Marijuana and Capitalism

Opportunism, innovation, creativity, entrepreneurship, first-mover, trendsetter, market expansionism, monopoly, vertical integration; these are some of the basic concepts of global business strategy implemented by corporations across the markets of the world. These are the strategies being implemented by the marijuana entrepreneurs that want to capitalize on the global expansion of this commodity. The emergence of a highly lucrative marijuana market forces us to further study the global-local (glocal) dynamics of this business, particularly when it comes to the United States and more precisely the State of Maine. It is inevitable to ask why our state continues to stubbornly insist on following the anti-Capitalist position of our federal government while other states and other nations become trendsetters and first-movers within an untapped market that could catapult the expansion of the global economy at a time of global stagnation.

It is clear by now that several market stakeholders have moved beyond the marijuana taboo, shifting toward regulation of a medical and recreational marijuana market that eliminates the advantages for the black market while exposing the commodity to the rules of the free market. While we sit idle as a local economy, states within our Union and countries around the world have taken a decisive step forward, cashing in on a multi-billion global market.

It is calculated that the medical marijuana market alone will be worth close to $55.8 billion by the year 2025, this compared to the present $48 billion global retail coffee market.[1] With millions of recreational marijuana consumers across the world, the size of the recreational market is predicted to be even larger.[2] Just last year the State of Colorado reported $1 billion in sales, and it is predicted that the Canadian recreational marijuana market will surpass “the combined sales of beer, wine, and spirits” in that country, reaching close to $23 billion once it is federally legalized in the summer of 2018.[3]

The potential of the American market is tenfold; if the marijuana market was going to have the same impact as in the Canadian economy, sales of medical and recreational marijuana could potentially surpass the present $223.2 Billion alcoholic beverage market once our federal government moves toward legalization.[4] With only 29 states passing medical marijuana laws and eight states legalizing marijuana use for recreational purposes, the country already “leads the world in marijuana sales,” yet our state continues to miss out on another economic development opportunity that falls right on our lap, insisting instead on old models of economic development that are dependent on fiscal incentives that only benefit out of state corporate actors at the expense of the local small businesses and the tax payers.[5]

Theoretically the United States, the capitalist mecca of the world, would be the logical market destined to capitalize on this emerging commodity market but that has not been the case. Canada, the country that has historically filled in the gaps left by our own domestic and foreign policies, has once again taken a lead on this golden opportunity. When in the early twentieth century our regulatory structures impeded us from capitalizing on the internationalization of banking services across the Americas, it was Bank of Montreal and the Royal Bank of Canada that filled in the gap. When a constitutional amendment impeded our market from legally distilling and selling alcohol, Canadian entrepreneurs filled in the gap, informally supplying our market and giving rise to global distilleries such as Seagram’s. When we closed our trade and foreign policy relations with Cuba, the Soviet Union and China in response to our Cold War policies, Canadian businesses filled the gap and became key trading partners and influential players within the international market system. In each case the United States government has had to reevaluate its position, forcing its business sector to work its way up the ladder while depending on the leverage developed by Canadian businesses in order to get a foot in the door in these strategic markets.

All seems to indicate that the Canadian government-business partnership is once again positioning itself advantageously in order to fill in the gap left by the snail’s pace reaction of our federal government to capitalize on this emerging commodity market. By the summer of 2018 it is expected that recreational and medical marijuana will be legal across Canada, setting its private sector with tremendous opportunities to carry out research and development in order to create value added uses and technologies that will triple the profit potentials of marijuana. It is not commonly known, but Canada’s medical marijuana industry is already a global player.

