You may want to look into a Multi Network. But be aware, many plugins are not coded for this type of setup.
Another alternative would be instead of making each level a full site (CA – LosAngeles – Compton being 3 levels), you could set up a MultiSite to handle the highest level (states) and within each state, create CPTs and Taxonomies to handle the metro area and individual city. If your goal is to restrict access to content – whether it’s admin/editor type access or just visitor access – it’s relatively easy to set up your CPTs with custom meta permissions.
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