7 ms·

When Capitalism Meets Cannabis

61 points by robg 16y ago

stcredzero 16y ago
I had no idea Walgreens was around from before prohibition, nor that they expanded 20-fold during prohibition. But when was the last time your pharmacy had a milkshake night? Well, I don't think there were doses in the milkshakes, but I used to go to drug stores in Indiana for a malted.
- tptacek 16y ago
  Walgreens is one of Jim Collins "Good to Great" companies; there are other interesting things about their business model to know too. For instance, they "pioneered" the "blanket every other major intersection with a retail location" model that Starbucks uses (unlike McDonalds, which is a franchise system, SBUX and WAG do this because there are logistical efficiencies they can exploit).
  - stretchwithme 16y ago
    That's a great book, even better than the first one. They made us read it at founder institute. Those logistical efficiencies must work in the convenience store biz as well. Honolulu has all of these ABC stores. I even saw 2 almost across the street from each other.
    - cma 16y ago
      ABC stores aren't necessarily owned by the same company: http://en.wikipedia.org/wiki/Alcoholic_beverage_control_state http://en.wikipedia.org/wiki/Alcoholic_beverage_control_stat...
      - stretchwithme 16y ago
        This is what I referred to: http://www.abcstores.com/about.htm
      - riffic 16y ago
        it's interesting (from the article) that during the temperance period, alcohol too was sold from stores called 'dispensaries' > At the beginning of the temperance movement in the United States, many states curtailed where and when alcohol could be sold. Before this time, most alcoholic beverages for off-premises consumption were often sold just like any other item in stores or in saloons/bars. Because of heavy lobbying by temperance groups in various states, most required off-premise beverages to be sold in dedicated stores (primarily called dispensaries)
stretchwithme 16y ago
I think very local control is much state or federal control of marijuana sales, medical or otherwise. http://www.theanswerisliberty.com/2010/06/can-democracy-and-recreational-drug-use.html
- albemuth 16y ago
  ...much better than state... or could be worse, idk :)
  - stretchwithme 16y ago
    I think if the decision makers face the consequences directly, they'll be inclined to make better choices and also learn more quickly from their choices. Legislators don't necessarily have to live with the consequences of their choices. The local condo board does. And the consequences will undoubtedly be worse. To someone. And ideal to others. But if they can each live in a community with rules they prefer, there's no problem. That is a major challenge and opportunity of good government. Drawing the lines so that people are free but not stepping on each other's toes.
    - jpdbaugh 16y ago
      If marijuana or any other drug for that matter were 100% legal tomorrow nothing at all would change from the way it is now. The people who want to use it will still use just like they do now. The fact is that even being illegal most places it is incredibly easy to get.
      - philwelch 16y ago
        For marijuana this may be true--marijuana is easily identifiable and it only takes a little bit of networking to "know a guy". For other drugs this is emphatically not true--LSD, for instance, has faced supply-side crackdowns to the point where it's very difficult to find on the street, and additionally, no easy way to distinguish supposed LSD from other hallucinogens.
jpdbaugh 16y ago
"The new rules, many of which will take effect over coming months, treat dispensaries a bit like pharmacies and a bit like casinos. Felons will soon be prohibited from owning dispensaries." Are people with DUI's or other alcohol related offenses banned from owning bars? I don't know personally. If they are then I am okay with this.
- dnsworks 16y ago
  Felons are prevented from owning bars, a felon could not get a liquor license.
LarrySDonald 16y ago
You'd have to be pretty naive to think being legal would then suddenly mean you can easily make it. Burgers are legal. The vast majority consume them. Now open a burger joint and corner the market! Oh wait.. Health code regulations? Employee benefits? Payrolls? Tax? Inspections? Fire code? Have to be better and/or cheaper then the big chains? Who would have guessed running a successful business wasn't trivial! People who were in the game before competed against anyone who couldn't run a small time dry cleaning shop. They were in it because it was illegal and those good at business was instead running legal businesses.
- sliverstorm 16y ago
  I am completely out of touch with the black market, so I don't know for sure, but I was always under the impression people involved in the black market were there for the potential for large profit, not because they can't run a business.
karzeem 16y ago
This reminds me of the whole should-you-build-on-someone-else's-platform thing, with the unpredictable, ever-shifting platform rules being in this case the mishmash of federal/state/local laws. The next family values president could put all these people out of business (and in jail, for that matter) with the stroke of a pen.
- Groxx 16y ago
  Can one be put in jail for doing something not-illegal? I mean, sure, if they don't stop, but actions strictly prior to a law being passed don't seem questionable. IANAL, however, just an idealist, forever at odds with the Real World™.
  - deleted 16y ago
    [deleted]
  - jeffcoat 16y ago
    It's certainly possible in this case: There shouldn't be any problem with "actions strictly prior to a law being passed" -- the US Constitution frowns on _ex post facto_ punishments -- but everything described in the article is only legal under state, not federal law. An aggressive attorney general could therefore decide to prosecute them as federal criminals. It's happened before; see, e.g., Gonzales vs Raich.
code_duck 16y ago
The already existent, well developed multi-billion dollar black market is a much more pure expression of capitalism than what the article describes. This is more like 'when capitalist bureaucracy is applied to retailing cannabis'.
brc 16y ago
I thought it was a great article, it will be a long time before authors can resist Cheech and Chong references, a bit like how motoring writers cannot review an Aston Martin without mentioning James Bond. What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level. Applying the 'sell shovels in a gold rush' rule, I think being a medicinal-pot lawyer or consultant is probably the best way to profit from this. Each time the government gets nervous and changes laws, these people will be needed to help shop owners navigate the new laws. The shop owners themselves are facing a price-sensitive consumer, regulations and retail leases. I wouldn't be surprised if the eventual winning business model looks more like a Walgreens and less like Starbucks.
- rms 16y ago
  >What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level. There will be something of a price floor set by virtue of cannabis potency. Already, black market cannabis when consumed efficiently is effective with dosages that cost around $1. Prices will fall, but not by 10-fold because people are willing to pay more to get high than they would for a single cigarette. A pack of cannabis cigarettes at a gas station is always going to cost more than a pack of tobacco cigarettes, because people expect to pay more for a product of sufficient strength.
- s3graham 16y ago
  > I wouldn't be surprised if the eventual winning business model looks more like a Walgreens and less like Starbucks. Hmm, I was thinking the opposite. A fancier more "treat"-like atmosphere with higher prices and more exotic products would help to differentiate. I guess both probably have a market.
- michaelkeenan 16y ago
  > What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level. That might depend on the regulatory constraints. From the article: "A batch of regulations known as Amendment 1284, signed by the governor on June 7, is expected to put many dispensaries out of business, eliminating the amateurs and semipros who jumped in because there was nothing to stop them, but greatly strengthening those who have the wherewithal to remain standing." As in other industries, onerous regulations might help large companies by raising barriers to entry and hindering startups that can't afford to jump through the hoops.
afhof 16y ago
Not relevant to hackers.
- sliverstorm 16y ago
  Sometimes thoughts like that cross my mind, but don't forget the target audience of this newsfeed is entrepreneurs who happen to be hackers, so practically any article about markets (esp. up and coming markets) is potentially relevant.
GFischer 16y ago
Why do cannabis dispensaries need 24-hour webcams, and other MUCH more sensitive businesses (say, firearm sellers) don't? (AFAIK). I'm against excessive regulation, and this seems more egregious than most.