Canada’s PharmaCielo was recently granted the first Colombian licenses for the cultivation of cannabis for medical sales, “becoming the world’s largest licensed producer.”[6] Not only will Canada have the potential to be self-sufficient for the supply of its domestic market but it will also benefit from the establishment of transnational operations in order to supply other markets across the world as other markets move toward the legalization of recreational and medical marijuana. The Netherlands, Spain, Portugal, North Korea, Uruguay, Peru, Jamaica, Australia, Switzerland, Argentina, Cambodia, Costa Rica, Czech Republic, Ecuador, Italy, Estonia, Mexico, Israel, Germany, and even states within the United States could become potential clients for PharmaCielo and other Canadian transnational corporations interested in capitalizing on the potential of the emerging commodity.[7] PharmaCielo’s subsidiary, PharmaCielo Holdings S.A.S., is instrumental in the internationalization of medical marijuana because the Colombian government has authorized not only the medical sale of cannabis oils but it has also allowed the export to countries where it is legal.[8] It all seems to indicate that Canadian companies such as PharmaCielo will become the global leaders in this industry, using first-mover strategies to separate itself from the rest of its competitors. Capitalizing on Colombia’s warm climate, abundant rainfall, four growing seasons, and 12 hours of daylight all year long, the company will be able to produce “enormous quantities, at a very low cost.” [9] They project to yield at least “two million kilograms of dried marijuana flower per year, and as much as 250,000 kilograms of oil.”[10]

The neo-colonial vision of capitalizing on cheap labor and low production costs for the mass production of a commodity that will ultimately benefit the global market seems to be a story of American imperialism, but it is actually the present reality of the internationalization of the marijuana market that is being led by Canadian companies that will ultimately benefit from its government’s initiative to legalize marijuana. The government-business partnership will give an advantage to the Canadian economy that will be hard to compete with once we federally legalize marijuana. I say this because it is inevitable that the capitalist forcers within our own market will eventually pressure the federal government to change its course.

Shortages of supply, environmental impacts, and market inefficiencies are already predicted in Canada thanks to the research behind Bill C-45 (Cannabis Act). Growing capacity is limited because of climate, forcing Canadian production to indoor systems that are energy inefficient and that result in higher market prices. The carbon footprint is high and the dependency on electricity, water diversion, pesticides, and water contamination will eventually be unsustainable.[11] Therefore the option of producing overseas is more economically sound, even if it comes at a high human and environmental cost for potential legal producers like Colombia.

These are problems that would not impact the United States market, considering that southern states could eventually become potential agro-industrial producers of cannabis. Maine entrepreneurs could eventually become first-movers, replicating what the Canadians did in Colombia, but within the Union. We could secure production in the south, contributing to the economic development of the region, while reducing the costs for our recreational and medical consumer market here in Maine under our regulatory environmental standards. Although hypothetical at this point, Maine could become an important player within the early development of this commodity market allowing our local stakeholders to capitalize on the expansion of both domestic and international markets.

Unfortunately the inability to cohesively structure a market-driven policy that assures our ability to capitalize on this economic development opportunity reflects the character and vision of out capitalist leaders that are elected to office. Long gone are the political leaders that entered public office with long-term goals for the economic prosperity of our state. Today we are victims of a political culture that impede economic growth in exchange for short-term political gain based on flawed moral arguments.

Our society and policy makers are eager to promote the sale of alcohol and chastise marijuana, even though “alcohol is one of the most pressing public health issues in the United States.[12] According to the Centers for Disease Control and Prevention, close to 88,000 Americans died each year from alcohol-related causes, much higher than the 64,000 annual deaths related to drug overdoses.[13] According to the DEA, “no death from overdose of marijuana has been reported,” yet we are quick to construct negative propaganda around the commodity, impeding our entrepreneurs and our economy from capitalizing on this emerging market.[14]

Our nation has been built on the principles of the free market and not on moral values. Our policy makers must listen to new generations of constituents that see the world very differently and that do not see marijuana as a taboo. Traditionalist views should be replaced by market-driven views that could then be translated into economic development opportunities for the future of our state.

