Several cannabis multistate operators (MSOs) have exited states in the latter half of 2023. The exits are due to a number of factors, including increasing competition, regulatory hurdles, and a lack of profitability. View other drafts You’re correct. Several cannabis multistate operators (MSOs) have exited states in the latter half of 2023. This trend is likely to continue as the industry matures and competition intensifies. Here are some of the reasons why MSOs are exiting states: Increasing competition: The cannabis industry is becoming increasingly competitive, as more and more companies enter the market. This is making it difficult for MSOs to operate profitably in all of the states they are currently licensed in. Regulatory hurdles: The cannabis industry is still heavily regulated, and each state has its own set of rules and regulations. This can make it difficult for MSOs to operate efficiently and comply with all of the applicable laws. Lack of profitability: The cannabis industry is still relatively new, and many MSOs are struggling to be profitable. This is due to a number of factors, including high overhead costs, low margins, and a lack of access to capital. As a result of these factors, MSOs are increasingly focusing on consolidating their operations in the most lucrative states. This is leading to exits from states where there is a lot of competition, regulatory hurdles, or a lack of profitability. Here are some examples of MSOs that have exited states in the latter half of 2023: Cresco Labs: Exited Arizona and Maryland Trulieve Cannabis: Exited Puerto Rico Ascend Wellness: Exited California It is likely that more MSOs will exit states in the coming months and years. This is a natural part of the industry’s maturation process. As the industry matures, competition will intensify, and only the most efficient and profitable MSOs will be able to survive.

• Increasing Competition: The cannabis market is becoming more crowded as new companies emerge, making it challenging for MSOs to maintain profitability across all states they operate in¹.
• Regulatory Hurdles: Each state has its own unique regulatory framework, which can complicate operations and compliance for MSOs, leading to inefficiencies¹.
• Lack of Profitability: The relatively nascent nature of the cannabis industry means that many MSOs are still striving to achieve profitability, hindered by high operational costs, slim margins, and limited access to capital¹.

As a result, MSOs are focusing on consolidating their presence in the most profitable states and withdrawing from markets where competition is fierce, regulations are burdensome, or profitability is elusive¹.

Some notable examples of MSOs that have exited states include:

• Cresco Labs: Exited Arizona and Maryland to focus on more profitable markets¹.
• Trulieve Cannabis: Divested its California retail outlets and ceased operations in Massachusetts¹.
• Ascend Wellness: Exited California as part of its strategic realignment¹.

Learn more:

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