“With a vertically built-in license, you have to have the power to domesticate, course of, dispense, and transport as a single entity, which will increase the prices for licensing. It additionally doesn’t permit for farmers who’re good at farming to simply give attention to that piece and never must tackle companions with different expertise that they don’t have. Similar to somebody who’s owned nook shops for 3 generations might not know the best way to domesticate something, however they’d run a implausible dishing out group—that’s a ‘horizontal’ method that the majority states have adopted,” stated Florida hashish, agricultural, and dietary complement legal professional Scheril Murray Powell.
With a horizontal method, there may be much less monetary stress on licensees to handle all points of the manufacturing path and extra capability to give attention to fulfilling one chain within the hyperlink. A marijuana grower grows; a hashish processor processes; and a product distributor distributes.
Critics of vertical integration say its necessities make it tough for small companies to compete, whereas permitting giant corporations with numerous monetary backing to take over. Trulieve, one of many first MMTCs licensed in Florida, is a publicly traded firm that operates in 11 states with “leading market positions” in Arizona, Pennsylvania, and Florida—the place it now controls greater than 50 p.c of the market.
In some states, comparable to Washington, vertical integration is prohibited, and strict separation between manufacturing and retail is enforced. In different states, comparable to Massachusetts, vertical integration necessities established for medical marijuana have been lifted for the adult-use recreational market. New Jersey and New York, which legalized grownup use final yr, followed suit.
Final spring, the Florida Supreme Courtroom sided with DOH against Florigrown, ruling that the constitutional modification that legalized medical marijuana additionally gave the state’s legislature rulemaking authority. That paved the best way for the administration of recent MMTCs. The vertical integration license requirement remained unchanged.
“There must be some reflection on whether or not a vertical license remains to be acceptable at this level,” stated Murray Powell. “And there additionally must be an try and not solely treatment the drawback that the present program locations on Black farmers, but additionally Black, minority, and small enterprise homeowners that wish to take part, who even with the issuance of the Black farmers license, will nonetheless be deprived and unnoticed of the method.”