Florida is often considered one of the most critical states in terms of growing legal cannabis sales. The State is estimated to have approximately $2.6B in 2023 legal sales, representing a per capita consumption of about $118 based on the total population or $145 based on adult population.

The State has a highly developed medical cannabis market. As of 1/26/24, Florida had 871,459 registered active medical cannabis patients, representing 4.9% of its over-18-year-old population, significantly exceeding Pennsylvania, another state teetering on Adult Recreational Use allowance with approximately 4.0%.

The top five competitors in Florida have made outsized bets on the State with disproportionate percentages of their total national dispensary portfolios:  Surterra (88.0%), AYR (70.0%), Trulieve (67.5%), Verano (54.0%), and Curaleaf (41.5%)

Has the State gotten ahead of itself? The blue line on the graph depicts the number of active patients per dispensary, which has dropped by approximately 8% over the last year as dispensary locations grew by 21% while patient counts grew by 12%. Florida’s 1410 patients per dispensary figure compares to 2445 in Pennsylvania, indicating that FL may be temporarily overstored.

What’s the upside from Adult Rec? Many analysts project a state will at least double its legal cannabis revenues when switching to adult rec. But doubling Florida’s already high medical revenue would require a per capita consumption of approximately $234, significantly higher than that of Illinois or Massachusetts. If Florida matched Massachusetts, sales would only rise by about 70%.

The top companies in Florida are making a massive bet on the State, with it accounting for more than ½ of their combined national dispensary portfolios. The State has many advantages, and the required vertical integration limits the downside risk of new entrants. Still, it is far from clear that the bet will pay off as handsomely as expected.

The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from the Viridian Cannabis Deal Tracker.

Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $50 billion in aggregate value.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.