Florida Canna Cometh
The Sunshine State looks to get sunnier.
Alliance Global Partners hosted a Pre-Election Florida Showcase featuring John Tipton, President of Southern Region for Verano Holdings, Aaron Miles, the Chief Investment Officer at Verano Holdings, and Jim McKee, who is a Partner at Foley & Lardner LLP.
Below are some of the highlights:
VRNO on FL Amend3: FL university showing 66% approval yesterday.
VRNO Internal polls are similar to that, ranging from 64-66%.
Seeing a shift in voting base, more republicans voting pro cannabis.
Middle base transitioning to a yes vote.
Jim McKee - All polls showing just above 60%.
VRNO – Think Smart & Safe has done a good job educating the voter.
Progressing in the right direction.
Most of undecideds are due to confusion, not exactly know what the bill means.
^ due to some of the negative ads out there.
Think having Trump’s support has helped w/ that dramatically.
A large portion of undecideds sit in Republican camp.
A large portion also probably older voters.
Having Trump come out issuing support has been very positive for the campaign.
140m visitors to FL annually.
$350-400m conservative top line benefit to VRNO from FL A/U. 👀
2 cult facilities.
Haven’t really talked about what has been done positioning ahead of A/U.
Always focused on indoor, high quality. 260k sq ft of cult right now.
#2 player down there.
FL the most important market ever to transition from medical to A/U.
Jim McKee - FL amendment would maintain current vertical structure.
Amendment does permit legislature, if they pass a future law, to create future licensees that could be vertical or non-vertically integrated.
Wholesale is currently prohibited.
Legislature would have to act and explicitly permit that.
VRNO – FL is highest margin state.
Just bought VA, which has a similar model / also high margin. 👀
Focused on protecting margins.
Never wanted to beef up top line to detriment of margin profile.
OMMU doesn’t show dollars behind numbers (some operators selling cheaper product than others).
Some competitors play pricing game, everyone will take pricing measures, but VRNO doesn’t do it to the detriment of margin profile.
Additional Florida dollars will be largely on a fixed cost basis, will be only additive to margins.
VRNO did $73m FCF last year, all about printing bottom line.
FL will help w/ that.
Have transitioned to A/U in many states.
Know how to operate in non-vertical and vertical models.
If legislature goes non-vertical, have ability to pivot.
Jim McKee - Don’t think there will be a delay in opening A/U market beyond the 6 months included in the measure.
Think will see a special session in Jan / Feb to pass the amendment.
VRNO – The longer they wait, the more opportunity there is for the illicit market to proliferate.
Once public feels the initiatives have passed, most want to get it the next day.
Increased capex considerably once felt more certain on adult use. 👀
Have done a good job positioning ahead of growth.
Have 2 rooms left to go at Apollo facility, then transition is complete and will have doubled capacity at Apollo Beach facility alone.
Difficult to operate in FL.
Have to be good at everything.
Makes it very hard to operate / compete / establish.
Not many operators have capital to deploy.
Jim McKee – Will soon have 50 licenses in FL.
Licenses only to be made available once new patients are added to the registry.
If amendment passes, will probably see medical patients contract and no new licenses would be issued.
Could see horizontal dispensary-only licenses that would in turn have to purchase wholesale from current cultivators.
VRNO – Will cost a lot of money in order to stand up operations in FL at a competitive scale vs. current operators.
State is creating a situation where you have to be large in order to play.
Important to educate on product quality difference between cannabis products (tested, regulated) vs. hemp products.
Jim McKee – Think / hope will get hemp regulation bill in ’25.
People need to feel confident in what they're ingesting.
Need regulations in place to make it safe for human consumption.
VRNO – Confident in FL footprint.
Looking at some additional spaces.
Obviously w/ A/U you look at areas where you may not have considered for medical, more recreational-type areas.
Most current dispensaries work pretty well for medical or adult-use.
Will create more fun atmospheres vs. medical atmospheres.
Making some changes to take advantage of tech / AI in dispensaries, have tested that in other markets and happy w/ the results.
Think will see oversupply in the short term leading up to A/U.
Will see pricing pressure during that time.
Cabbage Club loyalty program thus far very well received.
Building a sticky relationship w the consumer once you take care of them with discounts, product launches, first looks at product, etc.
Have a safe journey and please enjoy responsibly.
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CB1 has positions in / advises some of the companies mentioned and nothing contained herein should be considered advice.