If one were to create an anti-monopoly cannabis toolkit, what would it look like? Fortunately, we don’t have to speculate. Parabola Center, a nonprofit think tank, has produced an anti-monopoly cannabis toolkit for us.
Of course, “woman of color” comprise this so-called “nonpartisan” group who want to “prioritize people over profits.”
So you can be sure this toolkit will be less about cannabis liberalization and more about specific laws that – they feel – should be enacted.
While the think tank’s mission is to support cannabis policies that “put communities and small businesses first,” the road to hell is paved with good intentions.
So let’s examine what’s wrong with this so-called anti-monopoly cannabis toolkit. Let’s see if we can correct some of their mistakes by bringing in sound economics and a history of the Western legal tradition.
Anti-Monopoly Cannabis Toolkit Overview
The anti-monopoly cannabis toolkit begins, “If you are concerned that big businesses are taking over the cannabis industry and you want to take action to prevent it from getting worse, this toolkit is for you.”
We begin on the same page. I am also concerned about “more domination and destruction caused by Big Tobacco, Big Alcohol, and Big Pharma.”
Yet, I am highly skeptical that there is legislation that will “limit the consolidation of corporate power and encourage open, competitive state markets.”
Unless it is legislation that repeals everything. Because it is the laws which enact more rules and regulations, even with good intentions, that lead to lobbying, corruption, and monopolies.
The authors say they base the information in the anti-monopoly cannabis toolkit on years of academic papers and “expert analysis.” And while that’s probably true – it’s within a particular mode of thought.
For example, the most significant thing we can do to build a better cannabis industry (and, consequently, a healthier economy and civil society) is to get the government out of the money-printing business.
Of course, bringing up the fraudulent practice of fractional reserve banking would take this anti-monopoly cannabis toolkit from mainstream respectability to the underworld of so-called right-wing misinformation.
So instead, they talk about creating “fair cannabis markets” by prioritizing “people over profits.” Which is the economic equivalent of believing the earth is flat.
Bad Ideas #1: Limit Cannabis Licences
The anti-monopoly cannabis toolkit suggests “policymakers should set limits on the number of licenses, stores, or square feet of cultivation space that one person or entity may own or control.”
One fails to see how politicians and bureaucrats limiting your business potential results in “fair cannabis markets.” Of course, the idea is that these limits would “prevent the establishment of massive cannabis companies that can use their deep pockets to crowd out smaller businesses.”
And you can see their point. In the beer industry, how many small craft brands are actually owned by large conglomerates? A lot. But, they did start as small craft brands.
The problem with lofty ideals like this is that they tend to ignore the nuances of reality. Namely, some consumers prefer large name-brand products to unfamiliar small businesses.
As well, how does a prominent cannabis company “crowd out” smaller businesses? Canada is perhaps the best example of a cannabis cartel. Large established medical producers were given the first recreational licences and were the first to get their product into the new legal stores.
Additionally, a ridiculous excise tax limits the potential of small businesses vis-a-vis the larger corporate guys.
But – despite all this, Canada’s small-to-medium cannabis companies still exist. Granted, they’re struggling. But that has more to do with foolish government regulations than “deep pockets” trying to crowd out smaller businesses.
Goods are Heterogeneous
A friend of mine lives near a Wal-Mart. The place is always busy. But directly across the Wal-Mart is a small boutique clothing shop. During the pandemic, she was concerned this clothing shop would go under. But it survived.
According to this anti-monopoly cannabis toolkit, this small boutique clothing shop should have been “crowded out” by the giant Wal-Mart across the street.
But consumers aren’t a homogenous blob. Nor is “clothing” a single staple. Likewise, cannabis comes in all shapes and sizes.
Giving governments the power to limit licenses and manipulate the cannabis market to reward “small businesses” will result in unintended consequences. It may even create the monopoly the toolkit wishes to prevent.
Never underestimate the power of corporate lawyers to find loopholes in your legislation. The best approach is to level the playing field by eliminating cannabis licenses.
Since when did Americans need to apply to the government to open a business?
Bad Idea #2: Limit Technology
Like the bad ideas above, the anti-monopoly cannabis toolkit sees tech platforms as a “major concern.”
They see some cannabis companies making exclusive contracts with delivery apps. They conclude that it’s unfair to those not included in the arrangements. That those without access to the delivery app are at a competitive disadvantage.
