The licensed producers (LPs) have been stockpiling cannabis.

With over 7,000 kilograms of cannabis in their inventory, once they are allowed to sell to a recreational market, even through the mail, prices for cannabis will drop significantly.

You can’t flood the market with legal, recreational cannabis and not expect prices to fall.

But could BC Bud producers and vendors survive an environment where cannabis is $1 per gram?

This wouldn’t be the result of free-and-fair markets.

Safeway, for example, can’t reduce the rate of a certain vegetable by 75-90 per cent. For one, they’d lose money. But, moreover, their competitors wouldn’t be able to offer that steep discount and would have to refrain from selling that particular vegetable.

During this window, Safeway could buy up all the suppliers and distributors in Canada. Since this vegetable is no longer profitable for others, this gives Safeway a free hand to do as they please.

Then, once the competition is gone, prices rise back up to their market-clearing rate.

There are laws on the books to prevent this, but rules don’t stop people from acting. This is evident in the cannabis industry.

The reason Safeway, or any other business, have never done something like this is because if you were sitting on a board of directors and this was your plan to bankrupt the competition, no one would take you seriously.

So what prospect is there of this happening with cannabis?

Let’s go back to the Safeway example and assume that the vegetable in question was illegal but now is being introduced into a legal, regulated environment.

In the meantime, Safeway can sell the vegetable in its pharmacy, but only to people with prescriptions. For whatever reason, instead of following supply and demand schedules, Safeway accumulates a large supply of the vegetable, more than what’s in demand.

In other words, they are stockpiling more than they are selling. I think you see where I’m going with this.

Once the government legalizes for everyone, Safeway can then send the product out to their shelves, and, with such a supply glut, can slash their prices.

Other producers and sellers of this vegetable, who haven’t been stockpiling, but, who have, in fact, been barred from even associating themselves with this “illegal” vegetable, can’t keep up.

The vegetable that may have sold for $3–7 a gram is now going for $1 until the supply glut is cleaned out and prices rise to better reflect supply and demand.

In the meantime, small-time producers can’t survive in a $1 a gram environment.

In addition to the regulatory burdens the government is placing on them (assuming they don’t outright ban them entirely), the small-time producers are at the mercy of large-scale producers who were legal before they were, and who stockpiled enough product to crash prices once the recreational market opened up.

Is this what will happen to cannabis? Will BC Bud die out regardless of how the federal government decides to regulate?

After all, that LP cannabis needs to go somewhere.

If LP cannabis is sold in a liquor store conglomerate for $1 a gram while dispensaries are raided and deemed “unsafe” by the political and media establishment — then what will happen to BC Bud farmers? Vendors? Extraction crews? Bakers?

How long can they survive in a market where the price of cannabis is artificially suppressed? Not forever, as I’m sure a low-price for cannabis will evoke busy-bodies to cry and wail about “addiction” and “the children.”

But what if the price of cannabis stays low long enough to clear out the excess LP supply and bankrupt the smaller producers?

Who will survive when cannabis is selling at $500 a pound?

  • bryanleiher@gmail.com

    There will always be a market for premium cannabis, whether or not it becomes a black one will be decided by the gov.

  • Anthony

    NWO they want to steel our black market economy because they know we are building an alternate reality with cannabis profits!

  • bob

    WELL FIRST I THINK MAYBE THE LP’S CAN ONLY STOCKPILE A LIMITED AMOUNT…THE REST THEY WILL NEED TO TURN INTO OIL FOR WHICH THIER MARKET IS WEAK AND HC DOES NOT EVEN PAY FOR THE VETERANS…

    IF THEY CAN KEEP THE GOVERNMENT PAYING FOR THE VETS IT MAY GIVE THEM A STRONGR POSITION TO LOWER PRICES AS THEY CAN CHARGE MORE FOR VETSS SUPPLY..

    BUT THE BUYER IS THE ONE THAT NEEDS TO BE EDUCATED…..THE QUALITY OF PRODUCTS FROM LP’S WILL ALWAYS BE INFERIOR TO PROPERLY GROWN PRODUCT FROM EXPERIENCED GROWERS…

    THIER COST OF PRODUCTION AT LP,S IS SOMWWHERE AROUND 2 DOLLARS A GRAM…SO THEY WILL NEED DEEP POCKETS TO SELL AT 1 AND SHAREHOLDERS DO NOT LIKE TO LOOSE MONEY…

    THESE LP,S WILL NEED A MAJOR REDUCTION IN COSTS TO COMPETE AT ALL..

    IT IS OUR JOB AS PRODUCERS TO LOWER OUR PRICES AND OUSH THE LP’S INTO A CORNER…

    AGAIN SEPARATION OF BC IS PROBABLY THE ONLY WAY WE WILL GET TO DO THIS JOB CORRECTLY..

    THE GOVERNMENT FROM BEYOND HOPE IS WELL???? USELESS??? ACTUALLY DETRIMENTAL???

    THE FIGHT WILL GO ON UNTILL WE JUST OVERWHELM THE OBSTACLES…

    MOST COMPASSION CLUBS ARE JUST TRYING TO CREAM THE SITUATION AND COULD REDUCE PRICES DRAMATICALLY TO PUSH HARDER NOW…BUT THEY ARE GREEDY TOO…

    OUR BASIC CONCEPT OF GROWING NEEDS TO SHIFT FROM INDOOR HI COST TO OTHER STYLES…

    WE CAN PRODUCE QUALITY BUD FOR 1/3 THE COST OF LP’S IN THE PRESENT CONDITIONS..

    THE ONLY WAY THEY WILL SURVIVE IS IF THE GOVERNMENT STARTS PAYING FOR IT

    OH AND FOR YOUR INFORMATION LOBLAWS IS PRESENTLY LOBBYING THE GOVERNMENT TO ALLOW THEM TO PRODUCE AND IMPORT FROM COLUMBIA..SO IF THEY MANAGE THA THINGS WILL CHANGE AGAIN….

    BUT WHAT THYE CAN DO I HOPE WE CAN DO TO..AND NO MATTER WHERE THYE GO OR WHO THEY USURP THEY WILL NEVER COMPETE WITH THOSE OF US US WITH YEARS OF EXPERIENCE

    AS ALWAYS THOUGHT WHERE TJE CONSUMER SPENDS THIER MONEUY DETERMINES THE OUTCOME OF ANT PRICE WAR..

    HOPEFULLY THE CONSUMER OF MJ IS NOT THE SAME PERSON THAT SHOPS AT WALMART…