Looking on the Bright Side of Marijuana Legalization

The legalization of marijuana has come a long way in the United States, so much so that it has become a promising source of investment. While 29 states have legalized medicinal marijuana, 9 states have attained legal recreational use with minimal regulations. Unfortunately, it continues to be illegal based on the federal law, which is why the emergence of Cronos Group, a Canadian cannabis company, on US Stock Exchange as a publicly traded commodity has received a considerable amount of attention from investors. Cronos Group has officially been placed on NASDAQ through the authorization provided by the Securities Exchange Commission as the one and only firm to welcome shareholders into the cannabis industry in the States.

Previously, American businessmen have shown apprehension towards the idea of purchasing shares on the Toronto Stock Exchange, though the only route to do so was through the Exchange-Traded Fund Industry. Even so, Mike Gorenstein, the CEO of Cronos Group, stated that the shares are largely dominated by American investors. Hence, the increased accessibility attributable to NASDAQ’s acceptance of the Cronos Group means that investors can now take part in a rapidly blooming industry that has the potential to reach a $50 billion benchmark in the United States by 2026 with ease, as declared by the investment bank Cowen & Co. Such a lucrative profit margin has led to a high demand from capitalists, nonetheless, Gorenstein has made a statement to deny any claims concerning the company’s plans to step into the states “from a production or sales standpoint until cannabis is federally legal.”

From an economic standpoint, more benefits can be expected following the impending legalization of marijuana at a federal level. For instance, the increased tax revenue will no doubt aid in the US economy, which will directly affect the global economy due to the dominance of the United States on global markets. This is evident by the figures presented by the legal sales of marijuana products in 2015, which summed up to a notable $996 million. Consequently, an equally impressive amount of $135 million returned as tax revenues. This fund could vastly improve things like the education system and militarism and so forth.

In addition, the legalization could function to demolish black market sales, since consumers no longer need to resort to illegal means in order to attain cannabis products. This, in turn, benefits the economy as there are fewer trades unaccounted for. With proper regulations, the safety of consumers can be further ensured as well as the monitoring of the circulation of capital in the market. All things considered, however, oppositions towards the matter often revolve around the health concerns of users. This is forthrightly justifiable by the medicinal benefits that marijuana have shown.

Debates regarding the status of marijuana as a form of drug due to its ability to alter one’s mind and perception for a short time period and may be dangerous when it involves activities such as driving or operating heavy machinery. Be that as it may, if a substance like alcohol, that equates to the same outcome, with more proven damage to a human’s body can be legally consumed, what is stopping marijuana from becoming the next available source of entertainment like alcohol? Similar regulations such as DUIs can also apply to users in the future for safety purposes. Much like tobacco, the demand for marijuana is price inelastic, which means that regardless of price changes, or presumably law changes, those who are determined to consume will continue to find a way to do so. As such, wouldn’t it be better for the government to set regulations to ensure safety while benefitting from the tax avenue?

FTC approves Amazon’s acquisition of Whole Foods

Wednesday, the Federal Trade Commission (FTC) signed off on Amazon’s purchase of Whole Foods, The Washington Post reports. The $13.7 billion deal, which Amazon announced in June, is scheduled to take effect by the end of the year.

The FTC said in a statement that it had examined the “proposed acquisition to determine whether it substantially lessened competition.”

The deal would give Amazon 2% of the US grocery market, according to the Post. Walmart, which is among Amazon’s fiercest competitors in the grocery space and elsewhere, holds 20% of the market; Kroger has 7%.

Last year, Walmart generated $200 billion in revenue via grocery sales, the Post says. Kroger reported $115.3 billion worth of revenue in 2016. Whole Foods’ annual revenue approaches $16 billion.

“Based on our investigation,” the FTC says, “we have decided not to pursue this matter further.”

According to the Post, some have called upon regulators to amend antitrust laws to accommodate a corporate climate in which companies like Facebook, Google, and Amazon continue to grow.

The Post notes that the approval of the merger is the FTC’s first major action since President Trump took office in January. Trump has accused the eCommerce behemoth of shirking its taxes, fostering speculation that he might push the FTC to block the deal.

“Amazon is doing great damage to tax paying retailers,” Trump wrote on Twitter August 16. “Towns, cities and states throughout the U.S. are being hurt — many jobs being lost!”

Per the Post, Amazon reported paying $412 million in income taxes last year, $273 million in 2015, and $177 million in 2014. Though many states do not levy sales taxes on online retail transactions, Amazon collects sales tax in states where it is required to do so.

Whole Foods shareholders approved the acquisition earlier Wednesday. It is by far Amazon’s largest takeover to date, the Post reports.

