Companies team up as marijuana market grows
Florida trying to become one of largest cannabis markets in nation
TALLAHASSEE – Modern Health Concept, one of seven licensed marijuana operations in Florida, has joined forces with an out-of-state investor to help the South Florida organization expand in the wake of a voter-approved constitutional amendment legalizing medical marijuana for a broad swath of patients.
Massachusetts-based PalliaTech Inc. teamed up with Modern Health Concepts, affiliated with Costa Nurseries, to bring "operational and financial strength" to the Florida business, according to a news release issued Wednesday.
"This is a minority investment by a strategic partner to take the company to the next level," Modern Health Concepts CEO Richard Young told The News Service of Florida in a telephone interview.
PalliaTech operates in several other states, including Colorado and Massachusetts, according to the company's website.
The partnership comes as Florida's licensed medical marijuana businesses seek to expand operations after passage of the constitutional amendment, which received more than 70 percent approval from voters in November.
Medical marijuana was already legal in Florida, but its use was limited. Lawmakers last year approved allowing marijuana for terminally ill patients and in 2014 approved non-euphoric cannabis for patients with some conditions such as seizures.
After passage of the constitutional amendment, however, more than 500,000 patients in Florida could be registered for the marijuana treatment within a year, making the state one of --- if not the --- largest cannabis markets in the nation.
Costa Nurseries was one of more than two dozen applicants that entered a highly competitive application process two years ago for a handful of coveted licenses to grow, process and distribute medical marijuana products in Florida. At the time, only non-euphoric marijuana was legal in the state.
But lawmakers later authorized full-strength marijuana for terminally ill patients, allowing the handful of licensed "dispensing organizations" to prepare for the anticipated passage of what was known as Amendment 2 in November.
Young stressed that his business, which began dispensing non-euphoric cannabis to patients three months ago, had planned to expand even before joining forces with PalliaTech.
"We had growth plans in place and planned to expand the business as the patient demand increases," Young said. "We thought that PalliaTech brings a level of expertise across all business practices to help us."
PalliaTech got its start in the marijuana business six years ago by developing a single-dose vaporizing pen. The company is now involved in all aspects of the marijuana industry, including dispensing, testing and research, according to the news release.
Young called PalliaTech a "minority investor" but would not say how much the Massachusetts company paid or what percentage of the business it now shares.
The state's dispensing organizations are "bound by the representations made in their respective applications for approval," Department of Health spokeswoman Mara Gambineri said in an email. "The addition of strategic partners or minority investment are treated as amendments to a dispensing organization's initial application."
The dispensing organizations must notify the department of the changes, and new owners must pass the same criminal background checks required for owners and managers of the applicants, Gambineri said.
Modern Health Concepts isn't the only licensed marijuana operation in Florida seeking to boost its finances.
Surterra Therapeutics, a Central Florida dispensing organization affiliated with Alpha Foliage, raised $15 million last year, according to federal filings.
And Gainesville-based Chestnut Hill Tree Farm also is "exploring bringing on additional partners," according to Gambineri. Additional details about Chestnut Hill were not available Thursday.
News Service of Florida