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In late 2021, we learned about an emerging trend in the United States (US) where some states have changed the structure of the legal cannabis market to support small-scale cannabis operators by offering microbusiness licenses.
Micro Business licenses require much less capital to launch and operate a small, plant-touching enterprise. We are favorable on this vertical of the cannabis industry and believe that some of the best known brands started as small scale operators.
The new structure is part of an effort that is focused on making the cannabis industry a more diverse market. The reason for the change is primarily related to how recreational cannabis markets are becoming saturated with large-scale, well-funded multi-state operators (MSOs), which leaves little room for mom and pop type operators to be viable businesses.
The trend is starting to generate traction and three states have started to issue microbusiness licenses. The states are California, Massachusetts and Michigan, and we consider these to be high-profile markets that are great candidates to lead the change in other states.
During the last few years, several states have passed legislation that allow for the sale of recreational cannabis. Although most of the new recreational cannabis markets have not issued licenses yet, several of them have developed microbusiness and/or craft cultivation programs. These states include Connecticut, Illinois, New Mexico, New Jersey, New York, Vermont and Virginia.
An interesting trend within the microbusiness vertical is related to how states allow these operators to be vertically integrated to help them become more economically viable. We find this aspect of the license to be a key benefit of the program and will monitor how operators take advantage of it.
According to state data tracked by Cannabiz Media, California leading the microbusiness license trend and has issued more than 300 microbusiness. Michigan and Massachusetts have issued seven and six microbusiness licenses, respectively, and we expect to see more licenses issued in 2022.
Although the model is not perfect and some states have already had to make changes to the structure to further benefit small operators, we are glad to see states being proactive with the trend. In 2022, we expect the microbusiness licenses trend to become more significant and will monitor how it impacts large-scale MSOs.
If you are interested in learning more about states with microbusiness license models, please send an email to support@technical420.com with the subject “States with Microbusiness License Models” to be added to our distribution list.
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