In 2009, Amazon acquired online shoe retailer Zappos for $1.2 billion, and in 2014 the Seattle-based giant snatched up video game streaming site Twitch.

With the Whole Foods deal, Amazon, which has been closing in on brick-and-mortar commerce with services like Instant Pickup and PrimeNow, will enter a grocery sector that is struggling to keep up with changes in the ways consumers buy food. Over the last three years, the Post says, almost 20 grocers have filed for bankruptcy, largely because online food delivery services like FreshDirect are capturing an increasing share of the market.

Amazon has not disclosed its plans for Whole Foods as yet, but some have speculated that the tech company intends to build an online food delivery operation of unprecedented scale.

There are also whispers that Amazon will integrate Whole Foods into Instant Pickup. Customers could order groceries on their way to the store, then pick up their food as they walked in the door. Amazon could also use some or all of Whole Foods’ 460 brick-and-mortar stores as Instant Pickup warehouses and pickup centers.

Some warn that the takeover may jeopardize Whole Foods’ employees. As Amazon increasingly embraces automation and potentially looks to change the manner in which Whole Foods operates, staffing needs could change, leading to layoffs and personnel turnover.

“Amazon’s acquisition is a threat to Whole Foods workers and their families,” Marc Perrone, president of The United Food and Commercial Workers International Union, wrote in a letter to Whole Foods executives, per the Post. “They deserve a clear commitment from the entire board that their jobs, wages, and benefits will be protected from Amazon’s automated business model.”

John Mackey co-founded Whole Foods in Austin, TX in 1980, and remains its CEO today. The grocery chain is renowned for its favorable compensation and treatment of employees, most of whom earn more than minimum wage and benefits, according to the Post.

“Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades — they’re doing an amazing job and we want that to continue,” Amazon CEO Jeff Bezos said in a statement in June.

Featured image via Flickr/Mike Mozart

California Attempts to Built up Legal Marijuana Market

As the legal marijuana market continues to grow, the government of California is set to a rather difficult task. They must form the regulations that will govern California’s legal marijuana market.

California joins twenty-six other states, and the District of Columbia, who already have some form of laws surrounding the ever-growing legal marijuana market. Many of these states made marijuana legal and other simply legalized the drug for medicinal or recreational uses.

As of now, California allows adults the age of 21 to possess one ounce of marijuana and own at least six plants in their home. More thorough laws for the recreational use of marijuana in California will be finalized by January 1st of next year.

However, unlike California and the other twenty-six, some states are opposed to the idea of selling legal marijuana in any form. Then there are the states like Nevada who doesn’t allow businesses to use marijuana for public uses unless they obtain a permit to do so.

Legal marijuana currently is estimated to bring in $7 billion. The new industry would bring $1 billion in taxes each year for state and local governments.

Governor Jerry Brown came up with the suggestion of spending $50 million in order to properly organize the collections of taxes as well as issue proper licenses. The money would also go toward the hiring of employees to regulate the growing industry.

However, if the government fails to properly establish these new regulations, the marijuana industry will remain on the black market.

Theranos Cut in Half, Lays off Over 100 Employees

Theranos is continuing its descent into the new year as it makes plans to lay off 40 percent of its workforce and struggles to overcome past compliance issues. The blood-testing company describes its decision to lay off 155 employees as “further re-engineering”, leaving “a core team of 220 professionals to execute on its business plans” according to a statement on the company’s website.

Theranos’ downward motion was first signaled in October after 340 employees were laid off and clinical laboratories and wellness centers were shut down. The company has also faced distrust due to compliance issue allegations by regulators, ultimately ending in the company voiding two years of test results from its blood-testing equipment the year previous. Theranos also lost Walgreens as a business partner and faced lawsuits from patients as well as investors. The company continues to strain against strict sanctions imposed by regulators. Elizabeth Holmes, chief executive of Theranos, is banned for two years from owning or operating a clinical laboratory.

Theranos brought in crisis management professionals in December to augment corporate ranks. The blood testing company further shuffled its roster by adding a molecular diagnostic expert to its medical-scientific advisory board and letting go of retired Marine General James Mattis from the board of directors. The down-sized company is now working on getting its minilab testing platform ready for the market.

The company said in a statement that “teams have been aligned to meet product development, regulatory and commercial milestones.” The debut of its minilab testing, however, fell short of reaching its public interest goals, as a scientific conference session held over the summer reminded the crowd of the company’s initial disappointment. The lackluster response can be attributed in part due to Holmes’ silence of why the company’s previous blood-testing device did not work as promised. This omission is especially disappointing to scientists as this device helped make Theranos on of the most sought-after start-ups in the past few years.