Cannabis Musings - April 17, 2025

Curaleaf riffs on the Agrify theme.

Friends – you may have already seen the news that Curaleaf, one of the largest US MSOs, has transmogrified one of its Florida-based licensed dispensaries into a “fully dedicated hemp retail storefront”. This has been widely covered and discussed, and the press release kind of has all the details, but the gist is that Curaleaf seems to be pulling an Agrify and placing a bet on the direction of hemp policy.

You may recall that, back in November, Green Thumb Industries, the largest US MSO, effectively took control of Agrify, a publicly-traded cannabis services company with little in the way of operations at that point, through a combination of buying out key investors, lending fresh capital into the company, and taking over the board. I said at the time:

“perhaps GTI figures that it’s not an expensive ($10mm invested into Agrify, plus a bunch of stock to acquire the hemp assets) 50/50 bet (those aren’t real odds – just more reflective of the fact that there’s so little public information about the direction of the issue in the Farm Bill). If they’re wrong, it’s a writeoff. If they’re right, they have a public vehicle to raise capital to build a hemp drinks business.”

I think that’s what Curaleaf is doing here by turning one of its licensed (non-hemp) cannabis dispensaries into a store that only sells what they describe as “a diverse assortment of reputable hemp-derived THC products” (fantastic use of “reputable” here). Instead of going through all of the mishigas of cultivating, processing, and packaging non-hemp products, which they have to do themselves under Florida law, they’re selling their own and other companies’ “best-in-class, Farm Bill-compliant” (nothing said about the Food, Drug, and Cosmetic Act, though) products from all across the US. It's so much easier and cheaper to sell so-called “intoxicating” hemp products than state-licensed, non-hemp cannabis.

The one weird trick about this is that it’s being done in Florida. Unlike many other states, Florida’s (non-hemp) cannabis licenses aren’t tied to a particular location. Instead, Florida’s license allows the holder to open basically an unlimited number of dispensary locations. In contrast, most states tie the license to a particular location – if you move, you have to get state approval, and if you close up shop, the license will (probably) go away.

In other words, what I think the calculus is here is that, if Congress finally gets around to passing a new Farm Bill (and the President signs it) and the hemp loophole is closed up completely, or the State of Florida bans intoxicating hemp products (which is a live possibility), then Curaleaf simply transmogrifies the location back to selling state-licensed (non-hemp) cannabis. That’s something one practically couldn’t do in most other states, because the license for that location would probably be revoked when the location started selling hemp (not legal advice!) – a lot of risk for an outcome that’s completely uncontrollable and unpredictable. And if the loophole isn’t closed, and Florida doesn’t limit/ban hemp products, then Curaleaf has something of a head start on what appears to be a trend (we talked about that a few weeks ago).

That being said, this move is indicative of where the licensed (non-hemp) cannabis industry is today. Particularly in a medical-only state like Florida, there’s a perverse logic to turning a medical dispensary with a limited customer base into a THC hemp store that’s open to all adults, is cheaper to operate, may source product from all across the country, is subject to lower taxes, and (probably) has better net margins. At least, for now.

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© 2025 Marc Hauser. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. The foregoing represents my own views and not those of Jardín.