Where the Cannabis Industry Fails: the Marketplace

The third of four in a series

By Toby Shillito

Prohibition has prevented the normal growth of CSR (Corporate Social Responsibility) issues in the cannabis industry. In this third of four articles, Shillito considers: (3) the effects on the Marketplace.

Prohibition does not only mean that horticulturalists can go to jail. It also means that business people find it hard to:

  • form partnerships
  • make long-term investment decisions
  • avoid a transactional sales mentality
  • develop a positive corporate culture and
  • manage a socially and environmentally sustainable business model.

In short – prohibition disrupts cannabis businesses from functioning healthily.

With prohibition in retreat, there are emerging opportunities for companies to show – and mean – how their operations both:

  • address the threats to the planet and people and
  • take advantage of the opportunities to do business in a considerate, conscious way.

To do this successfully, companies need to look beyond the traditional borders of the industry, to address their impacts on the wider environment and beyond this to their social responsibilities: to staff in the workplace, suppliers and customers in the marketplace and the communities that live around their areas of operation.  This third article looks at the impacts of prohibition on the Marketplace.

Cooperation and Disputes

Prohibition drives unfair, unhealthy behaviour in the market for cannabis. Disputes are handled outside the rule of law, leading to tens of thousands of violent deaths in impoverished areas of the world where there are few legal alternative income sources. There is little incentive for cooperation between suppliers and retailers in a fragmented, transitory market. There may be shortages of produce that would happily flow to consumers, if only they knew how to locate it. The produce’s provenance and cleanliness are obscured. The benefits of consuming in the most healthful way – for example, edibles rather than smoke inhalation – are not clearly communicated or understood.

Losses to the industry

More than this, the wider society under prohibition loses out on:

  • scientific experimentation to explore the significant recreational, medical and spiritual benefits that humans have derived from the plant for thousands of years
  • financially, as profits disappear into the black hole of criminal empires
  • as its members consume sub-standard produce at super-high prices
  • as its entrepreneurs are beaten by ruthless black market competitors.

Tax

Every illicit cultivator I have ever discussed this with would happily pay a fair share of Corporation and Income Tax in return for the license to cultivate openly. Now that this is a fact of corporate life in the cannabis industry, society benefits from the financial benefits too. Indeed, the State of Colorado, with a population of only 5 million people, raised over US $ 250 million in 2017 from taxes, licenses and fees from the legal cannabis industry.  That is about one third of total General Fund Net Tax revenues.

Quality and informed decisions

Also, as the industry moves into the legal sphere, public scrutiny and transparency benefits both consumers and suppliers alike. In the last couple of years, it has become standard practice for consumers to read independent laboratory testing reports on the produce available on the open market. These data come in two forms:

  • the type of cannabis and the
  • quality of this cannabis.

By showing the type of cannabis, customers can make informed decisions about their own preferences. A consumer seeking to reduce anxiety or insomnia, for example, can choose cannabis rich in CBD, whereas another seeking a more intense recreational ‘high’, for a bit of energy and inspiration, can select a variety rich in THC. By showing the quality of cannabis, customers exercise their rights to consume produce uncontaminated by heavy metals, pesticides, micro-organisms or residual solvents. This allows a medical consumer to be sure that they are consuming pharma-grade produce.

The availability of empirical data leads to ever greater understanding of the benefits of this plant to society. Scientists are now seeking to understand which strains of the plant alleviate particular illnesses, including: Alzheimer’s and Crohn’s disease, epilepsy, glaucoma, gastroenteritis, inflammation, multiple sclerosis, PTSD and anorexia.

The end of prohibition offers the opportunity for horticulturalists, scientists and consumers to benefit from collaborative action that will allow the formulation of medicinal compounds to alleviate some of the suffering of those in society unfortunate enough to suffer from many kinds of debilitating illness. It also opens the market to reward companies that produce safe products for safe consumption – and to punish companies that fail to react to the requirement of transparency across their operations.

The last article will look at the effects of prohibition on the Community and looks to the future.

1 Environment / 2 Workplace / 3 Marketplace / 4 Community & The Future

Toby Shillito has been cultivating cannabis for 28 years. He holds an MBA from London Business School and is currently CEO of Sunshine Labs, a provider of legal Cannabis flowers and derivatives based in Europe, which seeks to do business responsibly. He can be contacted on tobyshillitouk@gmail.com

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