Legalization fails in Florida 🦩

FLORIDA
Legalization defeated in Florida

What happened: Florida failed to legalize cannabis yesterday. It’s the latest blow for an industry sorely looking for a win. Amendment 3 failed to garner enough support to clear the 60% threshold needed to pass, despite around 56% of Floridians — and Donald Trump — voting in favor of it.

Expect investors to be disappointed and cannabis stocks to slide when the market opens. 

What they’re saying: ‘Proud to have fought the fight - we left it all on the field. Looking forward to working with the legislature on the next steps to ensure safe access to marijuana for adults in Florida, decriminalization for personal possession and home grow. A big thank you to everyone across the state who supported the campaign! Onward!,” Trulieve CEO Kim Rivers said. The Tallahassee-based Trulieve spent over $140 million supporting Amendment 3. 

And: “I am disappointed to see that Amendment 3 will not move forward in Florida. Cannabis can greatly improve the quality of life for many individuals, and we remain committed to advocating for policies that support patient access and responsible use,” Curaleaf CEO Boris Jordan said. 

Why it matters: The fight over legalization in Florida was one of the most hotly contested and closely watched ballot measures of this election cycle, splitting the Republican Party in two and drawing in everyone from pro-legalization Donald Trump, to anti-legalization Ron DeSantis, to Barstool CEO Dave Portnoy. It was on the ballot with abortion, which also fell just short of 60%.

Legal cannabis in Florida had the potential to be nearly a $3 billion market in the first year of legal sales. That prize spurred Tallahassee-based Trulieve to spend upwards of $140 million on the Smart & Safe Florida campaign to pass Amendment 3.

The cannabis industry, after years of inaction on reform in Congress, was hoping for a big win with a new, legal market in a populous state. 

But the campaign received fierce opposition from Gov. Ron DeSantis and Florida’s Republican Party who spent heavily to defeat legalization. They focused their argument on the idea that the bill would be a “handout” to Trulieve and other corporate cannabis companies, as well as the purported harms of consuming cannabis on traffic safety and mental health. 

Despite opposition from the governor, a majority of Floridians did vote to legalize cannabis. But it wasn’t enough to clear the 60% supermajority needed to amend the state’s constitution.

Zoom in: Though it’s a setback for the industry, the vote on Amendment 3 was not a referendum on legalization itself, despite what Gov. DeSantis and some anti-legalization groups say.

A majority of voters in a Red state still wanted legalization. Both Presidential candidates agree that some version of cannabis reform is needed. 

It’s too early to diagnose the specific reasons for the bill’s failure — we’ll hear a lot of prognostication in the coming days — though it does rhyme with Ohio defeating a similar corporate-led legalization initiative in 2015 before voting for a different version of legalization eight years later. 

Some cannabis legalization advocates point to Amendment 3 failing because it didn’t enshrine the right to grow cannabis at home or include any social equity considerations. They say the ballot measure would have benefited Trulieve and other corporate cannabis firms at the expense of small businesses and criminal justice priorities. 

In states like New York, small businesses and minority entrepreneurs were given early and favorable access to the market. Florida’s version of legalization was always going to look different, based on the state’s political makeup — but it remains to be seen whether Florida voters rejected legalization, or simply rejected the version of legalization proposed by Amendment 3.

Either way, Trulieve will not be getting its $140 million back. The company sued Florida’s Republican Party for defamation in October, over what Trulieve said was an “intentionally deceptive” campaign to mislead voters about Amendment 3.

What’s next: It’s possible that the Florida legislature will take up legalization at a later date, but for now, the Sunshine State won’t be the next multibillion-dollar recreational cannabis market. 

Read more: Florida leaders react to voters tanking recreational marijuana

SOUTH DAKOTA
South Dakota voters defeated Initiated Measure 29. State voters approved legalization in the state 54-46% in 2020, though Republican Gov. Kristi Noem challenged the law — and it was ultimately struck down by South Dakota’s Supreme Court. Another initiative to legalize cannabis was defeated by voters in 2022.

NORTH DAKOTA
North Dakota voters defeated Initiated Measure 5. Legalization also failed in North Dakota in 2022.

NEBRASKA
Nebraska voters passed Initiative 437, which would legalize medical cannabis, and Initiative 438, which would set up the Nebraska Medical Cannabis Commission to regulate the industry. But these initiatives are still being challenged in the courts, so it’s yet unclear if these measures will be enacted.

-JB

GTI invests $20 million in Agrify 🌿

Green Thumb Industries (GTI) invested $20 million into Nasdaq-listed Agrify (AGFY), a cannabis cultivation equipment and supply firm, via a convertible note of which $10 million will be drawn at closing, the companies said. GTI CEO Ben Kovler will replace outgoing Agrify CEO and board chairman Raymond Chang. GTI will add Kovler — who’s also taking over as chairman — and two other executives, Richard Drexler and Armon Vakili, to Agrify’s board. Prior to this deal, Agrify had struggled to maintain its Nasdaq listing. The deal also gives GTI a foothold with the Nasdaq, ahead of a potential federal reclassification of cannabis. 

Curaleaf sued by an ex-executive 👀

A former executive at Curaleaf, Khadijah Tribble, filed suit against the company and former CEO Matt Darin in a federal court, per Green Market Report. Among the allegations in the suit, are that Tribble — a Black woman — made significantly less than her peers, heard racist language from company executives including current CEO Boris Jordan, endured sexual harassment in front of her subordinates, and received a death threat from a vendor. Tribble was Curaleaf’s Vice President of Corporate Social Responsibility from 2020 - 2023. 

Editor’s note: Curaleaf vehemently denied the allegations in a statement to us, and said it is “prepared to fully defend against this attack on its reputation in court.”

Cannabis earnings season kicked off yesterday, with Trulieve and SNDL up first:

• Trulieve reported a $60 million net loss on $284 million of revenue for the third quarter of this year, up 3% sequentially. That fell below analyst expectations of $292 million. The company reported adjusted EBITDA of $96 million, up 24% sequentially. Trulieve sank over $140 million into the campaign to legalize cannabis in Florida. 

• SNDL reported a $19.3 million net loss (CAD) on $236.9 million revenue for the third quarter, down slightly from $237.6 million. 

Here’s the schedule for the rest of the week: 

November 6

• Curaleaf, 5:00 PM

• TerrAscend, 5:00 PM

November 7

• The Cannabist, 8:00 AM

• MariMed, 8:00 AM

• Verano, 8:30 AM

• Cresco Labs, 8:30 AM

• Jushi Holdings, 4:30 PM

November 8

• Planet 13, 6:00 PM