Marijuana Business Factbook 2019

195 © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. Financial & Operational Data: Wholesale Cultivators | Chapter 3 MJBIZDAILY.COM CHART 3.12: Distribution Of California Adult-Use Cultivation Licenses By Number Of Licensees Large-scale cultivators with significant amounts of capital are well-positioned to capitalize on the trend toward low-cost cannabis production that’s sold to the extraction market ― posing a threat to growers without similar resources. Large cultivators can achieve economies of scale, both through buying greater quantities of inputs at a lower per-unit cost and being able to sell greater quantities of product to retail outlets. In California ― where the licensing structure was developed with the intention of allowing small cultivators an opportunity to come online before large grows ― 20% of all cultivation licenses (461 licenses) are held by only 13 licensees, while 50% of all licenses are held by 136 licensees. The state’s rules did not prevent businesses from “stacking” multiple licenses. This allowed for the creation of large-scale grows cobbled together through multiple small-scale licenses. This data reflects the contraction that has occurred in California’s market. As of July 2019, the state had issued 6,490 cultivation licenses to 2,810 licensees; by October 2019, there were 2,260 cultivation licenses held by 1,080 licensees. In some cases, this is the result of cultivators buying up dozens of licenses and allowing them to expire rather than renewing them. It also reflects the shift from temporary licenses to provisional and annual licenses, which are more difficult and time-consuming to obtain.