There’s a new player in Florida’s medical marijuana industry, and it’s got South Florida ties.
On Wednesday, a company affiliated with Canadian cannabis operator Aphria and Fort Lauderdale-based equity firm Delavaco Group announced that it has closed on an agreement to manage Chestnut Hill Tree Farm, one of seven medical marijuana growers and distributors in the state.
The deal has been approved by the Florida Department of Health, according to a press release.
Under the arrangement, a company operating as Aphria USA will manage the operations of Chestnut Hill Tree Farm, a nursery that does business as CHT Medical. That includes the “cultivation, processing, and dispensing of medical cannabis to patients within the State of Florida” and “the exclusive benefits of the finances from Chestnut’s operation.”
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For now, CHT Medical delivers its medicine to patients. But Aphria plans to significantly increase the size of the company’s operations and establish a network of dispensaries around the state.
“Chestnut is one of a select few licensed producers serving a state with a population over 21 million people,” said Aphria CEO Vic Neufeld. “It is only the beginning for our plans to be a dominant player in the medical cannabis industry internationally.”
The management agreement allows Delavaco and Aphria to break into a relatively exclusive market on the verge of expanding following the November passage of a medical marijuana constitutional amendment. But it comes at an uncertain time, and amid a flurry of investment and speculation.
The state’s medical marijuana program is about to expand, but as of yet there are no rules to guide the system, as the Legislature failed to come up with any in its recent session. And it’s unclear whether the state will regulate the number of retail outlets its license-holders can open — a key sticking point that killed a bill this month.
It’s also unclear whether any new licenses will be awarded, although on Tuesday, an administrative law judge recommended the state issue two new ones, an order the state says it’s still reviewing.
Still, Aphria says it remains bullish on the Florida market.
Though its management agreement reflects a pivot from earlier plans to purchase the assets of CHT Medical — a $60 million deal complicated by infighting among shareholders — Aphria still expects to purchase some of the company’s assets. It also plans to acquire Chestnut’s state license once new regulations are set.