Cannabis regulations vary by state, with license caps serving as one of the more glaring differences.
Depending where you are, caps may or may not be imposed on various points in the supply chain, which can include limits on ownership, production, delivery or retail.
It’s unclear as to which model is ideal for the overall industry, underscoring how legal marijuana is not one-size-fits-all.
To Be Cap or Not To Cap? That Is The Question
“It depends on what the goals are,” 420 Investor’s Alan Brochstein says, concerning states’ motives.
States looking to maximize revenue may lean towards a capped market that offers higher priced products. On the other hand, states looking to eradicate the unlicensed market would likely lean towards an uncapped approach, Brochstein explained.
Others in the space appear sold on one model over the other.
NewLake Capital CEO Anthony Coniglio says capped markets provide additional state control and more stability for the industry.
Illinois, for example, is an ideal capped market, Coniglio says.
“The state has had little to no issues with a grey market developing,” he said. “They captured significant tax revenue and provided opportunity for social justice to play a role in the development of the industry.”
In October, Illinois reported earning more than $100 million in tax revenue since adult use sales began on New…