State Classified Integration
It’s important to understand how states in the US have implemented cannabis regulations because it has a real impact on the ability of small businesses to enter the market. Currently state based programs are divided into two classifications:
Vertical Integrations
“A vertically integrated marijuana program is regulated and licensed by a State Health Department or similar governing agency, which must control all aspects of operation: Cultivation, manufacturing, transportation, distribution, dispensary, and in many cases, testing. The capital expenditure required to set up shop as a marijuana firm in a vertical integrated state is massive, on the order of tens of millions of dollars.”
- Programs must control all aspects of the operation like cultivation, manufacturing, transportation, distribution, dispensary, and even testing.
- Regulated and licensed by State Health Departments
Horizontal Integrations
“In a horizontally integrated program, manufacturing, testing, dispensing, distribution, and transportation are all considered separate business activities. With the exception of testing, a marijuana business can engage in any or all of those. So, a dispensary might carry products from many different growers, as strictly a reseller.”
- Manufacturing, testing, dispensing, distribution, and transportation are all considered separate business activities.
- Regulated and licensed by State agencies formed for oversight.
Source: Source: https://www.zdnet.com/article/how-the-marijuana-industry-is-organized-in-legal-states/