Up until recently, the cannabis industry has existed in a fragmented state of affairs dominated by small players on a state-by-state basis. However, multi-state operators (MSOs) — large and typically publicly traded companies with multi-state operations — are becoming increasingly prevalent in the cannabis industry as the space matures and as more states ease restrictions.

These companies develop and operate facilities for cannabis cultivation, extraction, and retail in just about every state that has legalized cannabis for medical or recreational use. It seems straightforward, but what tangible differences and advantages do multi-state operators actually have compared to single-state operators within the cannabis industry? To find out, I reached out to several executives in the cannabis industry:

The rise in multi-state operators is a benefit for consumers in a complex, highly regulated industry and is an expected evolution. Rather than individual entrepreneurs starting from scratch to figure out operational efficiencies and conduct R&D for product formulations, MSOs generally have more access to capital, can more quickly set up facilities with proven designs and system, and roll out a broader array of already developed products that can be produced more cost effectively than boutique operators. Many boutique licensees are actively seeking to be acquired by MSOs because the costs are overwhelming and margins are too thin to do it alone.

Additionally, the expertise MSOs bring is helpful to state regulators. Collaboration with MSOs who have experience in other states generally leads to a stronger program that works better for the state, cannabis businesses and consumers”

George Archos, CEO of Verano Holdings, a national, vertically integrated operator of licensed cannabis cultivation, manufacturing and retail facilities dedicated to improving lives by providing safe access to effective organic cannabis products that enhance health and wellness and by positively impacting the communities it serves.

One of the distinct advantages of being a multi-state operator for Cannabis Life Sciences (CLS) is the ability to be true brand builders across multiple jurisdictions. While every state has different restrictions, by operating in multiple places we can apply key learnings and best practices to other states and markets. For example, while it is illegal to transport cannabis and cannabis products across state lines, we can share the exact methods for growing and extraction used in Nevada with our operators in Massachusetts. Having this quality control and consistency across state lines makes it much easier, from a marketing perspective, to leverage a popular brand like City Trees, a complete line of oils, vape oils, and tinctures (both CBD and THC products).

Furthermore, and foundational to our success, being an MSO offers great economies of scale opportunities. Through increasing production while lowering costs we can achieve greater profitability and growth. We can also pool recourses to keep costs down. For example, Cannabis Life Sciences is structured with one CFO for the company and then separate individuals to run respective state branches on the ground floor. This way, our overhead costs get spread out over many jurisdictions and a larger number of goods instead of just within one market. Lastly, being an MSO also has the additional advantage of really pushing us to dominate in competitive markets.

— Andrew Glashow, President, COO, and Director at Cannabis Life Sciences, a public multi-state vertically-integrated company. City Trees is their wholesale brand, which is one of the fastest growing brands in Nevada.

Multi-state operators are helpful for jump starting brands in the cannabis industry. They allow brands to extend their distribution across state lines and allow brands to market to consumers they wouldn’t otherwise engage. I think multi state operators are the future of the business.

— Steve Gormley, CEO of International Cannabrands, a company focused on acquiring successful mid-market cannabis brands with a goal of bringing together unique and emerging legal cannabis brands and core cannabis capabilities that resonate with evolving consumer lifestyles.

MSOs are a natural progression in a maturing, highly competitive industry. For produce, clothing, or any other type of consumer goods, it is commonly recognized that it is more cost effective and efficient to replicate proven designs, best practices and formulations and do purchasing of goods and services across multiple facilities rather than one-offs. MariMed got its start by providing managed services to astute boutique operators who recognized that, rather than attempt to reinvent the wheel themselves, it was far more effective to utilize the expertise and capabilities of an experienced multi-state firm.

The next step in the progression is the advent of national operators who produce in select facilities and distribute products nationally.

— Charles Finnie, Chief Strategy Officer at MariMed, Inc. MRMD is a multi-state cannabis organization that develops, owns and manages cannabis facilities and manufactures, licenses and distributes top brands and innovative products

Imagine a road trip from California to New York; every time you hit Starbucks for your usual, you’re served swill that’s nothing like the stuff back home. This has been the state of the cannabis industry forever, but dominant MSOs like Acreage, Cookies, Harvest, and CannaCraft are changing the game. For the first time ever, you can order an eighth of Gelato by Cookie in Vegas, Phoenix, Denver or even Detroit and it’ll actually be the very same fire you fell in love with back in California. The last time we had nationwide product consistency like that, the marijuana was seedy and brown, and our dollars were ending down in Sinaloa instead of the stock market.

— Martin Kaufman, Co-founder of MKSI, an Oakland-based company that has decades successfully founding, leading and supporting companies across every aspect of the cannabis industry, from agriculture to advocacy to private equity, real estate, retail and beyond.