Limited Licenses – A Losing Game For Small Businesses and Consumers

When you buy a bottle of lemonade for $3, you receive a receipt, tax, a label to throw out, and a bottle to recycle. When you go to the stand a kid is running, you’re paying $0.25 for something better and making someone’s day. The same goes for home-growing cannabis when compared to buying from limited licenses markets, and we’re amazed how governments haven’t worked this out yet.

Perhaps it is because we are living in the afterglow of what appears on the surface to be post-prohibition consumer choice. There are shops full of exciting new products, more legislative moves than ever before, and a thriving digital community of cannabis enthusiasts (Limited Licenses) who are increasing education and awareness with the same level of passion as seen in historic advocates. 

Peel back the paint, however, and you start to see the cracks.

Shops in limited license markets are full of overpriced and often stale products. Legislation is unfairly benefiting corporations and tax-collection over the innovation and quality of the market. And the digital community, as our readers have shown us, aren’t cheering every piecemeal step towards equitability—they’re telling the powers-that-be that they need to do better, or the underground market will never step down from its top spot.

Regulatory Guidelines VS. Limited Licenses

Oregon, Oklahoma, Washington, and Colorado were early into the cannabis market—they adopted a model that so long as you were safe and transparent in your practices, you could set up shop. In these states, it’s often not only permitted to grow your own cannabis, but the openness of the market encourages it through allowing for supportive outreach, a great public image, growing competitions, seed shares, and a true sense of community.

Now, compare that with the limited licensing models of Illinois, Ohio, Florida, New York, Nevada, New Jersey, among others—their model means that only limited licenses are distributed for growing and sale. The reasoning behind this strategy varies depending on the legislator—some say it limits access points for the public good, while others say it helps incrementally develop the industry without causing bubbles.

The truth is that a limited licensing model only creates a deep well for multistate operators to throw money into. Through mergers, acquisitions, and aggressive practices, they push out local growers and take advantage of significant market demand with little to no competition.

As we all know, limited competition can only mean less innovation, lower quality, and higher prices. California is excellent proof as they near a total system collapse.

Why Limited Licensing Doesn’t Work

When you’re juggling millions of dollars worth of acquisitions, you are essentially running an entirely different kind of business than a good cannabis grower. Where a farmer might concentrate on light and soil quality, a multi-state operator is balancing books and enormous payroll. Where a home grower might wait for the optimal time to harvest each plant, a CEO demands deadlines to be met, and targets are reached. As we’ve asked before on our platform, who do you think this serves?

Consumer demand will continue to grow, but are these multi-state operators’ quality and pricing structure matching? In limited licenses states, no. The money is laid out upfront to purchase a license, and quality is left at the bottom of the list. The problem is exacerbated by governments doubling down on the illicit markets in these states by increasing the regulatory hoops that compliant operators have to face.

To summarize the above, a state establishes a structure that promotes interstate investment over local innovation. Quality and price suffer, and instead of addressing the problem, they make it even harder for legal growers to make a profit, thereby ensuring the illicit market thrives.

If that doesn’t make any sense to you, you’re not alone.

Limited licenses don’t work. Go with the lemonade down the road—at least then you see where your quarter ends up.

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