With the pandemic designation as an “essential service” as well as the legalization of Cannabis in additional states throughout the country, the Cannabis industry continues to grow and mature rapidly. What is becoming increasingly apparent to investors and industry watchers is the heightened attention to and valuation of “vertically integrated” Cannabis enterprises.
Essentially, vertical integration is a profitable business strategy that allows a company to streamline its operations by taking direct and full ownership of various stages of its production process rather than relying on external contractors or suppliers. Within the Cannabis industry, this strategy would require multiple state issued licenses in manufacturing, distribution, delivery, cultivation, and potentially a dispensary license.
One example of this strategy can be found in Oakland, California.
Operator, Carlton Williams’ New Life CA, is the first and only social-equity fully vertical Cannabis enterprise in Northern California and has quickly amassed multiple licenses allowing operations to scale rapidly while reducing operating and manufacturing costs.
There are many overall benefits to becoming a fully vertically integrated Cannabis company.
Here are the Top 5 Reasons.
1. Lower Cost of Production = Higher Margins.
By avoiding third-party distributors, cultivators, and or various suppliers, vertically integrated Cannabis companies can save immense costs while obtaining higher profits.
2. Control over Quality Assurance Processes
Full control over various stages of Cannabis production allows the operator to maintain a high level of quality and ensure its consumer base that their products are best in class.
3. Highly Attractive to Investors
Once federal legislation occurs, larger domestic and international operators will seek to acquire Cannabis enterprises that demonstrate the highest profitability - namely, fully vertically integrated Cannabis companies.
4. Quicker Response to Business Trends
When a Cannabis operator has direct ownership over all stages of Cannabis production, they can quickly adjust to changing trends and consumer demands. The ability to quickly adapt is essential as the industry continues to grow and mature.
5. “In-Rec Market”: The Ability to profit by carrying other Brands
Lastly, a Cannabis operator with a vertical integrated operation can more easily support additional brands - creating more revenue streams for the operator.
Read more about New Life CA Here: https://newlifeca.com/
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