Why Florida’s Vertical Integration Rules Define Who Wins in Cannabis
Florida’s medical cannabis market is built on one of the strictest “seed-to-sale” systems in the country, and those vertical integration rules shape almost everything about how the industry looks today.
Under state law, only licensed Medical Marijuana Treatment Centers (MMTCs) can participate in the medical market, and each MMTC must handle the entire supply chain: cultivating plants, processing products, transporting them, and dispensing them to patients at retail. They generally cannot contract out core functions like cultivation or dispensing. This is very different from states such as Colorado or California, where separate licenses exist for growers, manufacturers, distributors, and retailers.
The vertical model was cemented by a 2017 implementing law and later challenged in court by Florigrown, a would-be operator that argued the structure violated the voter-approved medical marijuana amendment. In 2021, the Florida Supreme Court rejected that challenge, ruling that the legislature had the authority to require vertical integration and to cap the number of MMTC licenses. That decision effectively locked in the current framework and confirmed that Florida could continue limiting licenses even as patient numbers soared.
Supporters of vertical integration argue it simplifies regulation and strengthens product safety. Having one licensed entity responsible from seed to sale makes it easier for regulators to trace products, enforce testing requirements, and respond to contamination or diversion concerns. It can also encourage investment in large, sophisticated facilities with robust quality-control systems, which appeals to both regulators and some investors.
But those same rules create extremely high barriers to entry. An MMTC must raise capital for cultivation, processing labs, transportation fleets, and a network of dispensaries—costs that can run into the tens or hundreds of millions of dollars. Legal and compliance expenses add another layer of cost and complexity. As a result, Florida’s market is dominated by a small group of multi-state operators (MSOs), with companies like Trulieve holding a very large share of sales and storefronts. Critics, including some policymakers and patient advocates, argue that the structure operates like an oligopoly, limiting consumer choice and keeping prices higher than they might be in a more open, license-by-activity system.
License caps and delays have reinforced that dynamic. Statute ties additional MMTC licenses to growth in the patient registry, but regulators have been slow to issue new permits even when thresholds were reached. In 2023, for example, the state received more than 70 applications for 22 new vertically integrated licenses, yet awards have moved slowly, prolonging the advantage of incumbent operators. For small entrepreneurs, that means the realistic options are limited to partnering with, supplying to, or being acquired by existing MMTCs rather than running independent dispensaries or craft grows.
The failure of 2024’s Amendment 3—which would have legalized adult-use cannabis but left existing MMTCs in a privileged position—means Florida’s vertically integrated medical structure remains firmly in place for now. Voters gave the measure a majority but not the 60% supermajority required, so there was no trigger to broaden licensing or relax vertical rules. New efforts to get a 2026 amendment on the ballot are underway, but they face both political resistance and newly tightened rules on citizen initiatives.
For the cannabis industry, all of this means Florida remains a high-reward, high-barrier market. Deep-pocketed MSOs enjoy scale, brand visibility, and the possibility of outsized profits if adult use eventually opens. Smaller operators, however, are largely spectators unless lawmakers—or voters—decide to unwind or soften the vertical integration mandate.