Marijuana Business Magazine - March 2018

with third-party distributors. Either way, that drives up the cost of doing business even more. It remains to be seen how that will affect who can survive and thrive. • The 19 different types of licenses available from the state have led to a wide variety of business models. Some opera- tors, for instance, have opted only for a microbusiness permit, which allows much more flexibility for what the company is allowed to do – including cultivation and retail – without obtaining extra licenses. The drawback is those operators will have to stay small and won’t be able to compete with companies that will corner as much market share as pos- sible. Others, by contrast, have gone the opposite route and are obtaining as many permits as possible. The jury is out on which business models will prove the most sustainable. • Different business models could unleash completely new types of companies, both large and small. Operators like Flow Kana, for example, are banking on a cooperative model that allows them to act as brand ambas- sadors – as well as transporters, packagers and tax collectors – for scores of small-scale growers or edible makers. If that’s the case, distributors could wind up picking winners and losers from a huge pool of existing brands that want to participate in the regulated market but can’t afford to on their own. The distributors, however, are going to want to choose only the best of the best. • Several MJ businesses will be forced to close if local authori- ties say no to cannabis. That’s because many entrepreneurs launched their businesses well in advance of local authorities deciding whether to permit or ban cannabis operators. So far, only a fraction of local governments in California have allowed recrea- tional marijuana businesses. • The final regulations aren’t even out yet. That could change things dramatically once again, depending on how many altera- tions are made. One I’ve been watching closely, for instance, is whether the state will allow medi- cal marijuana edibles to have a higher potency cap than rec- reational products. Currently, the cap stands at 100 milligrams per package for both rec and medical. That might make sense for rec. But it contradicts what most in the medical cannabis business have known for years: Many patients suffering from ailments such as cancer or chronic pain use far more than 100 milligrams a day. I’ll be shocked if there isn’t a move to increase that limit for MMJ. We’ll see what happens. Maybe none of this will come to pass. And everyone in the California marijuana business will be millionaires by the end of the year. But I doubt it. ◆ Day 3 of adult-use cannabis sales in California finds customers standing in line at Harborside in Oakland. Photo by John Schroyer March 2018 • Marijuana Business Magazine • 35