000 from farm income annually and lacks access to sufficient lines of credit and technical resources. The cost to apply for the BFL MMTC license is nonrefundable and more than twice the cost of the licenses issued in the first and only previous round, in 2015. The Florida Department of Health (DOH), which oversees the state’s medical marijuana program, has only released the application fee and instructions for the BFL license; it’s unclear if the fee will rise accordingly for the remaining 18 licenses it can grant.
“I was shocked by [the application fee hike]. It’s not to say you can’t increase your application fee. That’s fine. However, this particular license was authenticated and was supposed to take place under the original fee schedule. I believe that should have been honored,” said McCarthy. In most states where cannabis is legal for either medical or recreational consumption, application fees (not counting actual licenses or permits) amount to $10,000 or less. In Washington state, it’s $250; in Connecticut, it’s $25,000. The cost to apply for Florida’s Pigford/BFL license is the highest in the nation by far.
“I was shocked by [the application fee hike]. This particular license was authenticated and was supposed to take place under the original fee schedule. I believe that should have been honored.”
That $146,000 tag is also just a fraction of the total costs. Attorney fees, hiring technical writers and consultants, along with sourcing real estate for cultivation, processing, and dispensing locations, could run applicants at least half a million dollars, McCarthy estimates. And once the license is acquired, start-up costs could range from $15-$20 million.
The state’s justification for the fee hike is that the industry and administrative costs for the program have grown, but it’s also received an influx of revenue from the collection of taxes and fees related to MMTCs. There is no excise tax on medical marijuana in Florida, but purchases are subject to a 6 percent sales tax. In 2020, Florida raked in about $74 million in cannabis tax revenue, in addition to $50 million in licensing fees from its 22 registered MMTCs, according to The Miami Herald (five licenses were issued in 2015, and subsequent litigation required DOH issue its next 17 licenses to applicants who were rejected from that initial pool).
“Florida in 2017 was really ahead of the game in regard to identifying a socioeconomic class and saying, based upon the harm that’s been done, we’re going to create an opportunity for you to participate in this industry. That wasn’t being done then,” said McCarthy. Since then, she continued, the process has been derailed.
Of the roughly 2,500 Black producers in Florida, it’s estimated less than 100 are Pigford legacy farmers, people who took part in the 1997 lawsuit. Application requirements don’t state that a farmer must be a Florida resident; only that an applicant, whether an individual or entity, demonstrates that they have been registered to do business in the state for five consecutive years prior. A legacy farmer from Arkansas or elsewhere outside the state could partner with a Florida-based corporation to seek a license.
“With a vertically integrated license, you need to have the ability to cultivate, process, dispense, and transport as a single entity, which increases the costs for licensing.”
Only one of Florida’s 22 current MMTC licenses is minority-owned. Cookies, a California-based marijuana retail brand, was co-founded in 2012 by rapper and entrepreneur Gilbert Anthony Milan Jr., known to fans as Berner. Milan is of Mexican descent and has grown the brand into an empire worth half a billion dollars and with stores in multiple states and Israel.
In 2017, as Black farmers eagerly awaited another chance to join the industry, a stream of lawsuits filed against DOH challenged various portions of Senate Bill 8A, the Medical Use of Marijuana Act, which established the regulations and implementation of Amendment 2, as well as the constitutionality of the law itself.
Its first challenge came from a Black farmer. A lawsuit filed in September of that year by Panama City farmer Columbus Smith, then 80 years old, alleged that the state’s statute unfairly excluded him and other African American farmers from seeking a medical marijuana treatment center (MMTC) license based on its language. The law required the DOH to license one applicant who was a recognized class member of Pigford v. Glickman, and In Re: Black Farmers Litigation (a 2011 provision that granted farmers a new right to sue), as well as a member of the Black Farmers and Agriculturalists Association (BFAA) Florida chapter.
While Smith met the former Pigford-related requirements, he wasn’t part of the organization. When he attempted to join the agriculturalist association, Smith said he was denied membership. A county circuit judge granted a temporary injunction in the case three months later, halting the health department’s ability to award the license.
When in March 2018 an amended state House bill removed the requirement that farmers belong to BFAA, and that they be recognized as class members of both legal suits, Smith voluntarily dropped the suit. But the north Florida farmer’s case was one of at least seven that challenged various portions of the statute.
Another blow came in a 2018 lawsuit filed by Tampa-based company Florigrown, which resulted in another court-ordered injunction. This one blocked the health department from granting additional licenses. In that case, Florigrown, which applied for and was denied a license in 2015, alleged that the DOH’s requirement that companies be “vertically integrated” was unconstitutional.
Critics of vertical integration say its requirements make it difficult for small businesses to compete, while allowing large companies with lots of financial backing to take over.
“With a vertically integrated license, you need to have the ability to cultivate, process, dispense, and transport as a single entity, which increases the costs for licensing. It also doesn’t allow for farmers who are good at farming to just focus on that piece and not have to take on partners with other experience that they don’t have. Just like someone who’s owned corner stores for three generations may not know how to cultivate anything, but they would run a fantastic dispensing organization—that’s a ‘horizontal’ approach that most states have adopted,” said Florida cannabis, agricultural, and dietary supplement attorney Scheril Murray Powell.
