How Corporatization Is Impacting the Cannabis Industry

Could it be that those who most aggressively championed the cause of marijuana legalization will end up being those who rue its day the most? Not only is it possible, but it is also already happening. The cannabis industry is slowly but surely being corporatized. And as it happens, plenty of people who lobbied hard for legalization are looking back on the old days with fondness.

California is one of eighteen states that has legalized both medical and recreational marijuana use. One would think that full decriminalization would make the Golden State a bastion for cheap, easily accessible pot. But that is not the case.

Some four years after California went with recreational use, roughly 75% of all product is purchased on the black market. Why? Because legal marijuana products are way too expensive. Between corporate pricing and state taxes, it’s too much. People would rather buy their marijuana from non-licensed sellers.

Regulation and Corporate Interests

What is happening in California is not unique to that state. It’s happening everywhere marijuana has been legalized. Even in Utah, where marijuana is strictly a medical product, prices are much higher than they have to be.

The culprit is not capitalism. We know that to be true because the black market works just fine. Black-market entrepreneurs are making capitalism work for themselves and their clients. No, the real culprits are regulation and corporate interests.

Utah Marijuana, an organization that helps Utah patients get their medical cannabis cards, says there are only fourteen medical marijuana dispensaries currently operating in the Beehive State. Likewise, only a small number of growers are active there as well.

Business licenses are hard to come by in Utah because state lawmakers are trying so desperately to regulate the industry. Limited licensing ultimately leads to limited supply incapable of keeping up with demand. The end result is an industry that cannot produce medical cannabis at a low enough cost to meet legitimate medical needs.

Cashing in on Pot

California’s problems are more severe and systemic than Utah’s because they are dealing with more than just regulation. They are also dealing with corporate players whose only concern is cashing in on pot. They see a market worth billions. They are willing to do whatever it takes to get their share.

Corporations exist for one reason and one reason only: profit. There is nothing wrong with that – at least in principle. Even black-market operators do what they do to make money. But the significant difference with corporations is their tendency to leverage massive resources to crush the competition. In so doing, they create a consolidated market that ultimately leads to never-ending price hikes.

Plundering with Government Approval

Unfortunately, a desire to maintain tight control leads government policymakers to willingly go along with corporate plunder. After all, corporatism benefits bureaucrats and politicians alike. They give the green light to corporatism. Their corporate friends repay them in any number of ways.

What we are seeing now in the cannabis industry is similar to what took place just after prohibition. During the first few years following prohibition, most of the black-market alcohol producers maintained robust businesses because their products were cheaper. It took quite a few years for Washington and the states to figure out how they could keep their fingers in the pie without harming the market.

Here’s hoping they figure out the same thing within the cannabis industry. If they don’t, corporate interests are eventually going to take over completely. Both medical and recreational products will be out of reach without some sort of subsidy. And when that happens, they will officially own the industry.