"Medical marijuana is one of the few industries, if not the only industry, where retailers are forced to own the whole line of production," he goes on. "It's a huge pain in the ass to run a business like that -- and to force that model into retail is ludicrous, particularly given that Colorado voted to regulate marijuana like alcohol, and alcohol is just the opposite."
How so? Edson points out that "at a recent city council meeting, they did a nice job of talking about the history of prohibition, and how you're not allowed to be an alcohol distributor and a manufacturer. They thought it would be an easier way to regulate and control if they were separate -- yet some members of the medical marijuana industry and some of the legislators act like vertical integration is easier."
Value may be created from some level of integration and from some level of outsourcing. The firms in the industry would know best and have incentives to exploit it. There may be a public interest in regulating recreational drugs which could be made easier from one form of supply chain versus another. But it is not likely that what makes it easiest for alcohol makes it hardest for marijuana.