As of June 2017, there were 491 retail marijuana stores in the State of Colorado; that compares to 208 McDonalds and 392 Starbucks locations. In 2016 in Colorado, sales of marijuana reached $1 Billion. Selling pot can be good business especially if your store is located in an area with Millenials and high tech jobs: the Harborside Dispensary in San Jose California had sales of $20 million and a $1 million profit. On the other hand, despite the enthusiasm of voters on Prop 64 that legalized recreational stoning, sales in California have not been as robust as the Governor projected.
There are 68,150 marijuana cultivators in the State of California; the State requires cultivators to obtain licenses, however, only 1% have done so. Humboldt county in California has 2300 applications from growers who will have to compete with an estimated 12,700 illegal farms in the county. California planned to make the marijuana business favorable to small cultivators but its complex regulations limiting the size of licensed areas failed to prevent aggregators from seizing multiple licenses that will be sold to large tobacco or liquor companies. The ex-CEO of Molson beer has recently stated: “All alcohol companies are going to have to get involved in this industry at some point. That will come.” It is amazing how naïve politicians can be; in States like California where breathing is regulated, they believe that they can control all other minute aspect of life. They can’t . . . not yet. Big Cannabis will be ungovernable but will be welcome because they are big lobbying spenders, good for election purses.
California is estimated as producing five-times as much marijuana as its citizens consume – it apparently is sold out-of-state – illegally. Recently a truck was stopped in Chicago illegally carrying 1500 pounds of marijuana grown in California with a street value of $10,000,000. So much for stamping out illegal sale of marijuana. Whether any State that has not succumbed to the pot fever can sue California as an accessory to the crime of illegal possession of a lot of pot, I leave to the lawyers.
The enthusiasm for legalization in California was based on a common California rationale for any legislation. More regulation. More State union employees with fat pensions harassing small businesses. It was naïve to think that marijuana would be sui generis among bountiful products. Licensing is the mailed fist of government control; licenses granted are easily rescinded – and they often are. Because local jurisdictions are not hip like Berkley, West Hollywood and Palm Springs, 70 percent of jurisdictions have banned cannabis business and the number of legal licenses has fallen from 1100 projected to 400 actual. There was an estimated 40,000 to 50,000 farms growing pot before recreational legalization – the executive director of the California Growers Association estimates that the number has fallen by half. Lab-certification protecting against contamination and adulteration took effect in mid-2018. Old non-certified product had to be thrown out. It is not clear that there is enough certified product, though the industry was given six-months notice, to replenish the shelves. More chaos.
The United States is not alone. Canada shortly will be the first G-7 country to legalize all marijuana nationwide. Forecast for the first year of sales is an increase of 35% from present consumption to over $7 Billion per year. In large part, this is the result of product differentiation: oils, concentrate, vaporized cartridges, infused creams, lotions, beverages and edibles. Molson Coors Brewing entered into a joint venture with Hydropothecary Corp., a NASDAQ company. But it is not just Canada – the provider of Corona beer bought a 10% stake in publically traded marijuana company, Canopy Growth Corp. (Williams) Indeed, the stock market has welcomed marijuana companies with enthusiasm. A sure sign that legalization is here to stay.
Once large “pleasure goods” companies embrace marijuana, with their well-honed lobbying strength, profit, politics, and pot will become a common form of anaesthetizing young people who are tortured by the pains of growing up.
To be continued