Manufacturing licenses are one part of the cannabis value chain that does not get as much attention as farming and retail. They are not issued with the same frequency – nor ferocity as cultivation and retail/dispensary licenses.

However, they serve as important assets for companies because the products are often powerful brands. These brands, unlike license assets, can cross state lines and will undoubtedly help well-established companies thrive and build market share.  

We ended 2020 with 4,393 active manufacturing licenses. So far this year states have added 488 more, but we net out at 4,798 with non-renewals.

Background

We categorize a license as a manufacturer if it fits the following description: License is for the processing (manufacturing) of marijuana-infused products, such as edibles or concentrates, but does not include cultivation or retail sale to customers (flower in, product out).

States are rarely in harmony when it comes to these licenses. In some jurisdictions, the cultivation and manufacturing activities may be combined into a single license like in Connecticut and New Mexico. In other jurisdictions, like Florida and New York, the license holder is required to do all growing, manufacturing, and sales with their license. Georgia and Alabama are heading down this oligopolistic route as well.

Leaderboard

Here’s the Leaderboard comparing Year End 2020 and May 2021. The % column shows what percent of the nation’s total each state represents. The growth shows the change from the beginning of the year. 

As usual, the leaderboard is highly concentrated with five states accounting for 88% of the licenses.  

Key Findings

• Active licenses are up 9.2% since the beginning of the year.
• 43% of the new licenses were in Oklahoma.
• Michigan and Massachusetts continue to make strong showings as their programs continue to grow. 
• Only a few companies scored multiple licenses, and this tended to happen in Michigan and Colorado where license holders sought medical and adult-use licenses.  
  

Conclusion

Some consider manufacturing to be one of the sweet spots in the cannabis value chain. You are not subject to the challenges of agriculture or commoditization nor do you have to deal with the thin margins in the retail space. 

Manufacturers have the best opportunity to build a brand, and this makes it an attractive part of the value chain for transplanted talent from liquor, packaged goods, and pharmaceuticals because it seems familiar.  

Author

Ed Keating is a co-founder of Cannabiz Media and oversees the company’s data research and government relations efforts. He has spent his career working with and advising information companies in the compliance space. Ed has managed product, marketing, and sales while overseeing complex multijurisdictional product lines in the securities, corporate, UCC, safety, environmental, and human resource markets.  

At Cannabiz Media, Ed enjoys the challenge of working with regulators across the globe as he and his team gather corporate, financial, and license information to track the people, products, and businesses in the cannabis economy.  

Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University.

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