There is a reason the Liberals are waiting to legalize cannabis. An LP (licensed producer) bust is coming, and according to one financial investor, it’s “inevitable.”
Liberal Legalization demands that all cannabis producers are federally licensed and regulated and the longer that takes, the better.
So far, the only “legal” commercial cannabis producers are the licensed producers left over from the unconstitutional MMPR. When cannabis goes recreational, many of them expect to cash in.
In the meantime, they produce and stockpile cannabis (never-mind a few recalls), while the underground market is vilified as criminals by the politicians and then raided by the police.
The goal of Liberal legalization is simply consolidation, meaning, the fewer cannabis producers the better.
Is this a conspiracy theory? A strategy of economic “rent-seeking”? Or, is it following the economic consequences of a state-issued currency backed by, not real savings and capital, but low-interest rate monetary policies?
Even financial investors see the writing on the wall. You need capital to have capitalism.
Anyone getting into the commercial cannabis market now is wasting their time. According to Palmer, it’s “an accident waiting to happen and is a gross misallocation of capital, which will be ultimately wasted.”
Larger companies like Canopy Growth will likely survive the LP-crash, whereas smaller LPs like Aurora could be acquired by the bigger guys.
And once corporate cannabis legalization goes global, then all bets are off for the Canadian industry.
Success in the colder climates will come from domestic distribution and other third-party interests. As far producing is concerned, seed companies will thrive by experimenting with new strains, grown in greenhouses and sold abroad, protected by intellectual property rights.
In the meantime, there’s no use trying to cash in on legalization now.
Anyone trying to become an LP now or in the future, either medically or recreationally, is going to spend a lot of money jumping through regulatory hoops. You’re best just to grow and refine the plants yourself and then profitably share the results among interested buyers.
In other words, the mantra of cannabis legalization should be, “no harm, no foul.”
Because even if the regulatory costs of commercial production aren’t out of the average person’s price range, newcomers on the Canadian cannabis market are still at the mercy of other factors. Namely, the presumption that only Ottawa is deemed worthy enough to regulate federal producers.
The Liberals are planning legalization like how the Harper government planned and formed the LPs and the MMPR.
What the Liberals have in mind is not some recognition of pre-existing rights or a robust free market that could make issues like softwood lumber disputes with the US obsolete.
And certainly, the Liberals aren’t about to legalize cannabis so they can undermine medical insurance schemes and the pharmaceutical industry.
Anticipating a bad stock market, and the mergers and chaos that follows, the idea that Liberal legalization will revitalize middle-class entrepreneurship is a pipe dream at best.
It’s a corporate-state world until further notice.