banking

Cannabis Recession 2023 – Cannabis | Weed | Marijuana

Published

2 months ago

March 16, 2023

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Is a 2023 cannabis recession inevitable? While an economic downturn is inevitable, how the cannabis industry weathers the storm remains to be seen.

For sure, saturated retail markets will feel the hit as consumers cut back or make more discerning purchases. And large-scale industrial grows that have been more about selling equity than weed will feel the impact.

But why? Why has the value of cannabis stocks been removed from fundamentals? Why are small cannabis business owners – through no fault of their own – at the mercy of global economic forces beyond their control?

And what role can cannabis play in reviving the economy?

Cannabis Recession 2023

A cannabis recession in 2023 may be inevitable, but understanding why is a challenge in itself. Look at, for example, the massive money printing that occurred during COVID.

It even sparked a new meme – money printer go brrrr

So, as the new money entered the economy, the currency’s value dropped, and everything rose in price. That’s inflation.

But thanks to propaganda from politicians and the corporate press, the real cause of inflation is “corporate greed.” And, of course, the solution to “corporate greed” is to increase the scope and power of the centralized state.

Likewise, Larry Summers, an economist who worked in both the Clinton and Obama administrations, recently tweeted – accurately – about the collapse of the Silicon Valley Bank (SVB).

SVB committed one of the most elementary errors in banking: borrowing money in the short term and investing in the long term. When interest rates went up, the assets lost their value and put the institution in a problematic situation.

Sounds reasonable and logical, right? Like a physicist tweeting out that the speed of light is 300,000 kilometres a second.

But the reaction against Summers was swift. In the comments, he “clarified” what he meant by the original tweet. Prompting others, like George Selgin, to reply:

I’m glad to see, upon reading on, that Prof. Summers explains himself in the comments. Still, I was taken aback upon first seeing this tweet by him attributing SVB’s troubles to its having done what all banks always do!

What Have Banks Always Done?

I’m no Larry Summers fan, but it’s clear his original tweet was sound economics. Of course, he retracted and bent to the will of the mob, as is usually the case on Twitter.

But consider, what banks do daily would land you or me in jail. The trouble with the Silicon Valley Bank (SVB) stems from a practice called fractional reserve banking.

Once upon a time, we separated banking into two categories: warehouse banking and investment banking.

With warehouse banking, the bank provides storage services and seamless payment transfers. For this, the client pays a monthly service fee.

Investment banking involves having the bank raise capital by underwriting and selling securities.

Modern banking doesn’t distinguish between the two. Modern banks finance investment banking with money stored in warehouse accounts.

Instead of paying a small fee, the bank pays the warehouse depositor a small return. Of course, the bank’s depositors may want access to all their money simultaneously. This used to cause bank runs and was a powerful tool wielded by the masses.

Nowadays, banks create new money out of thin air.

You can imagine a storage garage working like this. You drop off things like furniture, thinking it’s a warehouse, but behind the scenes, the owner rents your stuff to others. In return, you receive a small nominal payment instead of a monthly fee.

On the surface, there’s nothing wrong with this business model. So long as the customer knows that the storage garage isn’t a warehouse but an investment opportunity. But this isn’t the case with modern banking.

Most depositors don’t realize they’re not depositing anything. They’re loaning money to the bank.

Fractional reserve banking has a scattered history, with the Bank of Sweden (founded in 1668) and the Bank of England (founded in 1694) employing such practices. The first large-scale practice was with the Bank of Amsterdam, established in 1609.

But fractional reserve banking didn’t become widespread until the 19th century. This isn’t something “all banks” have always done.

Banking for the Elite

Canada’s legalization of cannabis is perhaps the clearest example of who governments and banks work for. And it isn’t the average family.

Members of British Columbia‘s cannabis community have been cultivating and perfecting cannabis for decades. Without their civil disobedience, the Liberal Party would have never considered legalizing cannabis.

But were they rewarded with licenses and welcomed into the mainstream economy? No, they were “organized crime” until further notice.

Ottawa established a centralized system where federal bureaucrats determined who would grow cannabis in Canada. Not surprisingly, well-connected former politicians and cops got licences to establish industrial-size warehouses while B.C. Bud struggled for “micro-grow” licenses.

