Marijuana Business Magazine March 2019

Marijuana Business Magazine | March 2019 80 JACK of all TRADES It isn’t just a retail-only model that has the potential to be successful. Creating branded edibles or concentrates and working with contract manufacturers can help you build a multistate brand without vertically integrating, Dayton said. Contract manufacturing allows a product manufacturer to license another brand’s intellectual property to produce and package their product. It is common for, say, infused edibles and beverage makers to use contract manufacturing to get their products to market in other states. If you’re a concentrates or infused product manufacturer that has contract manufacturing agreements with other brands, it makes your investment in that one part of the supply chain less risky, Dayton said. If you choose not to vertically in- tegrate, processing or extraction can actualize a high return on investment, too, said Anne van Leynseele, the founder and managing partner of 7 Point Law, a cannabis legal firm with offices in California, Maryland, Oregon and Washington state. “How does an entrepreneur that wants to own a small marijuana business realize their American dream?” van Leynseele asked. “Their highest opportunity for success, in my opinion, is to process.” BE ALERT TO DISRUPTORS If you choose to create a business that focuses on only one part of the supply chain—cultivation, for example—con- sider factors that could disrupt or harm your new endeavor. Cultivation and retail are more sus- ceptible to disruption than extraction or distribution, Bachtell said. Distribution and processing, on the other hand, aren’t as sensitive to disruptors. Usually the people who win, win because they love what they do.” —Troy Dayton CEO of The Arcview Group Each state's license structure plays a key role in a business' decision whether to vertically integrate. Courtesy Photo