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Independent Operators versus MSOs: Thomas Winstanley Weighs In

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A recent survey by New Frontier Data indicated that Multi-state operators (MSOs) control about 50% of dispensaries, especially in states that have legalized adult-use marijuana.  MSOs have traditionally been the first to get adult-use licenses in new markets and establish a presence. Data from recent surveys have also shown that have adult use markets have a shrinking medical market.

MSOs are seen as conglomerates with multiple revenue streams sprawling into millions of dollars. This financial scenario is not replicated in the case of independent operators who mainly rely on bootstrapping. With the tough banking regulations in the cannabis industry,  small canna-businesses often struggle to access mainstream financing. At the same time, the industry is overtaxed and hence the profit margins are tight. This creates a situation favoring businesses that can capitalize on economies of scale, at least theoretically.

If one was to depict this scenario, MSOs will appear to be at the top of the food chain while independent operators will be scrambling from the crumbs that may fall from the table.

But surprisingly, several cannabis MSOs have been downsizing and citing liquidity issues. Why is this happening?

It appears that all is not lost for independent operators, most of whom capitalize on the medical market. A different way to look at it would be this: in taking on the corporate approach, MSOs have lost the personal touch and hence struggle to establish customer loyalty that comes with building meaningful customer relationships. At the end of the day, businesses that are successful in the long run are not about spreadsheets and conferences but are rather hinged on customer trust and loyalty.

Independent operators have the opportunity to engage with the local community and discover their unique characteristics which they can use to tailor their products and pricing structure. Simple gestures such as shaking hands with customers at the dispensary can make a great difference in the long run. At the end of the day, it's not just about doing it bigger but doing it better as well.

In seeking to better understand the interplay between MSOs and independent operators, My Cannabis spoke to Thomas Winstanley, the chief marketing officer of Theory Wellness. Theory Wellness is a vertically integrated cannabis brand that is both an MSO and independent operator at the same time. Interesting right? Let’s hear what Thomas had to say.

My Cannabis:  Is Theory Wellness an independent operator or a multi-state operator?

Thomas: At Theory, we're an independently owned MSO, which is an oxymoron. Being independent allows us to be nimble and adjust on the fly in our respective markets. It is an advantage for us in the ever-evolving and changing landscape of the cannabis industry.
My Cannabis:  What are some of the advantages of having this hybrid model?
Thomas: Being independent and vertically operated is a critical variable in our success for both markets in Massachusetts and Maine. Since we control our product pipeline, we can create new products rapidly and react to the market's needs in a timely manner.

The organization is also relatively flat in its leadership structure, allowing open communication with decision-makers. This helps us avoid some of the hang-ups of large top-down companies that are publicly traded with dozens of stakeholders who need to provide approvals.

My Cannabis:  Can you say that the hybrid model is superior to the MSO model?
Thomas: Overall, the approach has served us well, as we're more like a start-up in how we drive our growth forward. Our organization has been profitable since 2018, contrary to many larger MSOs that are seeing declining stock prices—especially given the current economic headwinds we see, not just with cannabis.”

My Cannabis was extra delighted to have these insights from Thomas Winstanley. Readers wishing to keep up with Theory Wellness can always check their website.



Lydia K. (Bsc. RN) is a cannabis writer, which, considering where you’re reading this, makes perfect sense. Currently, she is a regular writer for Mace Media. In the past, she has written for MyBud, RX Leaf & Dine Magazine (Canada), CBDShopy (UK) and Cannavalate & Pharmadiol (Australia). She is best known for writing epic news articles and medical pieces. Occasionally, she deviates from news and science and creates humorous articles. And boy doesn't she love that! She equally enjoys ice cream, as should all right-thinking people.