To be part of Canada’s legal cannabis regime, you need cash. You need tens of thousands in start-up capital and a willingness to place all your hopes, dreams, and aspirations in the hands of Health Canada.

The game was rigged from the beginning.

Who is likely to survive Canada’s cannabis regime in the long run? Large corporate actors or small business owners?

Both groups deal with excessive excise taxes, thousands of pages of regulations written in legalese, sometimes forgoing production to wait on the decisions of some Health Canada bureaucrat, rules against marketing, and government monopoly distributors.

But some have the capital, and others do not.

Anyone over 19 in Canada can buy cannabis just as easily as you would alcohol or cigarettes. But to produce and sell cannabis? You need deep pockets.

The entire industry is struggling. But who is likely to survive the 2023 cannabis recession? Those who have capital. Who has capital? Your local Mom and Pop pot shop or the corporation connected to Laurentian elites?

Cannabis Recession 2023

This “microeconomic” policy permitting fractional reserve banking has “macroeconomic” consequences. If you ever wondered how cannabis producers like Aurora or Canopy made so much money before producing any cannabis or why their stock value was higher than you could ever get from their weed, look no further.

New money gets shovelled into projects and into investments that otherwise wouldn’t have been made. Resources get misdirected. During the downtime it takes to move these resources into new, sounder capital structures, the economy experiences a recession.

Of course, governments and banks interfere with this restructuring process instead of liquidating bad debts and allowing the market to set interest rates.

Banks are supposed to make capital available for businesses through investment banking. They also provide a payment-and-exchange system through warehouse banking.

When a bank fails, like Silicon Valley Bank, it is in a “liquidity crisis.” SVB did not have 100 percent of their warehouse accounts available for their customers.

The United States hasn’t had a market interest rate in nearly 100 years. The U.S. central bank (the Fed) has been dictating interest rates like they were just another government policy.

After ultra-low rates for two decades, the Fed has begun raising rates. SVB has extensive holdings of older U.S. government bonds which lost value when the Fed raised rates.

As the losses mounted and SVB failed to secure money to cover the shortfall, customers realized what was happening and rushed to withdraw their deposits.

This situation is not unique to SVB. They are merely the canary in the coal mine.

Cannabis Recession 2023: The Solution

SVB is liquidating assets to cover deposits, so this may not signal a nationwide failure of banks like in 2008. But if not now, then later. And if not SVB, then another bank.

The banks have gotten the world economy highly leveraged. No one has resolved the issues that created the 08/09 financial crisis. In fact, the fundamentals are even worse than before.

So what’s the solution? Raise interest rates, bankrupt everyone, and start over? Or lower interest rates and hope this party continues indefinitely?

Of course, a third option, however unlikely, remains the best long-term decision. And that is: stop using fiat currency.

Money backed by a commodity – gold, silver or rare shells – is superior to paper money printed by governments and banks.

And this isn’t an opinion – it’s a historical fact.

Avoid a Recession by using Hashcoin?

Avoid a Cannabis Recession by using Hashcoin?

Commodity-backed money provides greater stability and predictability in its value. It protects against inflation by limiting the money supply and maintaining the purchasing power over time.

Commodity-backed money inspires greater confidence and trust in the banking system since people know the banks can’t destroy its value by creating more out of thin air.

Commodity-backed money is more difficult for governments, banks, and Wall Street to manipulate. They can’t print more money at will and, therefore, can’t easily repackage bad assets into Grade A investments.

Alongside a blockchain, commodity-backed money becomes a powerful tool in preventing counterfeiting, including official counterfeiting done by the banks. Commodity-backed money protects against corporate and government overreach and abuse of money.

Overall, commodity-backed money limits the power of governments and banks. It creates investment potential for small-to-medium investors that Wall Street have locked out of their casino.

Commodity-backed money – like hashcoin – restores the wealth and prosperity of the middle class.

Any politician that claims to want to help the middle class (as Justin Trudeau does) but doesn’t address monetary policy (Justin says he doesn’t think about it) is a fraud and a stooge for the elites.

Cannabis has the potential to create a green, sustainable world. But first, we need to get politicians and corporate bankers out of the way.

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All about Cannabis

Ten Ways Cannabis Can Revive a Depressed Economy – Cannabis | Weed | Marijuana

Published

2 months ago

March 22, 2023

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An economic winter is coming, but don’t worry; we’ve compiled ten ways cannabis can revive a depressed economy.

