Florida Supreme Court OKs adult-use cannabis ballot measure

Florida’s state Supreme Court on Monday greenlit an adult-use ballot measure bankrolled by Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF).

“Our role is narrow — we assess only whether the amendment conforms to the constitutionally mandated single-subject requirement, whether the ballot summary meets the statutory standard for clarity, and whether the amendment is facially invalid under the federal constitution,” Justice Jamie Grosshans wrote in the opinion published Monday.

“In light of those limited considerations, we approve the proposed amendment for placement on the ballot.”

Many executives, experts, and advocates believe the proposal will surpass the required 60% approval threshold, citing generally broad support across demographics.

“There’s a majority of Americans who support this, and that’s in every single age group, every education level, every income level, and every political group,” Sally Peebles, who leads Vicente LLP’s Florida office, noted.

Peebles also suggested that the legalization initiative, along with an abortion issue that was also approved by the court on Monday, could drive higher voter turnout, particularly among casual Democratic voters.

Still, a memo from Viridian Capital Advisors takes a more cautious approach.

“Assuming a go ahead by the Court, recreational use in Florida still has one (additional) major hurdle,” the cannabis-focused investment firm wrote. “The constitutional amendment requires a 60% supermajority to pass, and that is a tough standard.”

In 2014, Florida held a vote on allowing medical cannabis, but it received only 57% of the vote, just short of the 60% threshold. Two years later, in 2016, a similar measure was voted on, and this time it passed with 71% of the votes in favor.

“Ohio voters approved adult use last year by a 57% level,” the firm said, adding that polling on the issue is “all over the place.”

Still, Florida-focused cannabis company stocks performed better than the overall market last week, the firm noted.

Viridian calculated each company’s “torque” in relation to Florida by dividing the number of dispensaries each company has in the state by its enterprise value. Cansortium and AYR have the highest torque, followed by Planet 13 and Jushi Holdings. The strong performance of these Florida-centric stocks indicates that investors believed the court would approve the ballot measure.

If Florida legalizes adult-use cannabis, industry experts generally estimate that revenues could roughly double. With Florida’s estimated 2024 sales at approximately $2.8 billion, doubling would represent a 7.3% increase in total U.S. cannabis sales for 2024.

If Florida’s legalized sales reach levels similar to Colorado’s on a per-adult-resident basis, the firm said, sales could increase by nearly 120%. The potential for both Florida and Pennsylvania to legalize recreational use is one reason why Viridian believes consensus growth estimates for 2025 are likely to be exceeded.

“The big question that needs to be answered is, if the Supreme Court allows us to be on the ballot and it does pass, will that allow for new licenses?” Peebles said.

Hashing out rules

Uncertainty remains regarding the implementation and regulation of legal cannabis if the ballot measure passes. It is unclear whether the initiative would permit license types beyond the currently allowed “vertically integrated” operations.

The legislature also would need to establish new regulations in the next legislative session if the ballot initiative passes, and the governor would have to sign off on any resulting bills.

Twenty-two medical marijuana licenses are pending currently from an application process in April 2023, but they have not yet been awarded. Litigation from unsuccessful applicants could further delay the issuance of those licenses.

“Since the licenses haven’t been issued yet, we don’t know what that will look like yet,” Peebles said.

Still, there are those close to the situation who are hearing about licenses being sold or being offered at a lower price than what were seen years ago.

If adult-use cannabis is legalized, companies now selling delta-8 THC and similar products may also face challenges and could be forced to pivot to other markets, products, or states. A law tempering the sale of intoxicating hemp products recently made it through the legislature.

Existing medical outfits should gain the most for now, and moves have already been made such as securing new capital. ($40 million so far)

“We are thankful that the court has correctly ruled the ballot initiative and summary language meet the standards for single subject and clarity,” said Trulieve CEO Kim Rivers. “We look forward to supporting this campaign as it heads to the ballot this November.”

The Florida-based cannabis giant has already poured $40 million into the effort so far.

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