Outdoor Grown in California
I live in New Jersey, which is light-years behind California on everything cannabis. That is why I pay so much attention to the cultivation scene on the West Coast. No matter how, if or when New Jersey is legalized, massive hurdles must be overcome, just to remain relevant. That's why I suggest becoming more proficient with the terms MSO, SSO and... None of the Above. Good luck with cannabis in New Jersey, you're going to need it!
What’s the Future Business Model? MSOs, SSOs or Perhaps None of the Above
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.
New Hampshire is a lovely state brimming with natural beauty, but no matter how majestic its mountains, it will never have the climate suitable for cultivating cannabis. Sure, it can be done indoors, but grow facilities are horrible energy drains. In fact, you could drive 23 miles on the energy it takes to create one joint from a grow house.
Unfortunately, our neighbors to the North have a similar predicament. Canada is years ahead of the U.S. in terms of legalizing cannabis, but several provinces have grappled with shortages because cannabis just doesn’t grow well on Northern tundra.
Cannabis grown indoors not only leaves a larger carbon footprint on the planet, the cost of artificial lights and irrigation systems winds up costing consumers more. Someone has to pay for those electricity and water bills, and it trickles down into prices. Alternatively, there are states where cannabis can be largely sun-grown, taking advantage of bountiful sun and soil profiles, like fine wines. I’m looking at you, California. And while not every company can – or should – be based in The Golden State, companies need to make sure they’re building their central operations in areas with strong natural resources or generous tax credits – preferably both – so that when interstate and international markets come online, they’re ready to scale exponentially. On day one.
WB's Note: Outdoor grown is my preference!