When many people hear “cannabis,” they may think of it as a recreational activity or a medical necessity. And it is. But it’s more than that.

So while politicians will inevitably announce “stimulus” and bailouts, the real solution will come from entrepreneurs in a free market.

And since Canada has already legalized cannabis, that’s one hurdle out of the way. Next, cut all the regulations that prevent cannabis from reviving a depressed economy.

Difference Between Hemp and Cannabis

First, let’s briefly discuss the difference between hemp and cannabis.

Centuries of selective breeding have split the cannabis sativa genus into two identifiable crops: consumable cannabis and industrial hemp.

Hemp may be the most sustainable crop on the planet. It is one of the fastest-growing, requires little water, and no pesticides.

It also returns nutrients to the topsoil. Topsoil erosion is a huge problem that, if not dealt with, will result in the starvation of billions before the end of the century.

Ten Ways Cannabis Can Revive a Depressed Economy

#10 – Hemp Biofuels

We’ve covered this topic before. Naysayers “debunk” this idea based on current hemp strains. But this would be like calculating Canada’s current grain production using wheat stains from the 19th century. You’d conclude that we don’t have enough land to feed ourselves, let alone export.

Likewise, current hemp strains aren’t ideal for biodiesels, but that doesn’t make the idea unworkable. Hemp can create biofuels that power cars and other goods. Transitioning to hemp reduces dependence on Saudi oil and restores Canada’s energy security.

And, of course, creating biofuels creates jobs.

#9 – Industrial Hemp

Speaking of hemp, we can use it to produce various industrial products. In fact, hemp was once the preferred choice for several consumer products. Consider the jobs created in manufacturing and construction by making hemp paper, textiles and building materials.

Entrepreneurs can produce hempcrete, a sustainable building material made from hemp, lime, and water. It is durable, fire-resistant, and energy-efficient. We can use hempcrete in construction projects, creating job opportunities in the construction industry.

#8 – Clothing Industry

Ten Ways Cannabis Can Revive a Depressed Economy

Right now, a lot of our clothes are cotton-based. Cotton requires pesticides that build up in the soil and contaminate drinking water. Plus, Canada can’t grow cotton. We rely on the United States.

A hemp-based clothing industry not only creates manufacturing jobs but also supports retail.

#7 – Hemp Plastics

Entrepreneurs can use hemp to create biodegradable plastics. A cannabis-hemp plastics industry creates jobs and helps revive a depressed economy, and it’s environmentally sustainable.

#6 – Food

Cannabis not only helps revive a depressed economy, but it can also relieve food shortages. From protein bars to milk, the growth of the hemp food industry creates jobs in farming and manufacturing, processing plants, and retail.

Ten Ways Cannabis Can Revive a Depressed Economy

#5 – Cannabis Tourism

Tourism is one of the first sectors to notice when people are strapped for cash. However, people don’t stop wanting time off from work. And in a depressed global economy, cannabis tourism may be one of the more affordable options.

That’s why Canada is shooting itself in the foot with these “public health” approaches to legalization. We’ve entirely rejected the idea of cannabis tourism. There are little-to-no consumption lounges, cannabis-centric hotels, or cannabis-infused restaurants.

Gutting the “public health” approach to cannabis legalization and liberalizing the laws will help revive an already depressed cannabis tourist economy.

#4 – Beauty Products

Is CBD the Secret Ingredient in Beauty Products

What sector survives, even thrives, during economic recessions? Beauty products. You can come up with all sorts of reasons why that may be, but the fact is, the Lipstick Index shows how many women consider beauty products just as essential as food and housing.

Entrepreneurs already incorporate hemp oil into beauty products like lotions and shampoos. Growing this industry creates jobs in manufacturing, retail, and marketing.

Ten Ways Cannabis Can Revive a Depressed Economy

#3 – Research and development

With cannabis reviving a depressed economy, you can make money in research and development. Cannabis and hemp research can lead to new discoveries and innovations in medicine, agriculture, and manufacturing.

Create a hemp strain that can survive Canada’s harsh conditions on the prairies, and you could make millions.

#2 – Banking

Cannabis banking remains elusive even in Canada, where it’s legal. The rationale is that Canadian banks are too exposed to the American market and don’t want to piss off D.C.

