Starting a marijuana business in retail, cultivation or manufacturing is a particularly expensive gamble. Opening a vertically integrated operation upon inception is prohibitively expensive for any smaller-than-average business. These operations require multiple skill sets, and more variables create organizational challenges.
Despite regulation variances across each of the legal marijuana markets, to include those that may soon be legal, the advantages for vertical integration in the cannabis industry are becoming ever more so apparent. Several companies are seizing these opportunities at different levels of the seed-to-sale supply chain.
Vertical integration will maximize efficiency, reliability, and scalability, but can also give an edge over competitors. If executed correctly, this will provide a competitive advantage within the cannabis sector that will create short term and long-range success. As one website has stated, “There are obvious benefits to a vertically integrated approach to the cannabis business. Vertically integrated companies have superior control over the quality of their products. They are better able to make adjustments to their production and supply lines in evolving market conditions, a reality for a space facing changing regulations.” Read more…
So, you ask, what exactly does a vertically integrated cannabis business look like? A company that is functioning on every level from the seeds, to cultivation, to cannabis-infused products, to vapes, to research, to extraction, to distribution, and to retail. As you can imagine, this is logistically challenging in many aspects and requires a dedicated team of individuals who have the experience and knowledge implement effectively.
As the legal cannabis industry develops, it is imperative that companies focus on a strategy that consolidates as many steps of the production to retail process as possible. This allows the highest quality control possible, minimizes potential third-party liability and, perhaps most importantly, will maximize the margins on their product line.
