In the US, the cannabis industry has long grappled with a difficult dynamic, where small growers are often up against Big Cannabis. As the industry grows and becomes more valued, a big-versus-small division is growing across the country.
According to many accounts, on one side are larger corporations, like MSOs (multi-state operators) seeking to become as profitable and dominant as possible. On the other hand, there are smaller players who wish to enter into the business, such as social justice entrepreneurs, craft farmers, and so on.
It’s really “big business” versus the customer and the craft grower, a struggle that many are describing as a ‘David and Goliath’ scenario.
But is that view accurate? Are the little guys really always up against the big corporations? And are MSOs all bad? Let’s dig deeper into the question.
Who Are The Cannabis David And Goliath?
David–the little guy up against the giant–is the symbol of small craft growers and businesses who have more limited access to licenses and grapple with much smaller capital to get their business off the ground. They are smaller operators and entrepreneurs looking to get their foot in the door, social equity entrepreneurs, and the like.
The Goliath in the industry is the MSOs and large corporations seeking to dominate the market over smaller operators. To comply with federal law, the multi-state operator model operates national brands under a single brand name while keeping legally distinct organizations from state to state.
They have a significant advantage when it comes to nabbing limited licensing, and have extensive financial assets to put toward their share of the industry.
Goliath Is Winning
Here are just some of the recent examples of larger companies getting ahead of smaller operations in the cannabis industry:
In Michigan, there was a battle between the Cannabis Manufacturers Association, which is made up of many large firms, and others in the state’s medical marijuana sector over caregiver cultivation rights, testing standards, and a proposal to award microbusiness licenses.
In Arizona and Illinois, bold moves were made by multistate operators to reportedly gain control of social equity licenses or to obstruct efforts to increase the permitted canopy size for craft producers, respectively.
In New York, in 2019, a few MMJ licensees attempted to restrict home growing. According to a new analysis by the Minority Cannabis Business Association, state-level licensing caps are a barrier to fairness, a policy that is largely supported by larger marijuana corporations and multistate operations.
Are MSOs All Bad?
In general, people are critical of many huge marijuana corporations. The belief is that they are greedy and seek a monopoly on the market.
However, others would argue that combining multistate operators into a single category is an oversimplification that risks stigmatizing excellent actors–a misconception about ‘big cannabis,’ which MSOs are eager to dispel.
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Larger corporations point out that because of their size, they can invest in the highest-quality products, cultivation, and processing facilities, as well as their team members and communities, allowing them to create industry-leading standards.
It also implies that they will be able to invest in product research and development in order to continue bringing new, innovative products to market. Some MSOs also claim to be helping smaller craft growers by advocating for better access to licenses.
It’s Still Big Versus Small
At the end of the day, large companies that don’t care about social justice issues related to marijuana or anything consumer-related are proposing policies to lawmakers at the federal and state levels.
Their motivation is to find out how much their shares are worth. What is their return on investment? When that becomes their focus and incentive, those machines are frequently pushed in directions that are incompatible with the consumer or the small business.
The industry schism isn’t going away anytime soon; larger corporations need to protect their market position and develop further. They’re not going to give up. They’ll just keep on pressing. They have the means. And at the end of the day, the little guys don’t have the same resources as the big guys.
Big Changes Threaten The Future Of MSOs
According to another person involved in congressional lobbying efforts who requested anonymity to talk openly, the interstate-trade matter is one of the most pressing hoverings over the sector amid the likelihood of federal legalization.
Because if federal legalization leads in the national distribution of legal marijuana, it will most likely undermine the economic models of MSOs, many of which have invested heavily in indoor grows in northern states. Once cannabis grown under the sun in Arizona or California can be lawfully exported to New York, the value of those grow facilities is expected to plummet.
“The industry is almost in a state of a cold civil war right now … about this idea of interstate trade as part of comprehensive (federal) reform,” said the anonymous source.
In the US, the David and Goliath dynamic rages on in the cannabis industry. Large corporations continue to assert that they can be a good factor in any business–while still pushing for the lion’s share of the market. In the meantime, David’s gathering rocks, bolstered by the efforts of trade associations and organizations that advocate for free-market policies, open markets, and the elimination of license caps.