UberEats, for example, may sign an exclusive contract with Cannabis Company A. Because UberEats is more popular than, say, SkipTheDishes, Cannabis Companies B, C, and D are disadvantaged for not getting the UberEats contract.
The toolkit suggests legislation that reads: “A retail dispensary shall not market its cannabis products through an Online Platform that is operated by a third-party or fulfill any order referred to it by a third-party platform.”
How anyone takes this proposal seriously, I don’t know.
Like the above idea, this stems from “policy experts” that have gotten bogged down in their analysis instead of taking a step back and reading some Sowell or Hazlitt.
Bad Idea #3: Prevent “Vertical Integration”
This anti-monopoly cannabis toolkit suggests governments divide cannabis markets into multiple tiers, so a single company can’t be a grower, distributor, retailer, and processor.
Unless you’re a “microbusiness,” like a small farm that sells directly to consumers.
But when does a microbusiness become a regular business and thus be forced to sell its other assets? What about the economic benefits of vertical integration?
Is this an anti-monopoly cannabis toolkit or an anti-capitalist toolkit? It’s starting to feel like the latter.
In fact, this toolkit might be a good example of toxic femininity in our political culture, where what sounds right or compassionate outranks what is true. But I digress.
Anti-Monopoly Cannabis Toolkit: Things I Don’t Like Should Be Banned
Mergers and Acquisitions
According to this anti-monopoly cannabis toolkit, mergers and acquisitions are “anti-competitive,” and federal policymakers should prohibit them.
Of course, M&As get a bad rap because we don’t have a free and fair market economy. When one side of every transaction (the money) is controlled and manipulated by governments and crony bankers, the result is an unfree and unfair system.
A lot of people call the merger of corporate and state power fascism. But again, this kind of language would move the toolkit’s content from mainstream respectability to so-called right-wing misinformation.
Of course, M&As have their uses. Arbitrarily banning them due to the consequences of the Federal Reserve is like permanently turning off the water in your house because sometimes your basement floods.
It solves the flooding issue, but now you don’t have any running water.
Bad Actors
Finally, the anti-monopoly cannabis toolkit and I agree that individuals with drug-related convictions and records should be able to participate in the cannabis industry.
I take that stance because individuals are free. Therefore, if individuals working for Big Tobacco or Big Pharma also want in on the cannabis industry, I won’t argue. That’s their right as well.
Not according to this anti-monopoly cannabis toolkit. Since the authors want government licensing to continue, they want governments to bar corporations “with a history of harmful conduct” from entering the cannabis industry.
Why? Because they’ve been “defrauding the public and undermining public health.”
Of course, we have laws against fraud, so if that’s true, and governments have done nothing to stop this fraud, how exactly will empowering government bureaucrats solve this issue?
As Ludwig von Mises said, “If one rejects laissez faire on account of man’s fallibility and moral weakness, one must for the same reason also reject every kind of government action.”
Giving governments the power to bar specific individuals or companies based on their past actions is… well, it’s prohibition. By their logic, preventing individuals with drug-related convictions from entering the industry is perfectly valid.
Were they not “undermining public health” by selling illegal drugs before?
Anti-Monopoly Cannabis Toolkit: Support Small Businesses
The anti-monopoly cannabis toolkit says, “If the goal of anti-monopoly protections is to promote a fair and competitive marketplace, then limits on large corporations must also be combined with support for small and craft businesses.”
But do these supports include eliminating capital gain taxes or introducing commodity-backed money like gold or silver? Of course not. The toolkit suggests allowing small cultivators to sell their products directly to consumers—something they don’t want large cultivators to have.
The success of a small business does not come at the expense of large companies. And vice-versa. Goods are not homogenous. We can have a level playing field.
But of course, if your ideology insists on the equality of outcome rather than equality of opportunity, then the proposals in this anti-monopoly cannabis toolkit make sense.
Cannabis Monopoly is a Systemic Issue
The toolkit says, “Anti-competitive behaviors and monopolization in the legal cannabis industry are systemic problems that require systemic solutions.”
Of course, the term “systemic” needs defining. Often people refer to “systemic racism” when they mean cultural racism. But here, the problem is systemic.
One side of every transaction is money. And that money is disconnected from any scarce resource that would rein in inflation and resource depletion.
Elite bankers control the money we use in conjunction with corrupt governments. That’s the issue with the cannabis industry. It’s the same issue we have across the board.
But instead of addressing these core problems, we’re treated with this anti-monopoly cannabis toolkit. A children’s band-aid placed over a cancerous tumour.
