Florida MSO Trump Card | Seeking Alpha

Introduction

Former President Donald Trump held a news conference at Mar-a-Lago on August 8 at which he was asked if he agreed that people should not be incarcerated because of marijuana. He responded, “as we legalize it, I start to agree a lot more.” He went on to say, “Florida has something coming up I’ll be making a statement about …fairly soon, but as we legalize it throughout the country, whether that’s a good thing or a bad thing, it’s awfully hard to have people … in jail for something that’s legal.”

Trump’s marijuana remarks, which lasted less than a minute, had a significantly positive impact on cannabis stocks, as shown by the fact that $MSOS rose by 8.1% within minutes of his comments. MSO’s with heavy Florida concentration benefitted the most, with AYRWF rising 11.9% and TCNNF rising 10.9%.

A Change of Heart

Trump’s response to the marijuana question at his new conference was the first time he weighed-in on the subject. Furthermore, his comments differed significantly from a general belief that he was anti-marijuana. He exhibited an open mindedness that was greeted warmly by proponents of marijuana.

There are several reasons why Trump may have had a change of heart. First, perhaps he realized that a majority of people favor legalizing marijuana, and he doesn’t want to alienate such a large number of voters. Second, a number of the battleground states have either already fully legalized marijuana or are close to doing so. Arizona, Michigan, Nevada, and Ohio allow recreational consumption, while Pennsylvania is rumored to be very close to doing the same. By the way, both Vice Presidential candidates’ home states allow recreational consumption, J. D. Vance is from Ohio and Tim Walz is from Minnesota. A third reason for Trump altering his view might be that he would rather concentrate on other issues where he thinks Harris and Walz are vulnerable.

Game Changer For Florida MSO Sector

MSO investors have been waiting with bated breath for supposed catalysts that they expect will propel their stock prices higher. At various times in the past few years, decriminalization, safe banking, rescheduling, and state legalization have all triggered surging MSO prices. Trump’s brief remarks fostered more than a ray of hope for decriminalization and Florida legalizing recreational consumption. His comments also may have encouraged this administration to accelerate the rescheduling.

The financial impact of Florida voters approving Amendment 3 on November’s ballot by the required 60% cannot to overstated. Florida’s tourism is unmatched, and consumption by these tourists dwarfs consumption by full-time residents of most states.

In 2023 Florida had more than 140.6 million visitors, representing an increase of 2.3% above the 2022 record. The rapid growth in tourism following the pandemic lockdown has continued into 2024 as evidenced by the fact that a record 40.6 million visitors journeyed to Florida in the first quarter. Of these visitors, USA residents accounted for 37.2 million, overseas residents 2.1 million, and Canadians 1.3 million.

While many states have seen their populations decline or stagnate, Florida’s population has surged. In 2024, its population rose above 23 million, making it the third most populous state in the nation.

Amendment 3 Importance

Despite Florida’s large and growing population, Florida centric MSOs have struggled to make a profit. In fact, in 2023, the four largest MSO companies operating in the state had 329 dispensaries at the end of 2023, and they recorded a combined net loss of $1.197 BILLION, Trulieve lost $526.8 million, $VRNOF lost $117.3 million, Ayr Wellness lost 272.4 million, and $CURLF lost $281.2 million.

Passage of Amendment 3 would allow Florida MSO’s to hopefully become profitable. Available data suggest that competitive pressure on prices and a decline in basket size have caused MSO losses. For example, based on first half results, Verano’s MUV dispensaries had estimated annual sales revenue of $3.3 million/dispensary during the first half of 2023 and only $2.6 million in the comparable 2024 period. This represents a decline in dispensary revenue of a whopping 21.2%/dispensary.

To combat the decline in sales revenue, Florida MSOs have continued to increase the number of dispensaries. During the past 12 months, the four MSOs with the largest number of Florida dispensaries increased the number of their dispensaries from 318 to 346 or 8.8%. The cannabis sector is now among the largest employers of Floridians.

Conclusion

Florida’s existing 661 medical marijuana dispensaries are well positioned to meet the needs of an expanded customer base emanating from the resident population and visitors if Florida fully legalizes marijuana. Trulieve is undoubtedly best positioned to capitalize on full legalization since it has the most dispensaries, but more importantly because it owns about 2 million square feet of fallow cultivation facilities. It deserves whatever financial rewards come its way, since it has spent about $60 million on the campaign to fully legalize marijuana in Florida.

Florida MSOs need passage of Amendment 3 in order to establish a thriving, profitable sector. Without question, fully legalizing marijuana is sorely needed at this time to make the business profitable and raise depressed stock prices.

If Trump announces he intends to Vote YES on Amendment 3 in November, passage by more than the required 60% will be assured and prices of Florida-centric MSOs will soar. Importantly, his announcement will send a signal to the Republican dominated Florida legislature that they should facilitate and not hinder speedy implementation.