Business

It’s still tough to expand brands across state lines

By Alex Halperin

Cannabis brand veterans know that expanding into new states is an ordeal fraught with difficulties that conventional companies don’t even have to consider. For at least five years, companies have been trying to execute these moves and there’s still no playbook on how to do it right.

Federal reform, which appears to be gaining support in Washington, could quickly normalize the industry’s growth. And there have been discussions between states about allowing interstate trade on a limited basis. But for now, brands with national ambitions have two options, both of them fraught with risk: They can either reproduce their operations and apply for licensure in each new target state or they can partner with a company which is already established in the new market. 

The former path allows companies to maintain control of their operations and brand, but tends to be expensive. Each new market requires them to navigate a new set of licensure requirements, and, if they’re approved, they have to spend money to build a new factory, hire a team, and on countless other expenditures.

The second option requires a company to entrust a partner with its intellectual property, reputation, and other assets. While no one tracks how many companies have made these arrangements or how they typically perform, lawsuits attest to how they can go very wrong.

Read the rest of the story at MJBrand Insights.