61 points by robg 16y ago

I had no idea Walgreens was around from before prohibition, nor that they expanded 20-fold during prohibition. But when was the last time your pharmacy had a milkshake night? Well, I don't think there were doses in the milkshakes, but I used to go to drug stores in Indiana for a malted.

tptacek 16y ago
Walgreens is one of Jim Collins "Good to Great" companies; there are other interesting things about their business model to know too. For instance, they "pioneered" the "blanket every other major intersection with a retail location" model that Starbucks uses (unlike McDonalds, which is a franchise system, SBUX and WAG do this because there are logistical efficiencies they can exploit).
- stretchwithme 16y ago
  That's a great book, even better than the first one. They made us read it at founder institute. Those logistical efficiencies must work in the convenience store biz as well. Honolulu has all of these ABC stores. I even saw 2 almost across the street from each other.
  - cma 16y ago
    ABC stores aren't necessarily owned by the same company: http://en.wikipedia.org/wiki/Alcoholic_beverage_control_state http://en.wikipedia.org/wiki/Alcoholic_beverage_control_stat...
    - stretchwithme 16y ago
      This is what I referred to: http://www.abcstores.com/about.htm
    - riffic 16y ago
      it's interesting (from the article) that during the temperance period, alcohol too was sold from stores called 'dispensaries' > At the beginning of the temperance movement in the United States, many states curtailed where and when alcohol could be sold. Before this time, most alcoholic beverages for off-premises consumption were often sold just like any other item in stores or in saloons/bars. Because of heavy lobbying by temperance groups in various states, most required off-premise beverages to be sold in dedicated stores (primarily called dispensaries)

stretchwithme 16y ago

I think very local control is much state or federal control of marijuana sales, medical or otherwise. http://www.theanswerisliberty.com/2010/06/can-democracy-and-recreational-drug-use.html

albemuth 16y ago
...much better than state... or could be worse, idk :)
- stretchwithme 16y ago
  I think if the decision makers face the consequences directly, they'll be inclined to make better choices and also learn more quickly from their choices. Legislators don't necessarily have to live with the consequences of their choices. The local condo board does. And the consequences will undoubtedly be worse. To someone. And ideal to others. But if they can each live in a community with rules they prefer, there's no problem. That is a major challenge and opportunity of good government. Drawing the lines so that people are free but not stepping on each other's toes.
  - jpdbaugh 16y ago
    If marijuana or any other drug for that matter were 100% legal tomorrow nothing at all would change from the way it is now. The people who want to use it will still use just like they do now. The fact is that even being illegal most places it is incredibly easy to get.
    - philwelch 16y ago
      For marijuana this may be true--marijuana is easily identifiable and it only takes a little bit of networking to "know a guy". For other drugs this is emphatically not true--LSD, for instance, has faced supply-side crackdowns to the point where it's very difficult to find on the street, and additionally, no easy way to distinguish supposed LSD from other hallucinogens.

