Marijuana Business Factbook 2019

236 Marijuana Business Factbook 2019 Chapter 5 | Financial & Operational Data: Retailers © 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. Roughly one-third of retailers cited federal laws/intervention, lack of banking services, illegal market competition and managing growth/scalability as key challenges facing their businesses. All cannabis companies are hampered by federal laws and intervention to some degree as these laws place limitations on basic business activities such as advertising, banking and interstate commerce. Similarly, a lack of banking services continues to challenge all marijuana businesses, but retailers are particularly constrained by the inability to accept credit cards, handle payroll and high levels of cash transactions. This also creates a secondary security challenge and makes activities such as paying taxes more complicated. In more mature markets, cannabis purchases have largely transitioned from the illicit to the legal market, though some newer markets are still struggling with this change. Illegal market prices may remain below legal market prices ― particularly when taxes are taken into consideration ― disincentivizing consumers from making legal purchases. And in markets such as California and Michigan, retailers who have taken the steps necessary to become legal still compete against retailers operating in a gray area without having to pay the costs of licensing and compliance. Managing growth and scalability is a problem for all businesses, but, in a sense, it is a good problem to have if it signals a healthy marketplace. All businesses may experience a degree of struggle in expanding operations or outreach. For marijuana retailers, this may mean moving from one storefront to multiple storefronts or increasing the cultivation arm of their business for vertically integrated retailers.