Legalized Medical Pot Can Ignite New Industry—And $20,000 Bongs
Daily Business Review
August 4, 2016
If 60 percent of Floridians in November vote for Amendment 2, officially known as the Florida Right to Medical Marijuana Initiative, the Sunshine State could become ground zero for a new business boom.
Like $20,000 bongs.
Call them what you like—bongs, water pipes, chillums or "functional, blownglass artwork"—they are for sale at West Palm Beach's Habatat Galleries.
As Habatat partner Jay Scott recently told the Broward/Palm Beach New Times, "It takes real talent to make fine art that also has a function."
The market for such exquisite pieces has really taken off, thanks to 25 states that have already legalized medical or recreational marijuana. Eight states—Arkansas, California, Florida, Maine, Massachusetts, Montana, Nevada and North Dakota—have marijuana initiatives on the ballot this year. Four more states—Arizona, Michigan, Missouri and Oklahoma—have measures awaiting confirmation of whether the backers have collected the necessary signatures to qualify for the November ballot.
Demand for artistic water pipes has surged in South Florida as well, from West Palm's Habatat Galleries all the way down to Holy Smokes in suburban Kendall. Yet there is a huge drawback. If the police catch you lighting up marijuana—i.e. utilizing the functionality of your artwork—they can confiscate your piece of art as drug paraphernalia under the Florida Contraband Forfeiture Act. And that's a costly $20,000 hit.
In 2013, state Rep. Darryl Rouson of St. Petersburg pushed a bill banning the sale of all pipes. However, the bill failed, and Floridians were still allowed to buy bongs—as long as it was clear they were for tobacco-use only.
While some may mistakenly believe that these wink-wink transactions could be above-board on Nov. 8 with the approval of Amendment 2, prospective medical cannabis patients might want to wait on putting a down-payment on a $7,000 custom-made Chadd Lacey narwhal pipe just yet. Florida's Compassionate Medical Cannabis Act of 2014 explicitly excludes "possession, use or administration of lowTHC cannabis or medical cannabis by smoking" from the definition of "medical use." One cannot "burn or ignite a substance [marijuana] and inhale the smoke" as a means of ingesting medical marijuana. This likely means that for the foreseeable future, any instrument used to smoke marijuana will remain illegal in Florida.
This is not to say that loosened regulations may not lead to a new peripheral business market for medical marijuana. Marijuana Business Daily calculates there are 21,000 to 33,000 cannabis-related businesses in the U.S., and two-thirds of them do not deal directly with pot.
For example, Wheat Ridge, Colorado-based All Green Insurance focuses on marijuanacentered insurance issues that more mainstream companies won't touch.
According to All Green's website, the company offers insurance for marijuana dispensaries and grow houses, like protection against fire and break-ins. All Green offers crop insurance in case a sprinkler malfunction ruins a marijuana harvest. The company also offers more traditional services such as workers' compensation and landlord insurance as mainstream companies often will not cover losses incurred by marijuana-related businesses.
Bill McKnight of All Green told the Miami Herald his company could see its current business increase by 25 percent if Florida approves medical marijuana.
If Amendment 2 is approved, users of medical pot could spend almost $200 million in Florida by 2018, marijuana financial analyst New Frontier told the Herald. By 2020, Florida would be expected to account for 14 percent of legal marijuana use in the U.S.
"It could create thousands of jobs, lots of new business opportunities," Chris Walsh, editorial director of Marijuana Business Daily, told the Herald.
Florida's legal community could flourish along with legalized buds. A full-service, pot-related law firm would have little problem finding work. The Seattle-based Canna Law Group is an example of a law firm totally focused on marijuana legal issues that is located in a state (Washington) where recreational pot is legal.
Canna Law is licensed is six states, and its clients include pot retailers, processors and growers as well as ancillary businesses. The firm starts with helping prospective potrelated businesses incorporate and set up shop. Then it helps businesses navigate compliance issues in their home state. Canna Law applies a marijuanacentered focus to its other practice areas: corporate law, intellectual property, dispute resolution, regulatory compliance, commercial real estate and consumer products issues.
Trulieve is the first Florida company authorized to start dispensing lowTHC marijuana. Five others are awaiting authorization.
The Florida Legislature voted in 2014 to allow lowTHC cannabis for patients who have cancer, epilepsy, chronic seizures and chronic muscle spasms. But the first such pot is just now becoming available due to administrative and legal delays. Medical marijuana will be available in the beginning only as concentrated oil, gel capsules, vape cartridges and tinctures.
The main opposition to Amendment 2, the group Vote No on 2, says Florida would need 1,993 marijuana treatment centers to keep up with patient demand. That would mean such centers would out-number WalMarts (191) and Walgreens (840) stores combined. While Vote No on 2 meant that statistic as a harmful side effect of legalized medical marijuana, from a strictly business standpoint it does lead to a bevy of new jobs.
A recent poll by Quinnipiac University shows that 80 percent of Floridians support Amendment 2 this time around, while only 16 percent oppose it. But before you set up that law firm specializing in marijuana, consider that a poll before the medical marijuana vote in 2014 showed 88 percent in support before the measure fell about 2 percent shy of being approved by the required 60 percent of voters.
Prospective marijuana lawyers may also want to consider that the Florida Bar's board of governors has adopted a very conservative policy regarding lawyer activity relating to medical marijuana. The Florida Bar will not prosecute a bar member solely for advising a client regarding the validity, scope and meaning of Florida statutes regarding medical marijuana or for assisting a client in conduct that the lawyer reasonably believes is permitted by Florida statutes, regulations, orders, and other state or local provisions implementing them, as long as the lawyer also advises the client regarding related
federal law and policy. However, the bar's policy leaves open the possibility of prosecution for any direct involvement by a lawyer in a marijuana business.
John S. Leinicke, a senior associate at ROIG Lawyers in Miami, teaches a continuing education course to update insurance adjusters on the issues related to insurance and medical marijuana.
Reprinted with permission from the August 4, 2016 issue of Daily Business Review. ©2016 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.