As a new industry, cannabis is evolving fast. Try to jump into the market looking at the current opportunities, and you’re going to end up behind. On day one. Every industry needs innovators and market builders. But success in cannabis takes visionary skills, as well. Take for instance the race right now to become a multi-state operator (MSOs). In most instances, bigger is better. MSOs create a larger addressable market by having a presence in several marijuana-legal states. Yet, scale comes at a cost. Because of federal laws that prohibit cannabis to be carried across state lines, MSOs have to create new infrastructures in each state they enter.
New cultivation facilities. New manufacturing facilities. New management teams and staff. In every single state. Being an MSO means that the company is riddled with redundancies. That’s fine – and necessary – today. But these companies aren’t built for when restrictions are lifted and interstate and international commerce become legal. Single state operators (SSOs) may not be able to build a nationwide brand presence in the short-term, but they might ultimately be better positioned to expand without the burden of duplicative services. The key to their success is where they’ve planted themselves, and whether the state is suitable to sustain a growing cannabis enterprise.
For instance, Oakland-based Harborside, which recently went public on the Canadian stock exchange, is using the capital to build up a powerhouse presence in California, not expand into nearby states. The dispensary is adding cultivation facilities and reinforcing brands to capitalize on what’s already the largest U.S. cannabis market.