With a horizontal approach, there is less financial pressure on licensees to manage all aspects of the production path and more capacity to focus on fulfilling one chain in the link. A marijuana grower grows; a cannabis processor processes; and a product distributor distributes.
Critics of vertical integration say its requirements make it difficult for small businesses to compete, while allowing large companies with lots of financial backing to take over. Trulieve, one of the first MMTCs licensed in Florida, is a publicly traded company that operates in 11 states with “leading market positions” in Arizona, Pennsylvania, and Florida—where it now controls more than 50 percent of the market.
In some states, such as Washington, vertical integration is prohibited, and strict separation between production and retail is enforced. In other states, such as Massachusetts, vertical integration requirements established for medical marijuana have been lifted for the adult-use recreational market. New Jersey and New York, which legalized adult use last year, followed suit.
Last spring, the Florida Supreme Court sided with DOH against Florigrown, ruling that the constitutional amendment that legalized medical marijuana also gave the state’s legislature rulemaking authority. That paved the way for the administration of new MMTCs. The vertical integration license requirement remained unchanged.
“There needs to be some reflection on whether a vertical license is still appropriate at this point,” said Murray Powell. “And there also needs to be an attempt to not only remedy the disadvantage that the current program places on Black farmers, but also Black, minority, and small business owners that want to participate, who even with the issuance of the Black farmers license, will still be disadvantaged and left out of the process.”
“There needs to be an attempt to not only remedy the disadvantage that the current program places on Black farmers, but also Black, minority, and small business owners that want to participate, who even with the issuance of the Black farmers license, will still be disadvantaged and left out of the process.”
Racial equity advocates have called on state governments to address disparities in Black and brown ownership and participation in the marijuana industry since legalization efforts began. While Black and Latino communities have been disproportionately affected by the country’s War on Drugs, very few of their members have reaped the benefits of marijuana’s uneven and relatively recent ascent to lucrative legality. A 2017 Marijuana Business Daily survey reported 81 percent of marijuana business owners are white in contrast to 4.3 percent of Black and 5.7 percent of Hispanic business owners.
Florida’s new license requires applicants to submit a detailed diversity plan of steps they will take to promote inclusion. But its overall medical marijuana program, so far, hasn’t gone further than requiring one license for a very limited group of people, and a plan to do better.
The winner of the BFL will have a steep hill to climb: first, sifting through 70 pages of application instructions, proving they can literally do it all, and getting funding for the venture. With all the qualifications necessary to demonstrate an applicant’s ability to succeed, forming a partnership can seem like the only viable path forward for many Black farmers. That has raised concerns over farmers’ ability to retain control over the operation. That’s a critical issue for Black farmers, who typically have less land and capital—and are more vulnerable to losing both.
McCarthy described Pigford farmers eligible for the license as experienced farmers and savvy decision-makers seeking partnerships where they could be considered the “head as opposed to the tail” of an operation, as advocates envisioned. Yet some fear large firms would be unlikely to accept such an arrangement.
“The plight of the Black farmer in the state of Florida is real, and there may be an opportunity for this committee to do something to provide relief.”
In an online discussion held in early December via Zoom by marijuana law, accounting, and business group Cannabis Lab, a panel of industry experts and advocates outlined the process and its challenges.
“We’re going to have Pigford applications in which they will not be the majority owner … and that’s not what was intended,” said Erik Range, a cannabis consultant and board member of M4MM. “In order to raise the capital to even submit the application, with the [letters of intent] you have to put out, different partnerships that you have to get involved with, very few companies are going to come to the table with all the money and give up 51 percent. Right now, nothing in the statute requires [a Pigford farmer] to be 51 percent owner.”
One thing is certain: Florida’s Pigford license is worth millions. Licenses can be sold, and Milan’s Cookies bought a license from Florida’s Tree King Tree Farm in 2020. Although Cookies did not disclose the purchase price, PR Newswire reported one such transaction with Tree King Tree and a different company valued at $48 million in June 2019.
The fate of the Pigford farmer license—who will be granted it, whether it will be sold for a substantial sum—is anyone’s guess.
Some advocates fear that more legal challenges, which would inevitably lead to more delays, could lie ahead. The 2017 statute compelled DOH to issue licenses to medical marijuana applicants who were denied in the first round of licensing and had filed litigation against the department. The clock is ticking for this group of applicants, many of whom are in their 80s.
In a Florida Senate Agriculture Committee meeting held late September last year, committee chair Democratic Sen. Darryl Rouson questioned the director of the Office of Medical Marijuana Use (OMMU), about its lack of progress on the BFL license.
“I’m reminded of a phrase that’s been attributed to Dr. [Martin Luther] King, when he said that a man who starts behind in a race is doomed to forever remain behind unless he runs faster than the man in front. Years have passed since this legislature spoke about the issuance of the Pigford class license. … The plight of the Black farmer in the state of Florida is real, and there may be an opportunity for this committee to do something to provide relief.”