California

insights

February 19, 2021
Notable Players

A Deeper Look At This State

Regulatory Framework

With medical legalization dating back to 1996 and Proposition 215, there is a long and deeply entrenched regulatory framework across the state.  However, the framework is decided county-by-county, making California one of the most complex markets to navigate. The problem is further exacerbated by the state's inability to handle its thriving cannabis black market, which is currently more profitable than its legal one.

Notable Market Activity

January 2021 | Subversive/The Parent Company acquires Caliva and Left Coast Ventures

December 2020 | Columbia Care acquires Project Cannabis for $69MM

January 2020 | Cresco acquires Origin House

June 2019 | Terrascend acquires Apothecarium

What's the Play?

The Golden State is the largest and most competitive cannabis market in the world. A trailblazer since 1996, this market has enjoyed the longest tenure in building its infrastructure. California is considered the epicenter of cannabis culture and is home to the largest cannabis market in the world, Los Angeles.  

Many operators are attempting to compete in the ~$4B market with an open licensure structure that allows municipalities to decide how they regulate cannabis at the local level.

This highly competitive market creates industry-leading revenues with little profitability. Operators who can compete in this saturated market will find themselves poised to win in other markets that enjoy limited license structures.

Consolidation has been happening for years, and we anticipate this to accelerate as marginal operators are forced to find a partner or go out of business. We anticipate successful California brands eventually dominating the US market as operators look to licensing opportunities in emerging limited license markets. We also expect large MSOs to purchase leading retailers as they look to build a profitable presence in the largest global cannabis market.

Market Snapshot

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

58,380

This Data Point

594/273

By The Numbers

Population

~39.5MM

Medicinal Legalization

1996

Adult-Use Legalization

2018

MMJ Patients

Voluntary Registration

Monthly Revenue

~$384MM

Cultivation Cap

Varies*

Cultivation Licenses

2,697/No Limit (Issued/Limit)

Retail Licenses

593/No Limit (Issued/Limit)

Retail License Cap per Operator

No Limit

Vertical Integration

Allowed

Delivery

Allowed

MMJ Qualifications

Less Restrictive

State Population / # Retail Licenses

~67K

MMJ Patients / # Retail Licenses

*Cultivation limits vary by municipality and license type.

Top Cultivators

Notable Market Activity

Quick sentance is needed or wanted

Quick sentance is needed or wanted

Quick sentance is needed or wanted

Proprietary Sharp Capital Advisors data - compiled using various sources including state and local government data
Shit We Don't Know

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