Question

Title : The cannabis industry has a number of 'tremendous' tailwinds: 'The Big Short's Danny Moses

"I've never seen a sector have the political tailwinds, the economic tailwinds, and the wellness tailwinds that this sector potentially has," Meridian Capital Partners' Danny Moses says.

"The cost of capital would go down dramatically" for marijuana companies if they can get banking services, he says.

Questions: 1) give your advice on the topic economically talking

2) what are your solutions

Answer 1

Introduction

For the growth of any industry in general, capital is the prime most requirement. Marijuana as an industry is long debated on considering the health impacts and others across the United States and elsewhere also.

The West has after certain deliberate considerations, considered legalizing the use of marijuana to a certain extent for both medicinal and recreational purposes respectively, and in many States of the United States of America and others among Canada and others this sector has been legalized subject to certain restrictions in place respectively on the amount of it which can be possessed at any given period of time and also others including resale of the produce respectively.

The industry once legalized has the potential of high earnings for the government in the form of taxes and thus bringing the same under the preview of the banking system must be carefully analyzed respectively.

Case Specifics (Both Questions)

1) Give your advice on the topic economically talking

2) What are your solutions?

As long as the consumption of Marijuana has been legalized in a particular State, it becomes important to think about the key economic aspects of the issue in hand. The demand for marijuana will increase since it is now a legal to consume product in many states. The supply on the other hand would not be able to keep up, because of the lack of capital in the industry.

Therefore, a concrete solution to the problem needs to be presented to analyze and be able to take this as a key decision respectively.

The following are the solutions to be followed to bridge the gap between demand and supply respectively.

• Bringing the sector under direct exposure to financial institutions is important. A legal subject cannot and should not be denied the same economic opportunities which other sectors such as cigarettes and alcohol widely receive.
• To prevent misuse registration of production facilities should be mandated. This will ensure a block on illicit transactions if any.
• Further decisions can be taken on capping the maximum production in a given year, month or even a day by each producing unit and production levels be monitored closely. This will help in ensuring a capping on supply as much as it there on the demand in terms of the maximum usage by a consumer. This will also help in addressing the social issues involving marijuana.
• Lower costs can allow government to maintain profit levels by keeping tax rates and prices relatively unchanged while all the above steps would help maintaining an equilibrium among demand and supply of the product being offered.

Please feel free to ask your doubts in the comments section.