Cannabis Inflation: Corporate Greed? – Hemp | weed | marijuana

If cannabis prices went up significantly, would you blame inflation or corporate greed? Or are these two sides of the same coin?

If inflation and corporate greed are two sides of the same coin, then it must be a pretty big coin. It’s like saying the United States is in the Milky Way.

Technically you are not wrong. But there is obviously more to it than that.

Almost every problem facing society is either a product of (or aggravated by) corporate state greed. Her bloodlust, her striving for power, her sociopathy.

And nowhere is this greed more evident than in the monetary system.

Ever since barter gave way to exchange, people have wanted to control the means. Controlling money means controlling people.

Is cannabis inflation a product of fractional reserve banking or corporate greed?

Is the United States on Earth or in the Milky Way?

What cannabis inflation? corporate greed, really?

Cannabis prices don’t seem to be going up. If anything, a pandemic-driven boom is in self-correcting mode. Cannabis prices have fallen or remained flat.

But the question, “What cannabis inflation?” gets to the heart of what inflation is.

Left political leaders denounce “corporate greed” for rising prices. What they mean by this is, “Rich people raise prices to make more profit. Rich people bad.”

For them, the market is a zero-sum game. The only way to benefit from it is to take something away from someone else. And this is typically phrased as wealthy employers “stealing” surplus value from poor workers.

It’s the economic equivalent of believing the earth is flat because the horizon doesn’t seem to curve.

So, if or when cannabis prices will start to rise. Will you blame systemic theft courtesy of the corporate state banking system? Or the owners and farmers of cannabis companies?

How Profit & Loss works

Like all businesses, a cannabis company sets its prices in order to make a profit above and beyond the cost of labor and materials.

Technically, this is not a profit, but a return on investment. Owners of capital take home more than workers because owners have to manage costs up front. Workers are still paid for their time when a cannabis company loses money or goes bankrupt.

In a free, competitive market, this return on investment is more or less uniform across industries.

Profit is literally an arbitrage opportunity that arises from discrepancies in the market. If you can spot them, you can make a lot of money.

Until the competitors take notice and adapt.

As an example, consider a free market for cannabis edibles. Edibles manufacturers typically get the same return on investment.

But let’s say, perhaps through data research or real guesswork, you predict that a sugar-free watermelon-flavored gummy bear will be hugely popular next summer.

So, as an entrepreneur, you act on that forecast, and when summer comes, the results will speak for themselves.

They’re selling big, making a lot of profit, and by the time other edible competitors can bring their production of watermelon-flavored gummy candy to your level, summer is already halfway through and the trend is starting to wane.

The money you make early in the summer is beyond your typical return on investment. It’s the real win.

You can see what happens when the market is not competitive. Rules and restrictions that benefit a corporate elite at the expense of small businesses will result in profitable opportunities for some but not for others.

The problem is not “corporate greed” as it is an unfair market.

It’s like playing Monopoly with some friends. But a player is closely related to the banker and does not follow the rules.

Greedflation is not real

Could corporate greed infect the cannabis industry? Is not it beautiful? The link between inflation and corporate greed stems from a poor understanding of economics.

Leftist demagogues using “greedflation” as a soundbite, see your friend colluding with the banker in this Monopoly game. But instead of calling them, they get jealous that they’re not part of the pact.

Thanks to the corporate lobby, the market rewards further concentration and less competition. Government laws reward companies that earn more and pay workers less.

This trend has nothing to do with inflation.

Inflation in the cannabis industry or any other sector results from too much money chasing too few goods.

Consider Canadian grocery chain Metro.

This Montreal-based company reported $207.7 million in net income for the fourth quarter of 2021. Sales increased by 7.1 percent.

For Canada’s left-wing demagogues, Metro has unnecessarily raised its prices and is pocketing the difference. In their simplified analysis, that money rightfully belongs to the consumer.

But the success of a company results from sales, margins and costs.

Spending is higher because energy prices are higher. But Metro’s margins have stayed the same. The average grocery store has a 2.2 percent profit margin.

But that’s too complicated. It’s easier to point to the horizon and say, “I don’t see a curve.”

Cannabis Inflation: Corporate Greed?

So what causes inflation? If cannabis inflation is caused by corporate greed, how would that work?

Keep in mind that Canada’s major licensed producers can impact the price of cannabis. But they can’t generally increase cannabis prices.

For example, if Canopy manages to outlast every small LP and buy out every significant competitor, they might be able to raise cannabis prices to unreasonable levels.

But all of these funds mean Canada’s cannabis consumers have less to spend on other commodities. In other sectors, prices would not rise.

Canopy would engage in price gouging, not inflation.

And what’s stopping other cannabis producers from getting in the field and competing with Canopy to bring prices back in line with market preferences? (Barring costly regulations imposed by governments.)

Inflation, be it in the cannabis industry or in groceries, is caused by central banks.

They engage in “open market operations” where they buy bonds from the big institutional banks (which you can find on Wall Street or Bay Street).

Are central banks now buying these bonds with their gold reserves? Of course not. The Bank of Canada, for example, has no gold.

Do central banks charge their accounts at all when lending to institutional banks? Of course not. That would defeat the purpose.

The central bank exists to print money. Add digital numbers to a balance sheet. In this way they control interest rates as if they were making “public policy” rather than destructively interfering with the market economy.

And then the big banks get involved in fractional reserve banking, pushing the money supply further up the pyramid.

And when you increase the money supply, its price relative to other commodities goes down. In other words, money loses its purchasing power – the prices of goods and services rise.

Banks create inflation. You can call that corporate greed, but again, that’s like saying the United States in the Milky Way.

Technically correct, but saying it out loud says more about your intelligence than you think.

There is no such thing as inflation when we have market-based money like gold, silver, bitcoin or hashcoin. Just the criminal act of counterfeiting money.

footnote(s)

https://financialpost.com/news/economy/metro-is-using-profit-margins-to-absorb-food-inflation-resists-calls-for-higher-wages