The time that California passed Prop 64 was pivotal for the emerging cannabis industry as traditional business entities started to move into the space. I remember it so clearly, the attendees at MJBizCon in 2016 looked and acted differently than at past conferences. The exhibition floor where I used to see hippies and legacy growers included more suits, lots of boat shoes, and a bunch of representatives who formerly turned their noses up at cannabis brands trying to cash in on the media-promised “green rush.”
The industry started to turn on its head following that MJBizCon. Folksy tales of multi-generational farmers in the Emerald Triangle shifted to news of mergers and acquisitions. Only four years later, M&A deals evolved into sagas of unpaid bills and C-suite drama. This vibe shift is something that I think about now, five years later, while pondering the industry’s informal acceptance of all MSOs as the masked villain of the industry.
What is an MSO?
MSO stands for multi-state operator. It is a blanket term used in the cannabis industry attributed to a consumer-packaged goods brand, retail establishment, or vertical operation that operates in multiple state markets. As corporations started to form in the American cannabis space, industry pundits referred to them as MSOs. Over time, the substandard ethics and operations of some bad MSO players turned the innocent acronym into a red flag.
I polled my Linkedin network, a pool of around 5,000 people in the cannabis industry, and asked what the word MSO evoked in them. Some short answers were, “Just ‘no’,” “A negative gut response,” and “Stranger danger.” And from decades-long legacy operator Andrew Lopas, “After having dealt with several of them, I just avoid them now…”.
How did the term MSO take on such a negative connotation?
When exactly did this moniker gain so much meaning that it evokes such a visceral response in the community? Michael Mejer, Founder of Green Lane Communication, commented, “In my opinion, the term MSO has built up a negative sentiment over the years. Is it fair to negatively illuminate every single multi-state operator the same way? Not necessarily.”
The cannabis industry exists due to the hard work of activists and advocates who have fought against the status quo for years. When corporate entities started opening cannabis businesses, lobbying, and using decades of business knowledge to shape the industry– some of those who fought for it in the first place were being left behind. Sarah Ratliff, a writer in the space, added, “Not all, but most MSOs are Walmart wannabes. What I wonder about them is whether they understand the importance of this plant medicine or is it all about the money?”
Ratliff’s point is valid: many of the activists who fought for legalization are patients who view cannabis as medicine, while many corporations entering the space view it as a commodity to bolster portfolios. Kyle Rosner added, “I love to see good brands transcend state lines, but it needs to be done in a way that honors the local cannabis communities and gives back to the locals.” Not all MSOs deny plant medicine or degrade the legacy operator—some MSO CEOs were patients and legacy operators themselves.
Despite the commonly negative association, larger brands and MSOs can add to the market. Josh Freeman, Senior Financial Analyst at Parellel, has a different perspective after working with larger MSOs, “To me, MSO generally means standardization, and that can be good for consumers where products can waver in quality and consistency across markets. Sometimes this is at the cost of niche, unique, or more innovative ideas/products however and that’s a shame.”
Expanding the vocabulary
Alex Popoff, a veteran, and former industry operator made a point in the comments as well: “It’s just a term, I was thinking about this recently. I can’t think about anything good regarding most MSOs. However, some MSOs are legitimately smaller businesses and they’re diversely owned and operated. Some ‘MSOs’ might be in two or three states and have a handful of dispensaries or grows.”
Lauren Yoshiko, a journalist, and writer of the Broccoli Report commented with similar sentiments when asked what she thought when hearing the term, “Gut reaction: big dogs putting profit before planet and people. Second reaction: are we talking locally owned or publicly traded company? I recognize the MSO scene is getting more nuanced.” This begs the question, has the vocabulary outgrown MSO? Kyle Rosner made the point that, “I love to see good brands transcend state lines, but it needs to be done in a way that honors the local cannabis communities and gives back to the locals.” One brand is doing just that, and we reached out to their CEO Christine De La Rosa for comment on the semantics of “MSO.”
The People’s Ecosystem is a women of color owned and operated multi-state operator, with De La Rosa at the helm. She chimed in on whether it’s possible for an MSO to be considered objectively good, “Yes, that is what The People’s Ecosystem does every day and we are a small MSO with limited funds so this is absolutely doable by the large MSOs with access to capital.”
It seems that the industry has outgrown its rudimentary vocabulary and that creating a diversity of words could help industry operators differentiate one MSO from another. This reassessment of how we talk about multi-state operating cannabis companies may be required to take accurate stock of the corporate landscape.