Dispensary Gold Rush

California is well on its way to becoming ground zero in the competitive battle for cannabis dispensaries. No less than 40 companies from Canada and other US states are aggressively making acquisitions to establish themselves in the Golden State. Last year at this time there were over 2000 dispensaries, today there are 500 and by this time next year we may be back over a thousand. However, the ownership profile will change dramatically as more and more well-funded companies, offering cash and stock, will look to acquire California domain expertise in retail.

Why the focus on California? Obviously its big. Add to that the prevailing wisdom of the large-scale players is – “if you’re in Cannabis, you must be in California”. Just as important as market size is the sheer complexity of the CA market. With ever shifting sands driven by herky-jerky state regulation, evolving taxation across our 58 counties and a befuddling testing environment, CA operators are nose to the grindstone making sure they get and stay compliant. While CA retail owners focus day-to-day, well-funded multi-state operators roll in with an army of lawyers locking down every available retail permit (yes, even Coalinga). Add to that the inorganic strategy of acquiring retailers outright and you have a verifiably frenzied Green Rush. Chaos creates opportunity and well organized companies with strong balance sheets are taking advantage.

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