For Thomas Murphy, President of Gulf Coast Canna Meds, getting into the medical cannabis industry was as much a personal decision as a business opportunity.
Last week, High.co talked to Mr. Murphy about his vision for the company and prospects for the medical cannabis industry in Florida.
His background in banking and beer distribution seemed like a natural fit for the medical cannabis industry that is both highly regulated and a challenge to the traditional beer industry as millennials change habits in record numbers. According to Nielsen ratings, beer penetration fell 1% from 2016 to 2017 in the U.S. market, while both wine and spirits were unmoved. Analysts at Goldman Sachs now expects the overall beer market in the US to decline by 0.7% in 2017. It downgraded Boston Beer Company from “neutral” to “sell” and Constellation Brands from “buy” to “neutral.”
Mr. Murphy’s instincts appear to have been right. Earlier this month, Constellation Brands invested $250 million (with an additional $250 million in warrants) in Canopy Growth Corp, Canada’s largest licensed cannabis company (OTCPK: TWMJF). The investment marks the largest investment ever made in the cannabis industry by a publicly-traded company.
But for Mr. Murphy and his team, impulsive novelty seeking was not part of the emotional calculus behind jumping aboard the fast growing cannabis industry. There was a more private motivation that comes closer to a passion rooted in their personal experiences with life’s toughest moments. This includes a (late) wife struggling with chemotherapy, a veteran wracked by depression and a wave a friends and family touched by chronic pain.
The pharmaceutical industry’s solution has been the pervasive use of prescription opiates that has swelled addiction rates and overdose deaths to record levels in recent years. President Trump last week directed the Department of Health and Human Services to declare the opioid crisis a public health emergency.
For Mr. Murphy and his team at Gulf Coast Canna Meds, there is a different way – and it’s sweeping the nation. Overall, the cannabis industry is now worth U.S. $7.2 billion and is projected to grow at a compound annual growth rate (CAGR) of 17%, according to New Frontier, a data-analysis group focusing on the cannabis industry. The industry will be worth $24 billion and will create more than 300,000 jobs by 2020, asserts New Frontier. Greenwave Advisors estimates the market could be as large as $87 billion should the entire U.S. move to legalize cannabis.
In 2016, Floridians voted in favor of a constitutional amendment, Amendment 2, to allow medical cannabis for certain medical conditions. Since then, the state has been mired in civil litigation and administrative roadblocks. It now looks like ailing Floridians will have to wait until next year to get relief. Mr. Murphy projects that 825 dispensaries will open in Florida in the coming years.
The team has raised $1 million in seed funding already, and they are contemplating another much larger round of financing to position the company for more expansive opportunities. They have their sights on developing brands for artisanal small batch cannabis products with distribution in Florida and elsewhere.