MSO (Multi-State Operator) – noun: A cannabis company that has operations in multiple states.
The Basics
Remember, cannabis is still illegal on a federal level. States approve the plant for medical or adult use one at a time. Each time a state legalizes, it opens up an application process, where cannabis companies and entrepreneurs can apply for a limited number of licenses.
One of the lesser-considered consequences of cannabis being federally illegal is that no interstate commerce is allowed. What’s that mean? Well, cannabis is legal in California, and it’s legal in Colorado. But cannabis grown in California is not legal for sale in Colorado, and vice versa. Everything must be done state by state.
From a legal standpoint, this means cannabis companies cannot be national companies. You cannot have one legal entity that operates cannabis facilities in more than one state. This, then, poses a challenge.
Entrepreneurs are smart. They know that establishing a national brand is extremely important. You don’t go to CVS to buy soap, you go to buy Dove, or, you don’t buy beer, you buy Budweiser.The Dove’s and Budweiser’s of cannabis are already being established.
Here’s the challenge: companies need to find a way to operate national brands under one brand name, while still maintaining distinct legal entities from state to state in order to remain compliant with federal laws.
So How Do You Operate Nationally?
Cannabis businesses create separate legal entities in each state they hold a license, under the same brand name. So, let’s say you start a cannabis company called SMART-cannabis. Your branded “pre-rolls” in each state are called SMART-cannabis Pre-Rolls, your dispensaries are called SMART-cannabis, but legally speaking, SMART-cannabis Colorado and SMART-cannabis California are completely distinct legal entities.
SMART-cannabis, in this example, is a Multi-State Operator, or MSO. It has operations in multiple states under one unifying brand name.
There are many MSO’s in the United States. As new states legalize, these companies acquire more territory and further establish their national brands. Some of the biggest MSO’s are Curaleaf, Acreage Holdings, Harvest Health & Recreation Inc., and Cresco Cannabis. Many of these companies are currently valued at over $1 billion.
To recap, let’s make it simple: a Multi State Operator (MSO) is any cannabis company that has operations in multiple states. That’s basically it!
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