jpdbaugh 16y ago

"The new rules, many of which will take effect over coming months, treat dispensaries a bit like pharmacies and a bit like casinos. Felons will soon be prohibited from owning dispensaries." Are people with DUI's or other alcohol related offenses banned from owning bars? I don't know personally. If they are then I am okay with this.

dnsworks 16y ago
Felons are prevented from owning bars, a felon could not get a liquor license.

LarrySDonald 16y ago

You'd have to be pretty naive to think being legal would then suddenly mean you can easily make it. Burgers are legal. The vast majority consume them. Now open a burger joint and corner the market! Oh wait.. Health code regulations? Employee benefits? Payrolls? Tax? Inspections? Fire code? Have to be better and/or cheaper then the big chains? Who would have guessed running a successful business wasn't trivial! People who were in the game before competed against anyone who couldn't run a small time dry cleaning shop. They were in it because it was illegal and those good at business was instead running legal businesses.

sliverstorm 16y ago
I am completely out of touch with the black market, so I don't know for sure, but I was always under the impression people involved in the black market were there for the potential for large profit, not because they can't run a business.

karzeem 16y ago

This reminds me of the whole should-you-build-on-someone-else's-platform thing, with the unpredictable, ever-shifting platform rules being in this case the mishmash of federal/state/local laws. The next family values president could put all these people out of business (and in jail, for that matter) with the stroke of a pen.

Groxx 16y ago
Can one be put in jail for doing something not-illegal? I mean, sure, if they don't stop, but actions strictly prior to a law being passed don't seem questionable. IANAL, however, just an idealist, forever at odds with the Real World™.
- deleted 16y ago
  [deleted]
- jeffcoat 16y ago
  It's certainly possible in this case: There shouldn't be any problem with "actions strictly prior to a law being passed" -- the US Constitution frowns on _ex post facto_ punishments -- but everything described in the article is only legal under state, not federal law. An aggressive attorney general could therefore decide to prosecute them as federal criminals. It's happened before; see, e.g., Gonzales vs Raich.

code_duck 16y ago

The already existent, well developed multi-billion dollar black market is a much more pure expression of capitalism than what the article describes. This is more like 'when capitalist bureaucracy is applied to retailing cannabis'.

brc 16y ago

I thought it was a great article, it will be a long time before authors can resist Cheech and Chong references, a bit like how motoring writers cannot review an Aston Martin without mentioning James Bond. What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level. Applying the 'sell shovels in a gold rush' rule, I think being a medicinal-pot lawyer or consultant is probably the best way to profit from this. Each time the government gets nervous and changes laws, these people will be needed to help shop owners navigate the new laws. The shop owners themselves are facing a price-sensitive consumer, regulations and retail leases. I wouldn't be surprised if the eventual winning business model looks more like a Walgreens and less like Starbucks.

rms 16y ago
>What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level. There will be something of a price floor set by virtue of cannabis potency. Already, black market cannabis when consumed efficiently is effective with dosages that cost around $1. Prices will fall, but not by 10-fold because people are willing to pay more to get high than they would for a single cigarette. A pack of cannabis cigarettes at a gas station is always going to cost more than a pack of tobacco cigarettes, because people expect to pay more for a product of sufficient strength.
s3graham 16y ago
> I wouldn't be surprised if the eventual winning business model looks more like a Walgreens and less like Starbucks. Hmm, I was thinking the opposite. A fancier more "treat"-like atmosphere with higher prices and more exotic products would help to differentiate. I guess both probably have a market.
michaelkeenan 16y ago
> What the people retailing pot will find is that an easily-growable agricultural commodity is subject to perfect competition and prices will be driven down to a very low level. That might depend on the regulatory constraints. From the article: "A batch of regulations known as Amendment 1284, signed by the governor on June 7, is expected to put many dispensaries out of business, eliminating the amateurs and semipros who jumped in because there was nothing to stop them, but greatly strengthening those who have the wherewithal to remain standing." As in other industries, onerous regulations might help large companies by raising barriers to entry and hindering startups that can't afford to jump through the hoops.

afhof 16y ago

Not relevant to hackers.

sliverstorm 16y ago
Sometimes thoughts like that cross my mind, but don't forget the target audience of this newsfeed is entrepreneurs who happen to be hackers, so practically any article about markets (esp. up and coming markets) is potentially relevant.

GFischer 16y ago

Why do cannabis dispensaries need 24-hour webcams, and other MUCH more sensitive businesses (say, firearm sellers) don't? (AFAIK). I'm against excessive regulation, and this seems more egregious than most.