The State of Weed
What direction is the marijuana industry going? Where's the money headed?
verywhere I go, people tend to ask the same question: what is the future of the weed industry?
This is both an impossible and improbable question, but I get asked enough that I thought I would give it a try. Take it with a grain of salt, this is only my opinion, but I think it is worth sharing.
Let’s take a look at the numbers. Last month, the ArcView Group released the most comprehensive study of the economics of pot to date, placing the market spending of Americans on pot at $5 billion in 2015, and estimating a total of almost $15 billion by 2021. That’s a lot of cash, and it has attracted investors and entrepreneurs alike as moths to a flame. But as the moth that circles a candle too close finds out, flames burn.
Right now, a company like Monsanto could buy every single Cannabis company in Oregon, Washington or Alaska and not flinch financially. That is an incredibly tenuous position for our industry to be in as it flirts with outside investment and the consequences of easy cash and big money.
What attracted me to the pot industry in 2010 was the seeming ability to be a self-starter. The industry was a place where anyone could build a company or start a stream of income. Washington’s medical program built a thriving middle class of pot growers, processors and dispensary owners. The best principles of economics applied to the pot industry at the time. Local money multiplied through jobs and spending and the massive amount spent on pot trickled down into tens of thousands of lives.
But Washington saw that untaxed revenue as something it could control, and killed our medical program with a recreational system that taxes weed more than 46 percent. Oregon dangled the carrot of “tax-free rec sales” for a short while in the ill-fated OMMP/OHA licensed dispensary system, essentially a buy-out offer of 12-15 months of revenue before the majority of medical businesses folded under the new regulatory change. And especially in Oregon, where more than 2,000 license applications sit unprocessed, including those that operated legally and paid applicable taxes until January, the truth is that only those with capital can afford to move forward.
Don’t get me wrong; all businesses and industries take money to make money, and that is the nature of business. But the industry is shifting locally and statewide, and the scales are tipping against the mom-and-pop and average investor alike.
Allowing outside investment in Oregon was the first step to the end of small Cannabis. In states like Nevada, where a Cannabis business applicant had to have $500,000 in liquid capital (cash) not tied to a house, the fight was over before it began. And it is a widely known fact that the family behind Wal-Mart owns several Cannabis companies in Oregon.
So where is the Cannabis industry going? Clearly something worth so much will continue to be valuable, like a stock trader’s dream chart rising from left to right in huge jumps. But where is that money going? And what will be the end result of the capitalization of our plant?
If one mainstream company can buy every business in a state without flinching, our people have a real problem. The days of federal restrictions on banking and interstate travel surely will not last, and when they expire, two types of companies will exist: the sellers and the buyers, but there will likely be no winners. Citizens don’t benefit from the one percent; surely America has learned that lesson in other ways now. When will the pot industry?