A Tale of Two Markets

 The Black Market is where people go to get things and make money that the dominant system does not allow for. Thrill seekers, experimenters and regular folks shop for items provided by marginalized people, ex cons and outcasts who have been cut out of the system but still need to make a living.

Depending on where you live there might be a black market for anything from sneakers to game meat, alcohol to internet access. Wherever prohibition exists, there exists a black market. Stifling people’s desires for a product or service never stops people from seeking out what they want or in some cases, need to survive.

I started smoking weed at 15 years old in the state of Florida, a place that still does not have an allowance for the recreational use of cannabis. Even then me and my friends would ask, “Why is this illegal?” We were all good kids. The only thing that made us outcasts was the fact that we liked to get high which ironically, because of prohibition, put us in situations with people and in places that actually were dangerous.

Cannabis is at a crossroads. The regulated market is presumably half the size of the illicit market at the moment. Some would argue that continued prohibition in certain parts of the country has buoyed up the illicit market and made for the “golden age” of the street dealer. Many places have decriminalized or loosened restrictions on cannabis so you can’t get arrested, but without full legalization the incentive to sell on the street is now more enticing than ever.

No regulation.

No taxes.

No testing or inspections and no 280E tax burden.

I’m not gonna lie, sometimes I think about going back. Right now the money is much better.

We all need to grow up. Teenagers are now able to go to just about any corner store and pick up an untested, untaxed and unregulated bag of weed much easier than I could at 15. Kids in records numbers are showing up to class high and being subjected to dangerous products perpetuated by this two track system.

Legalize Now. Stop acting like prohibition ever stopped anyone from doing anything.

OTHER NEWS

This has been a busy week for me. On the heels of the 2nd annual Business of Cannabis Conference in Hartford I spent the next four days in NYC and then made my way to Chicago for the Benzinga Cannabis Capital Conference. For those of you who don’t know about Benzinga it is billed as, “ Where deals get done” which means a lot of money guys. And there were.

The timing could not be more perfect. As presentations were being made the Senate was taking a historic step in moving forward the SAFER banking act. This along with the HHS announcement several weeks ago and the supposed Garland memo had many people buzzing.

Investors think the next 24 months will bring more money into the space than anytime since 2014-15.

But the light at the end of the tunnel could also be the freight train barreling down at you. There will be winners and losers in this new world of cannabis. Many small to mid size operations will either be acquired or run out of business, furthering consolidation. Boris Jordan of Curaleaf said as much. Granted his communication style is intimately tied to his stock strategy, he did illustrate how he plans to grow his business through acquisitions and a play in the European market.

All of this should be very sobering for the legacy, mom & pop and the cannabis middle class. What I saw these last two days in Chicago is a coming avalanche of capital being held back by a thin dam of legislation. Much will be lost but you can prepare.

Be maniacal on developing and executing meaningful KPI’s. Narrow your focus to operations and shed pieces of paper (licenses) that may not be meaningful. There is a tremendous opportunity for efficiency- automation, use of data, etc. (yours truly can help on this front). Historically there has been too much arrogance and too little humility in the industry. You need to focus and put your pride in your back pocket

The average timing from FDA recommendation to DEA accepting is 110 days. To implementation is around 250 days which would take us into July of next year. If everything lines up that’s your timing to get your sh*t together.

OTHER OTHER NEWS

The Sea of Green podcast is in full swing. Check out the latest episode here

“Some people have a funny bone, some have a bone to pick”

Thanks for reading,

d