Fluent plots Florida expansion – with or without adult-use legalization

Fluent, a subsidiary of Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF), has grand plans for expansion, but the potential for adult-use legalization in Florida isn’t the key driver, according to CEO Robert Beasley.

The Tampa-based cannabis company, with is currently the sixth-largest operator in the state by milligrams of THC sold, will increase its growing capacity by roughly a third through a 32,000-square-foot expansion adjacent to its existing facility, Beasley said. But that strategy is focused on meeting growing medical demand.

The project’s 12,000-square-foot first phase will focus on premium indoor flower, followed by a 20,000-square-foot second phase for additional cultivation. The company already expanded its greenhouse to target extract production.

While the executive sees opportunity in the adult-use market that would come into being if Amendment 3 passes next week – he estimates that Florida’s eligible cannabis-buying population would jump from roughly 890,000 patients now to 56 million – Beasley said the actual market launch is likely still a ways off. He doesn’t expect it to kick off until at least May 2025, but he wouldn’t be surprised if it took another two years.

“We can’t afford to bet on it, so we can’t ramp now,” Beasley said during a recent industry roundtable hosted by Zuanic & Associates. “We’re going to have to catch it.”

But that doesn’t mean the company is sitting idly by while other operators, like Trulieve Cannabis Corp., jockey for position. Fluent has secured contingency property for additional cultivation to serve an adult-use market, but Beasley said the company won’t develop those plans until there’s more regulatory certainty.

And as an existing operator, Beasley suggested he doesn’t want to see unchecked growth that could undermine the market.

“We’ve all watched California and Colorado and other states run away with open stores and you know, basically following the tragedy of supply and demand and oversupply not matching the demand,” he said.

If wholesale is allowed under a rec program, “it would level it out and it would let that ramp go smoother for everyone,” Beasley noted. “But if it’s not allowed, then we’re all going to have to just grow in the unequal way that we’ve been doing.”

Florida’s humid climate makes large-scale cultivation challenging, with Beasley noting costs of about $14 a gram there versus 6 cents a gram in Oregon, based on his own recall of his previous growing experience in the Pacific Northwest.

“Cannabis doesn’t like wet feet or excessive moisture and we have both,” he said.

While Beasley expects existing operators could eventually meet adult-use demand, the vertically integrated companies will need time to scale after any legalization. Lawmakers would still need to set regulations in the upcoming legislative session, with THC caps and dispensary caps among likely items that would pick up if the ballot measure passes, which Beasley suggested he could be open to if reasonable.

“The operators that exist today are capable of meeting the need and the demand — it’s just a growth curve,” Beasley said. “We’re a shipping company, we’re a packaging company, we’re a cultivation company… to get all of that infrastructure, all those cultural divides together and working in the right direction takes a minute.”