But considering that this global depression will result from fraudulent banking practices, perhaps the most critical way cannabis can revive a depressed economy is by taking over the money itself.

Cannabis as money? It’s not as far-fetched as it sounds. Money originated as a commodity people liked to have. People like owning gold, but it also works as an effective medium of exchange.

Likewise, people like consuming cannabis, but like cigarettes in prison, grams of cannabis have exchange values that make for effective money.

Cannabis hashcoin to revive a depressed economy? Stranger things have happened…

Ten Ways Cannabis Can Revive a Depressed Economy

#1 – Agriculture

Of course, the #1 way cannabis can revive a depressed economy is through agriculture. Canada is one of the largest agricultural producers and exporters in the world. We should use hemp as a rotational crop to improve soil health and prevent erosion.

As per the 2016 census, there are 193,492 farms in Canada. The average Canadian farm is about 800 acres. To revive a depressed economy, we ease the agricultural sector’s burden by reducing these farms’ taxes and regulations.

Even communist Cuba realizes when shit hits the fan, you need a free market in agriculture. Canadians can support their farmers and future farmers by reducing financial burdens and incentivizing hemp and cannabis production.

Ten Ways Cannabis Can Revive a Depressed Economy

These aren’t the only ways cannabis can revive a depressed economy. And obviously, none of these proposals will work if the Canadian government continues to excessively tax income, capital gains, sales, hotels, employment, carbon, airports, natural resources, businesses, tolls, car tires, guns, fuels, schools, cannabis, alcohol, payroll, customs, and imports.

Once upon a time, Canadians knew they couldn’t compete with the U.S. economy. So our politicians focused on ensuring our business environment was friendly. That our taxes were lower.

As the 1940 Royal Commission reported, “British North American governments did not concern themselves with the daily regulation of the daily pursuits of the people… They took seriously their responsibilities for defence and maintaining internal order but they carried them out with frugal care.”

We’ve clearly lost this Canadian tradition. For cannabis to revive a depressed economy, we’ll have to revive this idea too.

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banking

Analysts Try To Stay Hopeful On SAFE Act

Published

6 months ago

December 10, 2022

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This article originally appeared on Green Market Report and has been reposted with permission.

The cannabis banking bill, the SAFE Act, did not make it into the defense bill despite efforts by Sen. Chuck Schumer. Now attention is turning to possible inclusion in the appropriations bill, but even that might not happen.

More disappointing for the cannabis industry: comments by minority leader Sen. Mitch Mcconnell tagging the banking legislation as a “pet priority.”

“House and Senate Democrats are still obstructing efforts to close out the NDAA by trying to jam in unrelated items with no relationship whatsoever to defense,” McConnell said on the floor on Tuesday. “We’re talking about a grab bag of miscellaneous pet priorities – making our financial system more sympathetic to illegal drugs or the phony, partisan permitting reform and name-only language that’s already failed to pass the Senate earlier this year.”

The industry had been told over several weeks that the legislation looked as if it would pass and that there was support for it. However, that may have just been strategic leaking in order to put pressure on the Republicans.

Stand-Alone Bill?

Cantor Fitzgerald analyst Pablo Zuanic believes the best chance for SAFE now is as a stand-alone bill. He wrote in a new report: “If the bill is to pass at all this lame duck session, it will have to be on a stand-alone basis … (but why didn’t Sen. Schumer pursue that path to start with? Not good optics? Not enough votes?).

Still, if Sen. McConnell indeed sees SAFE as ‘making the financial system more sympathetic to illegal drugs’ (did he just kill SAFE?), we wonder whether he will ‘whip’ Republican Senators not to vote for SAFE (if Sen. Schumer decides to put the bill up for a vote on its own). That said, if we want to be more positive, we could say maybe this is all about ‘horse trading,’ for the now (what gets included in SAFE, or excluded), and for the future (a new Farm Bill?).

Yes, maybe there is a veiled message there (‘Heck, they could have scheduled those matters for a vote this week,’ said Sen. McConnell). If you ask for the probability of the SAFE passage, we now say 49% only (vs. >70% before), but with the MSOS ETF at 12 now, that is not bad risk/reward, in our view.”

