We do NOT need to bail out the cannabis industry
Last week, Kris Krane, founder of 4Front Ventures, a cannabis investment firm, published a piece in Forbes titled “How the Coronavirus Pandemic Will Affect the Cannabis Industry” in which he advocated for a federal bailout of cannabis corporations.
Krane writes:
“Make no mistake, this health crisis and the ensuing economic downturn will have a major impact on the emerging cannabis industry. While other businesses were enjoying record stock prices and boom times, cannabis stocks have been in a bear market for the better part of a year, with many public cannabis company stocks down more than 75% off their highs in early 2019. This has made access to capital across the sector a major challenge. Now that the economy seems headed into a recession, with the stock market erasing all of the gains of the Trump administration, cash strapped cannabis companies will find it even more difficult to raise much needed capital to operate and expand their businesses.
Already this year we’ve seen cannabis companies walk away from mergers that became too expensive, sell off assets to raise capital, engage in large scale layoffs, and restructure operations to focus on core assets. The “Monopoly days” of 2018 and 2019, when many companies used cheap capital and over-inflated stock to consolidate assets across the country feels like a long time ago. Despite headlines touting how lucrative the cannabis industry is, the reality is that very few cannabis companies have achieved profitability.
…In the current environment of already sagging cannabis stocks, coupled with the new reality of a likely recession, cannabis businesses have few options to turn to for much needed capital infusions. This will likely mean that companies will be forced to shut down, and with no bankruptcy protections available to cannabis businesses in the United States, the ripple effect will be impactful, as creditors will be challenged to collect their debts.”
I cannot disagree more strongly with the idea, further expanded in the article, that the American taxpayer should bail out cannabis corporations. Not to mention, as Krane states right from the start of this suggestion — the pot stocks were already failing before COVID-19. Why would we bail them out, now or ever?
A big theme of the book I am currently writing is cartel capitalism and consolidation fueled by Big Business and the destruction of the free market economy that defined the American cannabis cultivation scene and culture during Prohibition. (Many of my Medium.com articles are excerpts of this work in development)
During Prohibition, the market was defined by a larger number of smaller farms rather than a smaller number of larger farms, which resulted in incredible innovation and diversity: a diversity of plant varieties, byproducts, methods of cultivation, methods of use and, most importantly, diversity of people who were able to earn a living as small farmers, manufacturers and distributors. This diversity of people is what defined our culture as the cannabis community before the Green Rush, and I feel compelled to infuse that culture into the conversation as the plant takes its place in the mainstream marketplace.
I remember a time when people who were willing to work hard on a small farm could earn a living from home providing their community with an ESSENTIAL herbal medicine and entheogen. As cannabis has become more legal, the right to grow and sell has been snatched from the people and handed over to cartels that “create jobs”. This is the crux of the problem of “business as usual”.
No, we should not bailout a “cannabis industry” that seeks to push our free market into a cartel using dark money fuckery, like the majority of our supply chains. Instead, we must demand the right to grow our own at home alongside a free and fair commercial market with reasonable safety regulations but no artificial caps or expensive barriers to entry.
I would rather we seize this opportunity to bring back the family farm and localized economies designed around producing the community’s “essentials” rather than handing that power away to faceless corporations and begging them to employ us. #OvergrowTheGovernment
