Business opportunities in marijuana

Are there any business opportunities in marijuana? Not yet. That’s our conclusion as we watch regulators, mj-phobes, mj-philes and law enforcement people wrestle with laws adopted by an unsuspecting public.

What did the public not suspect? Well, first what did they think they were voting for or against as voters approved initiatives in a number of states. They thought they were voting for or against making it legal to smoke weed.

In reality, the laws were written in a convoluted way to satisfy a number of perceived constituencies – especially bureaucrats/government people and legalization proponents.

So, there are provisions for taxes and regulations. Had the proponents simply legalized the plant, we wouldn’t be where we are today – a regulatory morass as all actors in the drama fight it out behind more or less closed doors.

The few remaining Libertarian purists’ voices crying, “Noooo to regulation and taxation!” were ignored.

Visions of tax windfalls reduced voter and government resistance. “As big business gets ready to make millions,…” said the Daily Telegraph in 2013.

Alas, as IFO has long argued, the price of illegal drugs is unlikely to drop upon legalization and tax receipts are unlikely to bring in the revenue greedy tax collectors were drooling over. Sadly, law enforcement personnel exaggeration of demand and prices of illegal drugs fooled everyone.

Guess what? Cost to enforce prohibition will almost exactly equal cost to regulate and tax.

What everyone forgot is that marijuana is a PLANT! It is a WEED. That’s why early hippies called it “weed.” It grows anywhere and contrary to what some people think or say, it is quite easy to grow. Hence, it will become a commodity. As such, about 80% of the price will be associated with marketing and distribution costs.

Given these disappointments, could a business of more than mom-and-pop size develop, now that so many states have somewhat legalized selling mj? IFO has only seen one possibility, but it is intriguing.

The Bob Marley family is introducing what they call the first global cannabis brand of products, according to a Nov. 2014 article from the BBC News. [Note: Mr. Marley died of cancer in 1981. Just sayin’.]

A branded product is the best possible way to market mj, since users will be able to count on its safety and reliability. That’s what a brand is. It’s why we go to McDonald’s restaurants when we are in unfamiliar areas – we know what we will get.

One final comment on mj from a medical book IFO received from an uncle-in-law many years ago. “A Treatise on Therapeutics and Pharmacology,” published in 1860, discusses the medicinal uses of the plant. Internet site w/.pdf is here, if you have the patience or bandwidth to download.

Basically, it says mj is good for relaxation and some pain relief, but doctors don’t like it because you can’t calibrate the dose and don’t know when it will no longer be effective. Strength is too variable.

In Vol. II of the edition, however, there is an intriguing paragraph on use for women in childbirth. The herb increases strength of contractions and does not last as long as another medicine “ergot.”

Pot legalizers have missed that one.

 

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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