Pubdate: Mon, 02 Feb 2015
Source: Orlando Sentinel (FL)
Copyright: 2015 Orlando Sentinel
Contact:  http://www.orlandosentinel.com/
Details: http://www.mapinc.org/media/325
Note: Rarely prints out-of-state LTEs.
Author: Scott Powers

GROWERS VIE FOR STAKE IN MEDICAL POT

But Many Expect Little or No Profit Under Current Florida Law

 From page A1 Central Florida commercial plant growers such as Kerry 
Herndon, Heather Zabinofsky and Bruce Knox expect fierce competition 
over who will legally grow medical marijuana in Florida.

Yet, most expect little or no profit under the current law.

"There is kind of a consensus that the first guys in can't make any 
money," said Herndon, who owns Kerry's Nursery in Apopka.

There are as many as 98 nursery companies in Florida, including 25 in 
Central Florida, that could qualify to bid for five regional medical 
marijuana licenses that Florida expects to issue later this year. The 
licenses give right to grow a non-euphoric strain of marijuana, 
process it into a medicine best known by the brand name "Charlotte's 
Web" and sell it to patients suffering from a limited number of 
ailments including severe epilepsy.

None of them can know for sure what the start-up, production and 
marketing costs will be like until a state committee meets in 
Tallahassee on Wednesday and Thursday to write the regulations.

After months of contentious attempts to establish the rules, the 
state formed the committee made up largely of interested businesses. 
It will negotiate regulations such as growers' minimum qualifications 
for production, quality control and where dispensaries could be located.

Some in the business like Herndon fret that low standards that allow 
for low production costs could make the already relatively small 
patient market leery. High-end standards meant to assure quality and 
reliability could bolster confidence, yet also force high costs.

"The regulations are in such limbo ... it's really difficult to 
project out with any kind of certainty," said Pete Sessa of the 
Florida Cannabis Coalition, a business group. "One slight, little 
change can mean exorbitant costs or enormous savings."

Herndon and other growers say they believe they already have 
production infrastructure in place to begin growing marijuana almost 
immediately, while others say they plan to invest heavily in 
state-of-the-art facilities.

Knox, a member of the rule-writing committee, is owner of Knox 
Nursery in Winter Garden. He said "the cost will depend on the 
regulatory requirements," some of which will be guided by the 
committee, and some by the Florida Department of Health.

"There is no doubt that the cost to start growing and dispensing 
could be very high," Knox said.

Production costs could be vastly different from most greenhouse crops.

"We've talked to people with large operations in Colorado, California 
and Canada," said Cerise Naylor executive director of another 
business group, the Florida Medical Cannabis Association. "They're 
all saying you're going to be spending hundreds of thousands of 
dollars a month just on your lighting costs. And then you're going to 
have to keep your air conditioning on constantly ... because those 
lights produce so much heat."

Estimates vary widely on the potential customer market, from a few 
hundred willing patients to hundreds of thousands.

Another committee member, Jill Lamoureaux, is a past president of the 
National Cannabis Industry Association. She is a lobbyist for a 
Colorado-based quality-control lab company called CannLabs, and 
helped write regulations in Colorado and Washington state.

Based on what has happened in other states, she said Florida should 
expect a small market. Connecticut, for example, has only four 
licensed growers, and its law allows for more products and more 
illnesses to qualify than does Florida's, but "the purchasing market 
is not big enough for the four."

"Prices are exorbitantly high," she said. "The prices are double the 
black market."

And no health insurance will pay for marijuana medicine.

Among other critical issues that the committee must settle is where 
the companies can sell their products. Initially there was the 
expectation that they would have to sell the medicine directly from 
their production facilities, meaning only five Bruce Knox, owner of 
Knox Nursery in Winter Garden, said regulatory requirements will 
likely dictate the cost of production for medical marijuana growers. 
dispensaries in the state, most likely located in semi-rural areas.

"That was the clincher in getting a better idea of what the revenue 
is going to be," Naylor said. "You would lose so much of your 
qualified and likely patient base if they had to drive two hours to 
the middle of nowhere to pick up their medicine. With retail 
facilities, more patients are going to be interested in using this 
low-THC cannabis because it's significantly more accessible."

So why all the interest in the competition?

Zabinofsky, who heads a Sanford-based company called Maser Growers 
that intends to partner with the Baywood Nurseries in Plymouth, calls 
the five licenses the "golden tickets."

If Florida fully legalizes medical marijuana, estimates suggest that 
the Florida industry could see hundreds of millions of dollars in 
annual revenue. Zabinofsky said she thinks that is a very low 
estimate; she calculates a potential market worth billions a year.

The growers already set up in business would be most ready.

"All I have to do is change the strain if I get the golden ticket," 
Zabinofsky said.
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MAP posted-by: Jay Bergstrom