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Why medical marijuana is becoming a business opportunity

Dara Kam - The News Service of Florida

 

Armored cars ferrying pounds of pot products --- with names like "Stinky Purple" --- from Pensacola to Miami. Cannabis advertised on billboards throughout the state by companies linked to some of the Capitol's most powerful lobbyists.

That scenario could soon become a reality as state officials prepare to pick Florida's first medical-marijuana vendors.

More than two dozen nurseries --- and their consultants, doctors and pot experts from across the country --- are seeking to become one of the fortunate five granted "dispensing organization" licenses to grow, process and distribute the non-euphoric marijuana authorized by Gov. Rick Scott and the Legislature last year. One nursery will be chosen in each of five regions of the state.

The News Service of Florida conducted an intensive review of the 28 applications, released by Department of Health officials last month.

Many of the applications are highly redacted, leaving the public in the dark regarding critical information, such as ownership of the organizations, what types of products they want to sell or the financial fitness of the applicants. Some of the applications are almost completely blacked out due to claims of "trade secret" exemptions."

The analysis of the applications, which range in length from fewer than 200 to nearly 2,000 pages, provides a glimpse into what the state's medical-marijuana industry might look like before the end of the year, when pot products could be on the shelf.

One applicant is interested in proffering pot "pods" like those more commonly used in single-dispenser coffee machines.

Another is relying on the expertise of a pot expert from Colorado who is also the co-host of "The Funky Fresh Garden Show," whose Facebook page features a directive to "Inhale the funk, extract the bull****."

Two nurseries are partnering with a group that includes the son of an owner of two Florida greyhound tracks.

Yet another applicant boasts the former head of the Florida Department of Law Enforcement, Tim Moore, as its chief security officer. Some of the applications are bursting with in-depth information about everything from machinery, such as air-conditioning systems and carbon-dioxide extraction machines, to "bear-proof dumpsters." Many include photographs of marijuana plants in various stages of growth and processing, presumably shot at grow operations in other states.

Nearly all boast that they are best-suited to provide the medical marijuana products --- including oil, paste, capsules, nasal sprays, liquids for vaporizing and suppositories --- anxiously sought by parents of children with life-threatening seizures who pushed for the law last year. 

Each of the applicants turned to experts in places where marijuana is legalized and in production, including Colorado, Illinois, Oregon, Nevada and Canada.

Some of the applications appear to have been adapted from other areas of the country.

For example, Winter Garden-based Razbuton applied in the Central region of the state and is aligned with "Phoenix Botanical Research of Florida," an organization linked with "Phoenix Farms" and "Phoenix Botanical Research Partners of Illinois."

Although Florida's law prohibits smoking of the low-THC products, the Razbuton application includes a lengthy description evocative of a wine review of the "dry hit," "flavor" and "cloud" of the Harlequin strain of medical marijuana marketed elsewhere by Phoenix.

"The soft scent of mentholated dry mango swirls around the tongue, punctuated by the flavor of overripe peaches," an explanation of the Harlequin "dry hit" reads. "Exhaling Harlequin produces a dense fog of sweet incense, with a soothing, soft and spicy sandalwood scent."

Many of the applications include nearly identical information about issues such as systems they intend to use to keep track of the pot plants and products.

And more than a few said they were interested in getting into Florida's marijuana business because of its potential to help sick patients, especially epileptic children.

But the documents also show the financial benefits some of the businesses hope to reap.

Dewar Nursery, which applied in the Central region, predicts its "Sunshine Holistic Care" medical-marijuana operation could bring in at least $700,000 in sales-tax revenue for the state in its first year, according to an analysis conducted by University of Central Florida economist Sean Snaith.

Razbuton estimates it will rake in $6.8 million in sales the first year, with a net profit of $1.4 million.

Southwest-region applicant Plants of Ruskin predicts its pot operations will harvest from $11,000 to $950,000 a month in sales. The nursery, which has leased 15 acres in Hillsborough County for cannabis cultivation and which estimates its start-up costs at $7.7 million, projects a $2.6 million loss the first year.

Several of the applicants hope to give patients access to additional services.

Knox Nursery, which also applied in the Central region, plans on cultivating and processing medical marijuana at its existing nursery in Winter Garden. If licensed, Knox intends to open dispensaries at the nursery as well as in Orlando, Tampa and Tallahassee.

The nursery also promises to offer "complementary lifestyle services at a discounted rate," including acupuncture, yoga, massage therapy, meditation, and "other potentially helpful treatment methods."

Arcadia-based Sun Bulb Nurseries wants to go even farther. The nursery, which applied in the Southwest region of the state, plans to sponsor an annual health fair in the Fort Lauderdale area as part of its marketing strategy.

"Yoga instructors, massage therapists, chiropractors, health coaches, meditation guides, reiki masters, homeopathic doctors, mental health counselors, acupuncturists and those practicing other holistic healing modalities could all participate in the annual health fair," Sun Bulb's application reads. "Not only would this give them a lot of exposure to potential clients and be a good opportunity to network with other practitioners, but it would give them an excellent venue for providing pro bono work and serving the community they practice within."

State officials have at least 90 days from the when the applications were due on July 8 to pick the five licensees. But that three-month period has been extended because health officials are seeking additional information from several of the applicants.

As of Tuesday, the Department of Health had not named two of the three members of the committee created to select the five licensees. According to the agency's rule, the committee will be comprised of the director of the agency's Office of Compassionate Use; a member of the Drug Policy Advisory Council appointed by the state surgeon general, who heads the health department; and a certified public accountant, also appointed by the surgeon general.

Lawyer Christian Bax, who was affiliated with unidentified medical-marijuana organizations in other states, was appointed to take over the Office of Compassionate Use last month after former director Patricia Nelson, who helped develop the rule governing the applications, stepped down. Bax is the third director of the division in less than a year.

Under the law, nurseries that have been in business for at least 30 years in Florida and grew at least 400,000 plants at the time they applied in July were eligible to seek licenses. Twenty-six nurseries applied for licenses, and three applied in two of the five regions established in the rule. Applicants could apply in more than one region, but can only receive a license in one.

Redlands Nursery and Alpha Foliage, owned by John and Carolyn DeMott, both applied in two separate regions. The nursery has partnered with "Surterra Florida," a limited liability corporation whose officers include two Atlanta investors also seeking to establish a footprint in Georgia's nascent medical-marijuana industry. Alex Havenick, whose mother Barbara owns greyhound tracks in Naples and Miami, is also one of the officers of the Florida group.

Influential lobbyists Billy Rubin, a close ally of the governor, and Ron Book both represent Surterra.

Tallahassee lobbyist Brian Ballard, an influential Republican who is also a fundraiser for Scott, is listed as one of the owners of Sunbulb, an Arcadia nursery seeking a license in the Southwest region of the state. Ballard's name can also be found on the application for Homestead-based Keith St. Germain Nursery, an applicant for licensure in the Southeast region.

In a telephone interview, Ballard said he is also affiliated with San Felasco Nurseries, doing business as "Grandiflora," which is trying to get a license in Northeast Florida. Nearly all of that nursery's 765-page application was redacted --- including the "entire operations manual" --- because of "trade secrets."

Ballard said it is common for lobbyists to accept ownership shares of businesses they represent, as he did in the case of the medical-marijuana applicants.

"We both know there's plenty of folks out there that have interests that don't disclose. I wanted to make sure that we complied not only with the rule but with the intent of the rule. Clearly the intent of the rule is to not be surprised by people who have ownership-type interests," he said.