Archive: Opinions

The fourteen inches (plus!) of liquid sunshine that's fallen in our part of the universe this first six months of 2019 has given way to an abundance of sun, along with accompanying heat and humidity. But, sun, glorious sun! And, with these consecutive days of blue skies and glorious brilliant sunshine comes a recognition that this column could certainly stand some sharing of good news., or at least optimism. It's a scary world out there to those of us who wallow in dystopia, but I do have some positive notes to share with you. At least I think it's positive...

Mike was a friend of mine during my first enlistment. We met at Fort Devens where we spent over six months in cryptographic specialist school. We were both then ordered to special operations training with the National Security Agency (THOSE guys!) at Fort Meade, Maryland. After three months with that super-secret agency we were then shipped to VietNam together. Although I had several fire base and field station assignments during that tour, Mike stayed in Phu Bai his whole tour. We reunited at Fort Bragg where we shared an apartment while attached to the 82nd Airborne Division until discharge in 1973. So, we had a lot of time to talk and philosophize, and I still like to look back with wonder at how brainy Mike was, and how much he seemed to be able to predict America's future in our far-ranging conversations.

One of Mike's weirdest predictions was that (this was 1971-1973, mind you) marijuana would become a cash crop 'someday'. Now, the U.S. government was, at the time, spending millions to defoliate acres of cannabis crops at the behest of the Mexican government, as well as California, and Texas was handing out twenty year sentences for possession. This was apparently one of Mike's pipe dreams in 1972, improbable as it sounded. Mike was a Nebraska farm boy, his parents raised cattle on a 'small' ranch near Broken Bow, Nebraska. Of course, there's nothing 'small' in that part of the world except the combine or tractor you intended to trade-in next spring, or perhaps 'small' could describe beef future prices on the spot market even in the best of times for farmers. As is apparent now, Mike's farm boy wisdom turned, eventually, to reality.

I think in part it was Mike seeing that marijuana as a cash crop could be a potential salvation to the struggling American farmer, with 'pastures of plenty' being available to the cannabis entrepreneur. Kind of like how Henry Ford (a farm boy, himself) saw ethanol as a salvation for the struggling American farmer seventy years prior to Mike's prediction. Ford was no fan of oil being refined to gasoline, disliked Rockefeller, and saw the corn crop as the wave of the future of the automobile. Rockefeller beat him, though, and we are still wondering how much corn can be grown to power our internal combustion engines, which may go the way of the buggy whip in Ford's time. I digress.

Here's, to me, the good news in Mike's prediction turned into reality. As I've written previously (ad infinitum) I'm a capitalist to my toes. It appears that even in this mythical la-la-land of marijuana entrepreneurship, the 'invisible hand' that Adam Smith (Wealth of Nations) so correctly envisioned is at work.

Marijuana in the sixties and seventies was the antithesis of government and business. It was everything that 'upstanding' society was not. How could it be smoked and still represent upstanding and up tight? In any case, pot was practically everything anti-establishment, as anyone who remembers can tell you. Of course, like the old joke goes, if you remember Woodstock you probably weren't there...But, predicting it would be eventually grown under government sanction? With a government issued license? In a state run dispensary? For profit by a multi-national conglomerate? And tax it to boot? Are you kidding me, Mike?

Well, it now appears that the 'invisible hand' of commerce that Adam Smith stated as a theory of why capitalist society works is at work in the 21st century cannabis business. Not just profit. Apparently, as more states legalize it as a recreational drug, those considered 'high cost growers' are predicted to become 'undercut'. According to Steve Schain, senior counsel at a cannabis law firm (you knew the lawyers would jump in wherever money was changing hands) Hoban Law Group: "...There will be upheaval in the price structure and (get this, fans of the invisible hand) efficiencies are going to set in." The people who study and understand the stock and bond markets get this phrase intrinsically: "efficiencies".

This may be somewhat of an anomaly, but the capitalist ideal still takes hold in this new world of 'high' commerce: The fewer licenses authorized to grow, the higher the floor of retail pricing, just like most other commodities and 'fairly' traded items in this world Even government control doesn't change the result as determined by the basic law of supply and demand.

State licenses to grow cannabis in Florida have been 'tight', difficult to come by, and therefore these licenses are being 'traded' at a premium. Imagine saying in 1972 that states would hand out licenses to grow (and retain the license to tax) that devil weed that in 2019 is being grown with up to 25% THC (the chemical that gives the 'high'). Listening to Mike predict that in 1972 could only result in the response "You're high, you're out of your ever-livin' mind!".

But, as I said, even though I remain against legalization for recreational use (and you, dear reader, will see the disastrous results of society-wide cannabis intoxication on the American psyche over the next twenty years) I am actually quite pleased to see that even such an anti-capitalist commodity as marijuana must be governed by the same rules that have been laid down for generations in commerce. Economics 101, if you please, even with governmental intervention and making sure everybody in power gets a piece of the action. Thus:

Acreage Holdings, a U.S. cannabis business, has a stock market valuation of about $2 billion according to the Wall Street Journal.

And, if you want to 'cash in' on this commerce bonanza but are queasy about dumping your retirement bucks into cannabis growers themselves (hey, former Washington power brokers know a good deal when they invest and control), why, step right up and take a look at companies like Scott's Miracle-Gro (yep, the stuff you put on your tomato plants and African violets) whose stock is going gang busters selling fertilizer to our blissed out pot farmers. Or maybe you can put some of your hard-working American go-go dollars into KushCo Holdings who provide packaging materials to growers and retailers.

It's a capitalist bonanza, folks. And while I can't say I'm going to benefit from all this legalization tumult, I can at least wonder how long it will be before my safe, solid banking stock jumps into a business which used to deal only with cash, and will (I'm sure Mike would agree) soon enough have 'small' banks sporting some version of a marijuana leaf as their logo. Why not? The cannabis investment bank (yes, there is one and its name is Viridian Capital Advisors) reported that since the beginning of 2018, $3.5 billion has been invested in domestic cultivation and retail marijuana companies.

Grow lights in bank lobbies as premiums to open a new 'green' savings/checking account. Your money is always safe with us. Grow your savings.

Right now, apparently, the states that have legalized cannabis are experiencing some chaos and some 'shaking out' of the business and its ancillary holding companies, license holders, growers and retailers with retail prices (just like the 'big boys' like Kraft Heinz and Proctor and Gamble) dropping below profitable levels. I'm still trying to imagine what Mike would say if we begin to see dark headlines concerning anti-trust legislation and anti-monopoly cases show up in courts. Bust up Ma Bell? Bust up Standard Oil? Bust up Microsoft? Hey, maybe it's only a matter of time before certain politicians start to carp about monopolizing the cannabis business. Bust up Marijuana, Inc.?

Keep that 'invisible hand' of commerce in mind: it's always been a cruel, sometimes plodding, but always and inevitably 'fair' master.

More 'positive' news next week.