Don’t Get Stuck With A Worthless Piece Of Paper: Risk, Reward And Other Factors That Make A Cannabis License Valuable
The economic behavior of cannabis licenses has been largely overlooked. Cannabis license values vary widely, from as low as $10,000 to as high as $1.5 million, driven by multiple factors.
First of all, the value of a cannabis business license varies significantly depending on market maturity and license type. In well-established markets like California, Colorado and Oregon, licenses cost less and align closely with market value. Emerging markets like Florida and Illinois, however, see higher prices due to increased demand and limited supply, making investments riskier. In this article we summarize these and other findings on licenses dynamics, reported MJBiz.
Market Maturity Impacts License Value
In newer markets, some licenses, especially those tied to specific categories like transportation, often prove less valuable. This occurs in states where the market structure allows cultivators and processors to sell directly to retailers, reducing the need for certain license types.
For instance, in Illinois, transportation licenses initially seemed promising, but they quickly lost value when the state did not require third-party transportation services.
Many license holders found themselves without viable business opportunities, leading to over 200 transportation licensees, with many shutting down due to lack of demand.
Colorado faces similar challenges with transportation licenses. The state requires municipalities to approve delivery services, but only a few have done so, leaving many transportation businesses struggling to find partnerships. This regulation failures add risk to entrepreneurs seeking to build …