The inability of cannabis businesses to move products across state lines because of federal illegality is extremely burdensome on all cannabis businesses, but it's especially problematic for the small mom-and-pop operators that are not well capitalized and don't have access to banking services.
An employee for Kiva Confections arranges cannabis-infused chocolate bars to be wrapped at the company's headquarters in Oakland, Calif. Photographer: David Paul Morris/Bloomberg challenges of the cannabis industry to date has been the inability of businesses to move products across state lines.
The inability to ship cannabis products across state lines means a business can’t take advantage of the same economies of scale as their counterparts in other industries. By way of example, if someone starts a successful craft brewery in Colorado, they would naturally look to expand, likely into neighboring states.
can cause it to take years before a business is fully licensed and operational, if they ever receive a license at all.That leaves businesses with a few options to expand into new states. They can try to acquire a company with a license in their target state. But that can be a difficult and expensive process. Even in non-limited license states, licenses typically sell for over $1 million.
. Unless you’re already a large multi-state operator with a publicly traded currency or a huge investor network, this simply isn’t an option for the typical cannabis business operator.If purchasing a license isn’t an option, a company could look to license their brand and operating protocols to an existing license holder in order to get their product into new markets.
For the time being, cannabis businesses will continue to struggle with the enormous challenge of expanding across state lines, something that currently favors the largest and most well capitalized businesses in the industry while creating largely insurmountable barriers for small product business startups in the space.
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