And, to give them credit, the toolkit’s authors seem to understand this. They write, “If protecting banks isn’t your top concern, contact your legislators and tell them what your top concerns actually are.”
The problem is Americans already did that. In 2008 nobody wanted Wall Street banks bailed out. But legislators did it anyway. So Americans reacted with Occupy Wall Street. The establishment answered with “systemic racism.”
So now we’re back to fighting each other instead of the elite.
Politicians work for lobbyists, not voters. Schools, academia, and the corporate press easily manipulate and sway voters. Politicians can buy voters with their own money.
Suppose the U.S. government implements every single proposal in this anti-monopoly cannabis toolkit. What then? Will the authors return to life in the cannabis industry? Happy and content?
Or do they recognize the fundamental problems of anti-competitive behaviours and monopolization go beyond Big Weed?
Anti-Monopoly Cannabis Toolkit: The Good?
Of course, not everything smells of anti-capitalist nonsense in this anti-monopoly cannabis toolkit. The authors do write favourably about home cultivation.
[P]rotecting the right to cultivate cannabis at home for personal use and sharing is an important check on corporate power. It allows consumers and medical patients, rather than just companies, to determine what products are available, ensuring they have access to strains and medicines that meet their interests and needs. Allowing growing at home is also a symbolic statement that the cannabis plant belongs to people, not corporations.
Protecting this right is also an essential check on government power. But, presumably, the authors associate democratic governments with “the people.” Thus, anything the government does is really the collective action of the people.
So even here, I have to take issue with the language. “Allowing” growing at home is a symbolic statement that the government can (and will) still throw you in a cage for cannabis.
Whether it’s too many plants, too big of a plant, or a plant with genetics that have been outlawed (for example, high THC strains).
The only right people have is to private property. That’s where the right to cultivate cannabis comes from. It’s intrinsic to our sense of being. It’s our extended phenotype.
No government or corporation has the right to take that away.
Missing The Forest for the Trees
On the surface, this anti-monopoly cannabis toolkit seems full of good ideas. Our concerns are the same. They write, “We expect to see even more aggressive action by harmful corporations to co-opt the legalization movement.”
And indeed, Canadians have already experienced this. The entire legalization scheme was an attempt to displace the B.C. Bud market and implement a top-down corporate structure.
But Canadians don’t want Big Weed. They want small, craft cultivators. And at the end of the day, in a free and fair market, consumers are in charge.
They decide who will “control the industry.” But only if the market is free and fair. That means everyone has equal opportunity. Whether it’s a small cannabis company expanding into a larger one. Or an already-established corporation testing the waters of legal weed.
If taxes are low, regulations and licenses are nonexistent (or issued by private, competitive accreditation agencies), and “intellectual property rights” are abolished – what power does a corporation have that a small business doesn’t?
Power rests with the consumer. Rather than address that fact, this anti-monopoly cannabis toolkit adds layers of rules and bureaucracy to an already bloated industry.
The more laws and regulations the government enacts, the costlier it becomes to do business. This means large corporations will have an advantage over the smaller guys.
Econ 101
It’s like taxes. When people demand rich pay their “fair share,” do they think through what they’re saying?
You’re either rich enough to hire tax lawyers to find every loophole in the book, so you pay little to nothing. Or you’re poor enough that the government gives you money.
The last place you want to be is in the middle class, where over 50% of your income will eventually see the inside of government coffers.
Likewise, in the cannabis industry. You either want to be a large corporation that can lobby its way to success. Or an employee who takes home a paycheque whether the business is profitable or not.
The last thing you want to be is the owner of a small-to-medium cannabis business. They’ve stacked the system against you. And nothing in this anti-monopoly cannabis toolkit addresses the systemic issue at hand.
Governments have gotten too large and too powerful. And that is the only source of corporate power. Outside of government privileges, the only way to profit is by providing goods and services to people on a consensual basis.
Suppose government concerns itself with national defence, and that’s it. Everything else is in a free market. And suppose you make billions and acquire a natural monopoly in the cannabis market by providing cannabis goods and services to people.
(And remember, competitors can displace a “natural” monopoly. No laws are preventing other businesses from operating).
Is this anti-monopoly cannabis toolkit still relevant? Or is anti-capitalism the real motivation behind this? A fetish for small businesses and an irrational hatred of anyone who makes more money than you.
Instead of implementing the policies in this toolkit, why not liberalize legalization?