The cannabis industry has an inherent limitation restricting the launch of billion-dollar brands and it is not money. Large amounts of capital are now flowing into performing cannabis companies of all sizes, whether locally owned small businesses or large, multi-state enterprises backed by private equity. And readily available capital is only expected to increase when the first U.S. capital market listings consummate as soon as the end of 2021. Even with all the capital, however, enterprise expansion is limited by diffuse state-by-state regulations that define the cannabis industry. The fragmented regulatory system and federal regulations prohibiting brands from operating across state lines are now the primary limitations slowing the growth of national cannabis brands. Companies are still forced to create industry-licensed operations in every state if they want to expand or, where permitted by state regulations, license their brands to other producers. The result is that many cannabis companies have evolved a self-limited growth strategy over the last few years. The rise of the single-state operator — companies that deliberately only exist in one state — reduces complications and compliance costs, but also limits a cannabis brand’s growth opportunity to a single market. And even single-state operators are limited within their home-state opportunity since many states cap the number of licenses a single enterprise can own.

Marijuana Venture, 10/26/2021 15:00:00 

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