US cannabis companies are racing for scale as more states continue to reform marijuana laws.
Some operators, however, are taking a more deliberate approach.
“Our lens is really built around scarcity of licenses,” Josh Rosen, the CEO of 4Front, a Massachusetts-based cannabis retailer told Business Insider. “That’s what we refer to as oligopoly states.”
The race is on as cannabis companies compete for scale in what’s set to be a $75 billion — or greater — market in the next decade in the US alone.
But for some US cannabis retailers like Massachusetts-based 4Front, growth at all costs isn’t the priority.
“I refer to it as a game of Monopoly versus a game of Risk,” Josh Rosen, the chairman and CEO of 4Front told Business Insider in a recent interview.
Monopoly is a game of unfettered capitalism. There’s a lot of luck as to where you land on the board, but the strategy boils down to buying every piece of real estate you come across — if you have the money. And in Monopoly, if you’re not a landlord, you’re paying rent.
Read more: Marijuana companies are using a ‘backdoor’ strategy to tap the public markets — and it’s fueling an M&A boom
To win a game of Risk, however, you have to be a bit more deliberate. While there is a fair amount of luck involved, players have to develop and execute a careful strategy to conquer territory at the right time.
The cannabis industry in the US is much more like a game of Risk. Rather than a cohesive federal market, the industry is a patchwork of 33 different state markets, each with their own local quirks and regulatory requirements.
Rosen admits the board game metaphor is “a little simplistic,” but it makes sense when you look at the firm’s acquisition strategy.
In November, 4Front acquired Cannex Capital Holdings Inc, which owns an operates two large-scale cultivation facilities in Washington State.
Read more: ‘My lips are wet, my mouth is watering to get a piece of that’: A war is brewing between US and Canadian marijuana companies to claim a $75 billion market
Cannex trades on the Canadian Securities Exchange, a secondary exchange in Canada that has become the favored market for cannabis companies with US operations. It’s emerged as a conduit between Canadian investors and the growing US market, as marijuana is still federally illegal in the US.
The deal, which valued the combined company …read more
Source:: Business Insider