In the United States, cultivation licenses are often viewed as the most valuable in the highly competitive application processes that most states use to determine who is allowed to cultivate and dispense in their states.

This value is partly derived from the fact many populous states initially only grant a limited number of cultivation licenses. For example, Pennsylvania, with nearly 13 million people, only granted 13 licenses.

Today the cannabis industry is defined by individual state markets, where no product can cross state lines due to laws prohibiting interstate commerce of a federally illegal product. But when prohibition eventually ends, then interstate commerce will open and businesses will be allowed to import their cannabis from any state in the country.

Are cultivators setting themselves up for long-term failure? We’re already seeing a trend towards large-scale greenhouse and outdoor production, which is driving prices down in states that do not have strict limits on the number of licenses they grant.

Companies that hold cannabis cultivation licenses can see large returns on their investments in the short term, but in the long term it will be simply untenable for large-scale indoor cannabis producers in the United States and Canada to survive.

Read the original article at Forbes