If we agree that the future of our nation and our state remains in the hand of the invisible hand of the market, as it has always been, should we continue to gamble on moral constructs of the past or pursue the opportunities of the market? I ask our governor to stop playing the moral card and instead follow the signals of the market as he did when he was a businessman. Are we going to wait until the Canadians corner us in the global market and the other states within our Union control our own internal market? Is our federal government going to allow the Canadian government-business partnership to once gain fill in the gap as they have historically done or are we going to take matters into our own hands? What good is it to have six marijuana plants growing in our back yard when other global stakeholders are capitalizing on the global commercialization of the commodity? We need a regulatory system that allows our business sector to actively participate in the market. This is a game changer and our obstructionist policy makers are forcing us to watch it develop from the sidelines.

[1] “Medical Marijuana Market Size to Reach USD 55.8 Billion by 2025.” Grandview Research, January 2017. Accessed November 1, 2017. http://www.grandviewresearch.com/press-release/global-medical-marijuana-market

[2] According to the United Nations World Drug Report 2015, it was estimated that there were 182.5 million consumers of marijuana around the world. The report also indicated that the NAFTA region was the biggest producer of cannabis herb in the world. For more information see World Drug Report 2016, Accessed November 13, 2017. https://www.thestar.com/news/queenspark/2016/10/27/recreational-weed-could-be-a-226b-industry-study.html

[3] For Colorado marijuana sales see Tom Huddleston Jr. “Colorado Toped $1 Billion in Legal Marijuana Sales in 2016,” Fortune, December 13, 2016. Accessed November 10, 2017, http://fortune.com/2016/12/13/colorado-billion-legal-marijuana-sales/; for information on the Canadian recreational marijuana market see for example Robert Benzie, “Recreational Weed Could be a $22.6 B Industry,” Toronto Star, October 27, 2016. Accessed November 10, 2017, https://www.thestar.com/news/queenspark/2016/10/27/recreational-weed-could-be-a-226b-industry-study.html

[4] “Alcoholic Beverages Industry – Statistics and Facts,” Statista. Accessed November 12, 2017. https://www.statista.com/topics/1709/alcoholic-beverages/

[5] Cashinbis Editorial Team. “Report: Global Marijuana Market will Surge to $63.5 Billion by 2024,” Cannabis Business News, June 6, 2017. Accessed November 14, 2017. https://www.cashinbis.com/report-global-marijuana-market-will-surge-63-5-billion-2024/

[6] PharmaCielo. “PharmaCielo Becomes Colombia’s First Fully Licensed, Fully Operational Cultivator and Processor of Cannabis Oil Extracts,” Cision, October 24, 2017. Accessed November 14, 2017. http://www.newswire.ca/news-releases/pharmacielo-becomes-colombias-first-fully-licensed-fully-operational-cultivator-and-processor-of-cannabis-oil-extracts-652731973.html

[7] Lauren Torres. “All of the Places in the World where Pot is Legal,” Kindland, June 2, 2017. Accessed November 7, 2017. http://www.thekindland.com/policy/all-of-the-places-in-the-world-where-pot-is-2871

[8] Brian Hutchinson. “Canadian Pot Firm Goes All-in on “Colombian Gold,” MacLeans, July 13, 2017. Accessed November 16, 2017. http://www.macleans.ca/economy/business/a-canadian-pot-firm-goes-all-in-on-colombian-gold/

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Nathaniel Morris. “Drugs for Alcoholism go Largely Unused,” The Washington Post, November 1, 2017.

[13] Ibid.

[14] DEA. “Drug Fact Sheet: Marijuana,” Accessed November 20, 2017. https://www.dea.gov/druginfo/drug_data_sheets/Marijuana.pdf

Stefano Tijerina

About Stefano Tijerina

My name is Stefano Tijerina and this blog’s objective is to connect Maine’s social, environmental, economic, cultural, and political issues to the global system, centering on how the local impacts the global and how the global impacts the local or what is known in Global Studies as the "Glocal" effect. In our present era of globalization it is crucial for the general public to understand how the new dynamics of the international system impact our lives here in Maine and how our local decisions impact the earth.