McDonalds. Wal-Mart. OxyContin. These are America: the great capitalist enterprise and evangelist of the dream, perverse, glorious, and slowly but surely placing roots within the cannabis industry and choking out the mom and pop cannabis shops that made room for it in the first place.
Every lucrative business sector must contend with the greedy and powerful fingers of the behemoths that are winning at capitalism and unwilling to share the spoils with the little guys. And while I’m doing a great job of painting this as a human catastrophe, it might not be so bad.
For one, big business brings legitimacy. If a product is on Wal-Mart’s shelves, regardless of how terrible that product actually is, it has suddenly become ubiquitous and acceptable. That is the only way to explain the devotion with which Americans consume fast food despite a plethora of research explaining how we are slowly killing ourselves because of it. So one can only assume that if the marijuana industry becomes hyper-commercialized by big business, it will defeat the stigma that has held it out of federal legality for so many decades.
On the other hand, what about the cannabis boutiques that laid the groundwork for state and (hopefully) federal reform?
Should the market place value on the spirit of marijuana? Or should economic nature take its course no matter how many small cannabis businesses are slain in the process?
In 2014, a Vice article speculated that the coming corporate future of the marijuana industry was inevitable. The article examined Big Tobacco’s interest in marijuana and how it increased when the plant seemed to be gaining legitimacy and waned when laws worked against it. Big Tobacco certainly has found a way to survive despite a dramatic decline in smoking and radical changes in tobacco use laws, but this adaptability does not necessarily prime it to take over the cannabis industry. Marijuana and cannabis are very different plants.
While tobacco is medically useless, highly addictive, and anatomically destructive, marijuana is touted for its therapeutic uses and low addiction profile
Big Tobacco could, in preparation for the end of the tobacco industry, position itself to invest in cannabis. It’s hard to imagine how boutique cannabis shops would be able to compete with a goliath like Philip Morris International.
Another business sector that seems to be positioning itself to take over (if not sabotage) cannabis is the pharmaceutical industry. Pharmaceutical companies have a strange relationship with weed. While some of the largest are developing cannabis based drugs or synthetic versions of cannabinoids, they are also some of the most generous donors to the anti-cannabis legalization movement. It makes sense.
Cannabis provides patients with an alternative to addictive and dangerous pharmaceuticals
and it doesn’t need to be developed in a lab; cannabis is competition. So while these pharmaceutical companies seem hell bent on bringing the legalization movement down, they are also racing to file patents on unique cannabis strains and processing methods, a clear indication that the industry is at least paying attention to cannabis’ moneymaking potential and trying to get in on it. I mean, if you can’t illegalize ‘em, cannibalize them. Am I right?
One of the greatest challenges that cannabis businesses face is the inability to patent their intellectual property since the US Patent and Trademark Office doesn’t award patents or trademarks to companies that engage in any federally illegal activity. Well, all cannabis businesses engage in federally illegal activities since cannabis is a federally illegal drug thanks to the Controlled Substances Act’s drugs schedule, a really strange categorization system that classifies marijuana as a medicinally useless, highly addictive, and most dangerous substance. Some cannabis businesses are able to overcome this hurdle by registering their brands as apparel companies. But not every cannabis businesses wants or can afford to manufacture clothing in addition to weed.
No Cash Back
While all cannabis companies face legal and financial hurdles, those are amplified for small businesses that aren’t backed by huge investors. For example, despite its illegality, marijuana businesses still have to pay federal taxes, but they are not allowed to deduct normal businesses expenses from those taxes. Additionally, many banks are wary of working with cannabis companies because of the liability risks of working with a company producing and distributing a federally illegal substance. This banking situation means that most dispensaries are operating exclusively with cash, and that places a target on their stores that burglars are not ignoring.
Mom and Pop
These challenges don’t mean that all is lost for the mom and pop cannabis stores that pioneered the legalization movement. Boutique shops can survive the evolution of the cannabis industry if they play smart. Smaller shops are more focused on the quality of their products, and there is definitely a demand for high quality marijuana, particularly in a culture becoming increasingly concerned with healthy living. Additionally, small, local shops have the benefit of being intimately tied to their communities, something that can inform the type of products they sell. On the other hand, small cannabis businesses that don’t develop a distinct brand and product/service menu will struggle to survive.
The cannabis industry has been likened to beer in that the market is okay with mass produced, cheaper, more accessible product (think Budweiser), but it also demands high quality, specialized, organic product (think craft beer). Although the beer industry is clearly dominated by the former, craft beer companies are not exactly in danger of dying out.
The future of mom and pop marijuana isn’t secure, but it also isn’t hopeless
It is inevitable that big business will hulk smash and bash the industry because this is America, and that’s how capitalism works. At the same time, this is America, and capitalism can also work for small companies with an edge and an insight into their markets. Whether that’s by focusing on selling high quality rather than mass-producing mediocre product, creating one-of-a-kind goods, or simply branding in a way that appeals to a specific market, boutique cannabis shops are and can continue to be a powerful force in the industry.