ACKRELL CAPITAL Cannabis Investment Report | December 2017 Because dispensaries “touch the plant,” they must usually obtain a state license. Obtaining a state dispensary license generally involves a multi-month application process that requires the applicant to demonstrate compliance with complex license criteria and local regulations, such as producing their own products (or being prohibited from doing so), locating their dispensary outside a city’s ordinary retail or commercial zones, operating as a nonprofit cooperative or collective, tracking cannabis prod- ucts from “seed to sale,” and collecting taxes on behalf of the state. Dispensaries must also comply with applicable regulations related to product testing, packaging and labeling, security, and health and
sanitary conditions.
An extensive network of dispensaries across jurisdictions will facilitate the growth of the cannabis industry and its ability to attract new consumers. Currently, states with the most extensive networks of dispensaries are those that have both recreational and medical cannabis laws, such as Colorado, Oregon and Washington, and those that have had medical cannabis laws for a long period of time, such as California. For example, according to the Rocky Mountain High-Intensity Drug Trafficking Area, as of June 2017, in Colorado there were 491 cannabis dispensaries, compared to 392 Starbucks and 208 McDonald’s.
E-Commerce
E-commerce refers to the use of digital applications to enhance the cannabis shopping experience. For example, a mobile application may facilitate the comparison of cannabis products and pricing or the delivery of orders from local dispensaries. These applications are being developed by a host of mar- ket participants, ranging from software development companies to retail dispensaries. Due to federal restrictions, cannabis e-commerce transactions are currently conducted only intrastate. If and when federal restrictions change to allow interstate cannabis commerce, we expect that home-delivery and e-commerce services will increase significantly. E-commerce solutions with high consumer engagement (such as those providing reviews and price comparisons for a broad selection of products) will help retailers acquire and retain customers.
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