Should Big Tobacco and Alcohol Companies be Barred from the Marijuana Industry Going Forward?
Legal cannabis is a given!
Even if the dinosaurs are fighting their mass extinction, the comet is well on its way, the ice age is upon the, their end is nigh. We know this is true since even the Republicans now have a pro-legalization bill floating about. We’ve certainly reached the tipping point. It is only a matter of when and how at this point in time.
With legalization however, the legal market will attract certain players that have been eyeing the industry for quite some time now – namely the alcohol industry and big tobacco.
People like Senate Majority Leader Chuck Schumer (D-NY) are trying to barre these industries to get involved within the cannabis industry through legislation.
“We’re taking a page from New York’s book and trying to do basically what you did nationally…What it will do is ensure that Americans in all communities won’t be arrested or barred from receiving services for using cannabis where it’s legal because the state’s making legal. We don’t want the big boys to come in. After all the pain that’s been occurring in communities like the one you represent in Brooklyn, where I’m from—to have the big boys come in and make all the money makes no sense.” – Sen. Chuck Schumer
While I agree with the Senator that it would certainly be a dick move for powerful corporations to simply come in and gobble up the market making it impossible for the “average Jane or Joe” to participate – I don’t think following the New York model would achieve that.
By delegating a certain percentage of available licenses to a certain group of people creates a problem; the most qualified people don’t always get the businesses. Additionally, when you limit the amount of licenses that people can get based on scarcity, you increase the value of the license. Usually, this is where the “Big Boys” win, because people from affected communities can’t pay $50,000 for a license without even thinking about running costs.
In fact, “limited licensing” is one of the major reasons why the vast majority of cannabis businesses are run by rich white dudes with Trust Funds. I have written previously on a better model for licensing that would take care of the problem of Social Equity by creating 2-tier licensing schemes. One for businesses generating less than $1,000,000 per year in revenue, and those who generate above it. You can read about that here.
Where I do wholly agree with the Senator is in how tax revenue should be spent. Here, the money should go to the most impoverished places that were negatively affected by the War on Drugs. In fact, I think all of the tax revenue should always go to the poorest parts of the country as opposed to bailing out billionaire corporations.
Should Big Tobacco and Big Alcohol be Banned from Cannabis?
This brings us to the main question of the article, should these monster industries get to participate in the cannabis industry? I don’t think there is a way to stop them really. Whether they enter via proxy companies or create hedge-funds to invest into corporate weed – there isn’t much you can do about it.
The powerfully affluent will always find a way to circumvent the law. This is why the only real way to ensure the integrity of the cannabis market is to make it easy for smaller players to participate. This way they can become the alternative to the “corporate weed”, which – most certainly seems like it would be a viable option within the cannabis marketplace, specifically considering that the average consumer has a deep down disdain for corporate overreach.
The fact of the matter is that Big Tobacco and alcohol companies have already contemplated cannabis and no matter what comes next, they will participate in the industry in one way or another.
These large scale enterprises also have a more robust system of logistics and distribution and could potentially generate hundreds of thousands of new jobs. Of course, it will be within the hands of the consumer to decide which cannabis they would prefer.
Now – I think it’s important to mention that while I’m not opposed to Big Tobacco or Big Alcohol to step into the weed game – I do believe that we need to make sure that they don’t swallow up the marketplace.
The way they would be able to swallow up the marketplace would be;
If regulatory costs are too high for the average American to participate
The regulatory hurdles make it difficult to get licensing
If you would like to limit these larger enterprises from engaging within the cannabis industry, one could also argue for a special category of cannabis company – those that share infrastructure with other industries. For example, if a tobacco company wants to expand into the cannabis industry they can do so – except they have to pay a higher fee than a cannabis-only company.
This last approach I find incredibly difficult to enact, meaning that the most viable approach would be to significantly lower the cost of participation. Currently, it seems that the Republican bill leans towards this approach, especially since they want to legalize cannabis and regulate it similarly to alcohol.
Of course, there is a battle between bills and Democrats like Schumer said that they would actively block measures that will not address larger scale legalization – for example modest bills that focus on banking protections.
Once again, here I agree with Schumer – the time for passing small modifications to the law has expired. Stop pussyfooting around and simply legalize the plant on a federal level. The only place where cannabis is still controversial is in Washington DC, the rest of the nation and the world has already embraced a bright green future – it’s time that politicians follow suit.
However, this is just my way of looking at it – what do you think? Should there be laws barring tobacco companies and alcohol companies from participating in the weed market? If so, how would it stop them from creating new companies or finding some other means of participation?