One of the most significant challenges of the cannabis industry to date has been the inability of businesses to move products across state lines. Since cannabis remains illegal at the federal level, state-licensed cannabis businesses have to cultivate, produce, and sell their products all within the confines of the state in which they have been licensed. Nothing can cross the state lines, even if the business is licensed in two contiguous states.
The situation is extremely burdensome on all cannabis businesses. It is especially problematic for the small mom-and-pop operators who are not well capitalized and do not have access to traditional banking services. Regulatory hurdles in the cannabis industry benefit wealthy entrepreneurs much more than compared to small mom-and-pop operators.
The inability to ship cannabis products across the state lines means a business can’t take advantage of the same economies of scale as their counterparts in the other industries. As an example, if someone starts a successful craft brewery in Colorado, they would naturally look to expand into neighboring states. That company would increase their production capability at their Colorado brewery, and start shipping their product across state lines to restaurants and liquor stores in places like New Mexico,Arizona, Kansas and Oklahoma.
However, this does not happen as cannabis is illegal at the federal level. This hurts the business and mom and operators have to settle for much less income than they deserve for their hard work.