I will tell you what my mentor in the cannabis industry told me when I asked him How to make money in cannabis:
”If you want to make a small fortune in cannabis make sure you start with a large one”
Cannabis is produced and distributed by both large and small organizations, as we see recreational cannabis legalization throughout the United States beginning to take hold, we will see the smaller producers being either bought out or pushed out by large producers. This was true with alcohol post-prohibition And is showing to be true in the post-prohibition cannabis era.
Something to consider is that federal legalization has not happened, and in my opinion we will only see a continuing of the smaller producer that is highly profitable being bought out or pushed out by the larger producer which is somewhat profitable but is on a much larger scale so has higher profits.
A good example of this is Budweiser versus sierra Nevada. While sierra Nevada has a higher profit margin, they do not have the distribution capabilities of Budweiser, so Budweiser makes more money but a much smaller profit margin. Now imagine Phillip Morris starts growing cannabis tomorrow, no one can really compete with them in the smaller markets because they have a distribution system, they have a very efficient growing methodology, and they are a much larger and much more well funded organization compared to any existing cannabis producer.
One thing to keep in mind is companies like Phillip Morris and Jack Daniels and other producers of recreational compounds such as alcohol and cigarettes can afford to lose money for a great deal longer than a Smaller producer. This is in effect drives people out of business because they cannot afford to essentially sell their peodicr for no profit Where as these larger organizations mentioned above can in fact make no money for quite some time before it starts to actually affect the health of their business.
We are seeing the effects of the free market and other capitalist concepts starting to involve themselves in cannabis now, and it will continue to change the face of the industry drastically.
