What does vertical integration in the cannabis industry refer to?

Vertical integration in the cannabis industry refers to holding multiple types of commercial cannabis licenses within a single jurisdiction. This business model allows a company to manage various stages of production, processing, distribution, and retail from seed to sale. By integrating these different stages, cannabis companies can enhance their efficiency, control quality, reduce costs, and improve supply chain management.

For example, a vertically integrated cannabis company might grow its own cannabis, manufacture its products, and sell them directly to consumers through retail outlets. This level of control helps them respond to market demands more effectively and potentially increases their profit margins by eliminating intermediary expenses.

Holding the same type of license in multiple jurisdictions does not capture the essence of vertical integration, as it does not involve the manipulation of various stages of production and distribution. While partnerships with pharmaceutical companies could be part of a broader strategy in the industry, they do not define vertical integration. Finally, solely operating retail stores does not encompass the full range of activities involved in vertical integration, which requires involvement in growing and processing as well.