One of the defining challenges of the cannabis industry to date has been the inability of businesses to move products across state lines. Because cannabis remains illegal at the federal level, state-licensed cannabis businesses must cultivate, produce, and sell their products all within the confines of the state in which they are licensed. Nothing can cross state lines, even if the business is licensed in two contiguous states. One state is trying to change that, but it’s doubtful that effort will gain traction.
While this situation is extremely burdensome on all cannabis businesses, it’s especially problematic for the small mom-and-pop operators who are not well capitalized and don’t have access to traditional banking services. As I’ve written about in previous columns, regulatory hurdles in the cannabis industry benefit wealthy entrepreneurs over small mom-and-pop operators.
The inability to ship cannabis products across state lines means a business can’t take advantage of the same economies of scale as their counterparts in other industries. By way of example, if someone starts a successful craft brewery in Colorado, they would naturally look to expand, likely into neighboring states. That company would increase their production capability at their Colorado brewery, and start shipping their product