Big Business and the Cannabis Industry: Is Assimilation Inevitable?

Big Business and the Cannabis Industry: Is Assimilation Inevitable?

  • by Staff
  • April 04, 2019
  • Comments

The growing involvement of major, big-money corporations in the cannabis industry was inevitable. Advocates long argued we should treat marijuana like alcohol (though for what it’s worth I only ever meant legally, not as yet another corporate commodity mass marketed to consumers).

Marijuana has been a multi-billion dollar business for many years. The industry grew that big without corporate finance and penny stocks and without branding consultants and marketing drones. The backbone of the domestic marijuana business, at least for the last 20-30 years (pre-regulation), has been networks of small and mid-sized growers and dealers.

By legalizing the business of marijuana, we’ve gone from an almost wholly decentralized system to a system that’s centrally regulated and controlled. The legal above ground market means dealing with zoning, licensing, and local politics, which means understanding how to work with local politicians and other power players. Then, there’s the federal 280e business tax issue, which creates an enormous financial burden for above ground companies.

All that is before even getting to overhead like rent and payroll and the excessive security required by regulators with concerns about cash and cannabis. In this environment, it’s no surprise that small businesses feel threatened, nor that they are being forced to either sell out or get out of the business.

And what about consumers? Legalization definitely means more choice. There are at least five pot shops within a mile of my apartment. There’s one in particular where I do most of my shopping. It’s the smallest shop in my area, but it’s not a franchise and it doesn’t have any out of state or foreign investors. I’ve known the owner of that store for a few years now, he’s a stand-up guy with honor and integrity.

 

I like the fact that my purchases are supporting my friend, his business, and his employees. I’m not a co-op shopping hippie by any stretch. I believe in buying local because it means literally investing in my community. Not buying corporate weed is also the best way for consumers to fight the power.

Unfortunately, regulations, corporate buyouts, and industry consolidation are making it hard to do that. What’s a conscientious pot smoker to do?

To find an answer to that question, I turned to someone much smarter than me, cannabis industry thought leader, Dominic Corva, PhD.

Corva is the founder and Executive Director of the Cannabis and Social Policy Center (CASP), a nonprofit “dedicated to learning whole plant lessons about and from emergent landscapes of cannabis legalization.” He shared his thoughts about the future of the cannabis community and the cannabis industry.

Q: What does the investment by large corporations (e.g. Constellation Brands, Altria, Anheuser Busch/InBev) in the cannabis industry mean for the future of the cannabis community?

A: There's the future of the cannabis community as an historical actor, and there's the future of cannabis-in-common communities.

For the former, which to me includes livelihood and communitarian "countercultural" remnants, converts and adherents, they are going to need different ways to imagine what they have in common, besides cannabis, in order to renew their networks as communities. Because consuming cannabis is no longer a symbol of resistance to the dominant culture, they will need now need to unite in different ways.

For the latter, which to me includes mass consumption-oriented networks, it means that they, too, can be advertised at, catered to with pre-packaged lifestyles, and co-branded with. These are communities too -- but more subcultural communities than countercultural ones.

I would note that there have always been "subcultural" (as opposed to "countercultural") cannabis communities and identities, but that right about now is when the subcultural ones become dominant and the countercultural ones disappear.

 

Q: What impact will corporatization have on diversity within the cannabis industry?

A: I want to say it will erase it completely, but that's not true. Diversity within the cannabis industry has a lot to do with the class composition of market actors across commodity chains, and this will remain, but with added twists. Let’s review what does and does not change:

1. Illicit urban distribution markets will continue to be dominated by people of color. Illicit sun grown rural production will continue to be dominated by white people, but it's getting more diverse and especially more East Asian on the West Coast. Illicit indoor production in rural, suburban and urban areas will be pretty diverse, but increasingly Chinese on the West Coast.

2. Licit retail, production, distribution, and ancillary ownership will become completely dominated by rich white men.

3. Licit consumption will be diverse-ish, but highly gentrified and much more demographically democratic.

4. Young people will seek out and find other drugs to consume, because of all the old people getting into weed.

All of the above is applicable to the U.S. and to some extent Canada. The rest of the world will be interesting to watch -- already there are many changes to cannabis culture in Europe, for example, and in "traditional" cultivation areas, whose genetics are being displaced by cannabis grown or made by white Europeans and North Americans.

 

Q: What can be done to support minority and woman-owned businesses entering and thriving in the cannabis industry?

A: Nothing short of removing the economic barriers to entry associated with over-regulation and vice taxation. No one can thrive in the cannabis industry without massive venture capital, and that capital is really white and male. We should encourage minority and women actors to get hired by State regulatory apparatuses, where they can help influence the direction of future policies, and secure salaried jobs with benefits.

 

Q: What can small businesses do to survive the corporatization of cannabis?

A: They cannot. But if they can, they will have to get super lucky with zoning, property ownership, and nail craft production and branding.

Tags: Corporate Cannabis Cannabis Business Corporatization Big Business Doug McVay Dominic Corva CASP California Oregon



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