Increasingly, a group of larger companies known as multistate operators, or MSOs, dominate the industry. While still small compared with, say, liquor companies, the largest MSOs have dozens of stores and hundreds of millions in annual revenue. Leading MSOs such as Curaleaf, Cresco Labs, and Columbia Care have raised money by going public in Canada.
Left behind are mom-and-pop entrepreneurs, including those who could benefit from equity programs. In the mainstream economy, entrepreneurs of color often struggle to access capital, but in the cannabis world, the entire industry is locked out of the financial system. Some banks are willing to quietly work with pot companies and charge them high fees, but smaller businesses can’t afford this option.
For several years, legal-weed jurisdictions have tried to support equity businesses by prioritizing them for licenses, various forms of financial support, and other benefits. The approach, which New York and New Jersey are generally following, hasn’t worked, and as the MSOs expand, the odds grow slimmer that they will. (New Jersey’s market could open in a few months, while New Yorkers probably have to wait until 2022. In the meantime, recreational marijuana use has now been decriminalized in both states.)
Cities and states lack the resources and expertise to support small businesses competing against the MSOs. It would seem absurd for a state government to help small-time entrepreneurs compete against Starbucks or Pepsi, but that’s essentially what they propose for cannabis. New Jersey hopes to reserve 25 percent of licenses for residents of “impact zones,” but awarding the licenses to disadvantaged entrepreneurs is not the same as enabling them to compete against far larger and better capitalized companies.