Weed Stocks: Police Betting Pensions could lose everything— Should we Feel Bad?

Stupid police. Probably revelling in the ironies. Having spent their careers prosecuting (and persecuting) Canada’s cannabis consumers, farmers and industry. Now, the police are enjoying their retirement on the market boom of large, licensed cannabis companies. The same ones established by the Harper government under problematic and unsettled circumstances. The same ones trading in the stock market

It’s easy to come out of this hating the police just as much after “legalization” as before. But you shouldn’t. To forgive is divine, no? Plus, in a sick sort of way, I actually do feel sorry for them.

Now, I feel sorry for a lot of people. And it’s not just police. All public pensions are invested in popular weed stocks — companies like Aurora, Canopy, and Aphria.

All right, all right, but how is this supposed to help us feel sorry for them? If anything, I’m angrier. Let’s not forget, many of the original aficionados of the industry are either being delegated to “micro-grows” or legislated out of existence.

So Justin Trudeau’s legalization is doomed to fail. I could have told you that. I did, actually.

Now I’m here to declare Canada’s cannabis industry bankrupt.

Or, at least, it’s not as worth as much money as everyone assumes it is.

I hope Canada’s weed investors, particularly the “investors” gambling away taxpayer money, are contrasting profit and cash flow.

Which of Canada’s licensed producers is using profit, or net income, as an accounting trick to mask real-world contradictions? Could it be all of them?

Think about what Canada’s legal cannabis regime actually is.

You buy a cannabis farm. It’s undeveloped land. Government regulation insists you record the purchase as a profit based on what you paid and how much they assess it’s actually worth. As far as your accounting department is concerned, you’ve profited.

Normally, you’d have to establish a viable, working cannabis business first. But even if you didn’t, and developed nothing, you’d have to sell the land for more than what you paid for it. How else would you define profit? 

In today’s modern economy, operating cash flow is a much better indicator than profit (or net income or net revenues).

How much cash do licensed producers generate from their operations? How much money is left over after the company invests back into its capital structure? 

Cash flow is king. The LPs have negative cash flow. They will go under. The question is when.

The gains made since the financial crisis of 2008 haven’t been indicative of a “recovering” economy. All we have now is more additional debt. Banks and governments set the stage for a larger crisis down the road.

We are now at the end of that road.

This financial bubble extends across the entire globe — putting government pension schemes and unfunded liabilities at serious risk.

Just as the USSR collapsed from its domestic contradictions, so too is the West facing the failure of its hybrid of capitalism and interventionism.

Where banking, corporate and government elites act in their own self-interest. Pitting people against each other, furthering their own agenda at the expense of everyone else.

This is why I feel sorry for the retired weed-investing cops. Some of them are probably going to lose next to everything.

Of course, there are plenty of people to feel empathy with. But consider the cultural and intellectual bubble police find themselves in — by the very act of becoming police officers. There’s no escaping it. They’re like first world war Germans. 

Not necessarily evil, just on the other side.

And how nice would it be to have a good ole’ Christmas truce before the establishment succeeds in dividing, conquering, and forging unholy alliances that cannot be undone?

If you’re using pot stocks (or any stocks, for that matter) as part of your retirement plan, then you’re going to have a bad time. And I feel sorry for you.

We are in a large financial bubble. Much larger and much uglier than the one the U.S. Federal Reserve created in the housing market. That is, the 2008 disaster that was their answer to the “dot-com” crash of the early 2000s. 

What will be shoved down our throats this time? A gold standard? Private crypto-currencies with an end to government-regulated banking? Doubt it.

Central planning of money, of interest rates, is clearly an issue that mustn’t be ignored.

It’s the key to everyone’s favourite issues a) extreme income inequality; b) use of resources in an unsustainable way; and c) corruption in government, business, and banking.

So if your blood is boiling over rising weed stocks while you’re still fighting for a free and fair marketplace… If you see police not only profit from the government’s half-baked legalization but secure their retirement as well… just take a deep breath.

The economy is a joke. These LPs can and will post profit after profit every quarter until the cows come home. But their cash flow is negative. And these are in “good” times.

What will come of them when the recession hits? I recommend finding a more secure source of cannabis.