U.S. Cannabis Anti-Trust Actions: More Cannabis Industry Sabotage

U.S. Cannabis Anti-Trust Actions: More Cannabis Industry Sabotage
U.S. Cannabis Anti-Trust Actions: More Cannabis Industry Sabotage

It’s easy to show how the U.S. federal government is biased against cannabis and the (legal) cannabis industry. But the question is always the same. Where does one start?

Legally, cannabis is classified as a Schedule 1 narcotic by the federal government. That means it is equated with heroin and deemed to have “no known medical uses”.

Heroin is both highly toxic and extremely addictive. It has killed and/or addicted millions of people. Cannabis is safe: non-toxic and non-addictive. No one has ever died from a cannabis overdose.

Cannabis is currently being prescribed by U.S. physicians for hundreds of different medical conditions. Obviously, the current legal status of cannabis in the United States has no foundation in reality.

There was never any justification for criminalizing cannabis. But this is just one example of the gross prejudice exhibited by the federal government toward cannabis.

For decades, cannabis “researchers” working for the federal government have published the most ludicrous anti-cannabis myths. One by one, these myths have all been debunked by real science. There is not one “warning” about cannabis from the U.S. federal government that has ever contained any degree of truth.

Even today, members of the current Administration continuously spout ridiculous anti-cannabis nonsense. Senate Leader Mitch McConnell has vowed to never allow a vote for cannabis legalization to reach the floor while he leads the Senate.

These politicians aren’t simply ignorant about cannabis. They proudly wallow in their anti-cannabis ignorance.

However, when it comes to obvious bias by the U.S. federal government, current “anti-trust” actions against the cannabis industry arguably top the list. Here most readers need educating.

What are anti-trust laws? They were some of the most important laws in our society (when they were being enforced). They were supposed to prevent the largest corporations from getting too large.

Roughly 30 years ago, the U.S. federal government simply stopped enforcing these laws. The largest multinational corporations have been given a free hand to merge or acquire each other.



The world’s largest beer manufacturer was allowed to buy the world’s second-largest beer manufacturer. Totally illegal. But it got past the corrupt stiffs in Congress.

One company (Luxotica) is now said to control up to 80% of the global market for eyeglasses. Massively illegal (if true). But it would explain how consumers are getting gouged for ridiculous mark-ups on virtually any brand-name eyewear product they purchase – up to 20 times what they cost to produce.

Telecom giants are routinely allowed to buy up each other. This is despite the fact that nearly everything we see and hear in the media is now controlled by a tiny handful of corporations (whatever happened to the Free Press?).

The only time that the U.S. government has ever enforced these rules in recent years was to prevent large foreign (generally Chinese) corporations from expanding their market share.

Suddenly, however, U.S. politicians who couldn’t even spell “anti-trust” have dusted off these regulations in order to sabotage the legal cannabis industry.

Understand the absurdity here. Anti-trust laws were solely intended to prevent national monopolies and oligopolies from coming into existence – where one company (or a small handful) dominated an entire national market.

Cannabis isn’t even legal nationally in the U.S. It’s only fully legal in 11 U.S. states, 22% of the total. Even if one company controlled the entire legal industry in the U.S. as it exists today, that falls far short of the (high) legal bar that has been set by the U.S. government in recent decades.

Currently, the legal cannabis industry accounts for little more than 10% of total cannabis revenues in the U.S. The rest is controlled by the black market.

A healthy, efficient legal cannabis industry is necessary to displace this black market. Allowing U.S. cannabis companies to grow (and merge) so they can achieve economies of scale is necessary for the legal cannabis industry to replace the black market.

In blocking U.S. cannabis deals – at this very early stage in the evolution of the legal industry – the U.S. government is engaging in obvious sabotage of the legal cannabis industry.

One of the deals currently being held up by these political pirates is the acquisition of Origin House (CAN:OH / US:ORHOF), a major California cannabis distributor, by Cresco Labs (CAN:CL / US:CRLBF).

For argument’s sake, let’s pretend that Origin House was the only cannabis distributor in California. Even if this was true, this wouldn’t come close to justifying blocking the deal.

First, California is only one state in 50 (admittedly with the largest population). But its legal cannabis industry still only accounts for roughly 40% of total cannabis revenues in that state. California’s cannabis black market still claims the majority of revenues.

If one company controlled the entire legal cannabis industry in the state of California, that would still only represent a 40% market share. If U.S. politicians chose to block business deals that involved that level of market share in even a single state, they would have had to block hundreds (if not thousands) of other deals that they have rubber-stamped.

What we are seeing with anti-trust actions by the U.S. government against the cannabis sector is blatant persecution of the legal cannabis industry. Totally outrageous.

Cresco Labs just announced that it now believes it has (finally) complied with all the hurdles erected by the U.S. government to block its acquisition of Origin House. It’s hoping to finally close on the acquisition later this month.

The deal was originally announced on April 1, 2019. Six months ago.

But instead of being able to proceed immediately on integrating Origin House’s operations, the Department of Justice turned Cresco’s announced deal into an April Fool’s joke – with Cresco Labs shareholders as the butt of the joke.

The U.S. government regularly allows the largest corporations in fully mature industries to buy up each other – with little more than token review.

The U.S. government is now regularly blocking deals in the legal cannabis industry, an emerging industry that still only accounts for a little over 10% of overall U.S. cannabis revenues.

To say this is “inconsistent” is understatement of the highest order. It is clear evidence of political prejudice and sabotage toward the emerging legal cannabis industry.

Cannabis investors based in the U.S. should be contacting their elected representatives to demand an immediate end to such political harassment.

If the U.S. government suddenly wants to start enforcing its anti-trust laws again. That’s great.

The politicians can start by breaking up the Big Banks, breaking up Big Oil, breaking up Big Alcohol, breaking up Big Media, and on and on. And by the time the federal government has finished properly enforcing anti-trust laws in all of those other industries, the U.S. cannabis industry will have had time to mature.

Then the politicians can start scrutinizing cannabis deals.
 

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