Zuanic went on to say that he is increasingly skeptical about other add-ons (to SAFE) being possible at this late stage, no matter how laudable. That includes:

Veteran equal access
SBA support
Safe harbor language for capital market access
Language around protection for minors
Specific research for the departments of Justice and Health and Human Services de-scheduling review process.

Unfortunately these add-ons are dealbreakers for some.

marijuana money — Photo by OlegMalyshev/Getty Images

Cautious Optimism

Alliance Global Partners wrote in a note that it remains optimistic for passage of SAFE in some form, but analysts acknowledge being cautious due to McConnell’s statements. “While stocks have since been under pressure, we would still note the omnibus bill as a vehicle to pass the SAFE Act, with the bill having bipartisan support & Politico reporting an agreement to include HOPE (social equity) and GRAM Act (gun ownership for cannabis users) as PLUS aspects of the measure.”

Cowen also thinks the omnibus bill could be an option, writing, “Our view remains that the best opportunity for SAFE is inclusion in the omnibus, which should be the final bill this Congress considers before adjourning.”

Cowen believes that the add-ons likely won’t get included. The group also thinks that with 10 Republican votes in favor, there could still be internal pressure on McConnell.

Looking Ahead

Zuanic concluded by saying, “Whether this is a 2023 or 2024 outcome is up to debate (probably more 2024). But we would assign little probability to the scenario that nothing else happens in the next Congress.”

This article originally appeared on Green Market Report and has been reposted with permission.

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Cannabis Banking Left out of NDAA – Cannabis | Weed | Marijuana

Published

6 months ago

December 7, 2022

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United States Congress has declined to include cannabis banking in the NDAA (National Defense Authorization Act).

The NDAA is an annual congressional bill guiding policies and funding of federal military agencies.

Often, the NDAA is used to undermine the principles the United States was founded on. For example, the NDAA grants the president the power to kidnap Americans and indefinitely hold them without trial.

The NDAA not only spits in the face of the Bill of Rights, it completely undermines the signing of the Magna Carta.

So what did the annual large-scale military state bill have to do with cannabis banking?

Cannabis Banking Left out of NDAA

The NDAA has been around since the 1960s. It should be a standard act for funding and directing defence agencies. But, as mentioned, it’s morphed into a monster undermining the Western legal tradition.

But there’s always a silver lining. Some lawmakers were eager to attach cannabis banking proposals to the NDAA, just as they tack on pet projects to legislation that’s assumed to pass.

Some U.S. politicians have been trying to get the cannabis SAFE Plus banking act passed. This would give legal cannabis businesses access to credit, better tax forms, and other financial tools and services severely lacking in the U.S. cannabis industry.

An earlier version of the NDAA included language that sounded like the SAFE Banking Act.

However, in a floor speech, Senate Minority Leader Mitch McConnell criticized using the NDAA to include cannabis banking. He claimed it would make the financial system “more sympathetic to illegal drugs.”

McConnell must be unaware that twenty years defending the poppy fields in Afghanistan made the financial system “more sympathetic to illegal drugs.”

Democrats haven’t been any better. Democratic Senators Cory Booker and Sherrod Brown have been less enthusiastic about cannabis banking in the NDAA.

So What Now?

Booker and Brown want federal cannabis programs that include job training, legal aid, and literacy programs for drug war victims. As well as loans for small cannabis businesses and cannabis businesses owned by people from marginalized communities.

“They just want to take care of the banks, and that’s all they want,” Brown said of the Republicans.

But in typical fashion, Brown is undermining the people he claims to help. Americans running cannabis businesses in the legal states don’t need Washington D.C. holding their hands.

They need access to credit. They need to be able to make deductions on operating expenses.

But apparently, “Republicans and the banks are just trying to steamroll” cannabis banking legislation into the NDAA without addressing criminal justice reform.

In other words, if I can’t get cannabis social reforms, then you don’t get cannabis banking reforms.

The worst of the D.C. mentality is on display, and it doesn’t matter the team’s color.

For example, Senator Inhofe (R) said he’d vote against the NDAA if it contained cannabis banking. At the same time, Republican Nancy Mace supported cannabis banking.

Senator Murray (D) called on colleagues (Booker and Brown) to put their differences aside and make sure “our legal cannabis businesses can access credit.”

While the cannabis SAFE Banking Act does enjoy bipartisan support, there was a consensus they should not enact it through the NDAA.

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