Everybody wants in on cannabis riches. With more states legalizing and Canada set for commercial sales in 2018, the future looks bright.
But what about the inevitable economic slow-down?
The cannabis industry is one among many currently experiencing an inflationary boom.
There is a burst of entrepreneur creativity in the cannabis industry, and as this develops and matures, as time goes on, many of these ideas will be honed in and consolidated.
This happens naturally, but an economic bust necessitates that this happens abruptly, in a way that makes some people poorer by revealing actions that are detrimental to wealth creation.
Without easy access to credit, many cannabis companies will end up like the bankrupt companies of the dot-com bubble from the early 2000s. But, like Amazon, some companies will rise from the ashes.
In the long-run, cannabis survives any upheaval. War, famine, depression, you name it.
But how many of those dot-com companies that once traded alongside Amazon still exist? Do you think that, in the future, people will still be using all the different cryptocurrencies that currently exist? The same way people still use AOL for e-mail or Internet Explorer for a browser?
Cannabis will always be popular. But to imagine a multilayered economy where anyone in the weed business is a millionaire just isn’t going to happen.
Especially in Canada. We’re such a small economy for such a large landmass. The industry will be consolidated by natural forces, but this process will be sped up, unfairly, under current crony-capitalist conditions.
People right now have access to the kind of capital required to start a cannabis business. But in the future, the near future, when capital is scarce, the natural consolidation process will be kicked into high gear, it will be like a clean-up on steroids or a highly potent sativa.
In the end, only a few companies will dominate.
So, where will the others go? And if they’re booted out of the market also due to state prohibition, something that has nothing to do with the natural consolidation process of the market, what then becomes of BC’s booming billion dollar cannabis industry?
The cannabis bubble originates from Ottawa and Bay Street, not BC.
The craft producers of BC are artisans that will survive any recession thrown at them. The stock-trading licensed producers regulated by Ottawa are the ones in trouble. A few will make it out alive, but even that’s up for debate.
The future of cannabis in Canada looks very much like the dot-com situation from the early 2000s.
Anyone pretending otherwise is deluding themselves.