Ohio

Cresco Labs is expected to sell off $250 million-$500 million worth of marijuana cultivation and retail licenses largely to meet state license limits as part of its planned $2 billion acquisition of rival Columbia Care.

Company executives told analysts that Chicago-based multistate operator Cresco “will likely” divest assets in Florida, Illinois, Massachusetts, New York and Ohio because of overlapping operations with New York-headquartered Columbia Care in limited-license markets.

Limited licensing

Let’s look at the other states that chose the limited, “privileged” license model.

Illinois, Florida, New York, Ohio, New Jersey, Nevada and several other states have followed this path.

The initial application process defines the market and the players.

The result has been “Big Weed” and the birth of the multistate operator, or MSO.

Since getting and maintaining a license is a separate skill from successfully running a cannabis company, many of the operators in these markets have figured out only part of the marijuana business.

Ascend, which completed its initial public offering (IPO) in May, has operations in Massachusetts, New Jersey, Michigan, Ohio, and Illinois including its flagship retail locations. A pending investment in New York will give Ascend access to that market — one of the hottest new markets to approve cannabis for recreational use. The company looks to grow into other limited license recreational or near-recreational markets. Examples of such markets include Pennsylvania, Connecticut, Maryland, Virginia and Arizona.

Why Ayr Wellness could continue to be a hot buy

Long-term investors will want to zero in on the company's outlook for 2022, when it anticipates that it will benefit from investments in multiple markets, including Arizona, Florida, Massachusetts, New Jersey, Ohio, and Pennsylvania. The company projects that in 2022, its revenue will hit $725 million and adjusted EBITDA will come in at $325 million.

The nationwide coronavirus outbreak could set back cannabis legalization efforts along the East Coast and elsewhere, raising further questions about the launch of lucrative new adult-use and medical markets in New York and other states.

Those potential markets, if launched, could generate billions of dollars in business opportunities for a range of marijuana companies.

But the outlook for legalization in those places now seems up in the air.

An analysis of state markets that release patient counts on at least a quarterly basis reveals several key takeaways:

Harvest Inc., the beleaguered marijuana producer with big problems in Pennsylvania, has even bigger problems in the Buckeye State.

The company is under investigation by the Ohio Department of Commerce, which has placed all of Harvest’s dispensary licenses on hold, the Cincinnati Enquirer reports.

Acreage Holdings has licenses in 17 states, of which 12 are operational, while the company has licenses to process in 12 states, seven of which are now in operation. The company has licenses to operate 68 retail dispensaries in 12 states, of which 21 are currently operational in 10 states. The Botanist is its retail concept designed to appeal to both adult use and medicinal consumers.

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Kevin Sabet, president of the prohibitionist group Smart Approaches to Marijuana, has already signaled that he anticipates at least some defeats after the group spent millions funding anti-legalization campaigns in states with marijuana on the ballot. In a tweet, he wrote that success “doesn’t hang on a ballot measure, a vote, a fleeting day.”

Cannabis legalization goes before the voters in a number of states on Nov. 6. This year’s highlights:

Michigan and North Dakota will decide statewide measures on the legalization of adult-use cannabis.

Utah and Missouri will consider medical marijuana legalization initiatives.

Other states will consider smaller reforms or advisory measures, including Ohio and Wisconsin.