***Official Las Vegas Legal Marijuana Thread***

[GrenadaRoger]

So California has excess supply and the supplier industry needs to shrink. So what? It happens in all industries when supply exceeds demand -- the industry is stagnant. There are ways for companies to survive in stagnant markets

Strategies for Success
Given these realities, are there any approaches that not only avoid the possibility of extinction but that also offer hope for a reasonable return on investment in stagnant industries? Our research uncovered three common characteristics of the strategies of businesses that have succeeded in stagnant industries: they identify, create, and exploit growth segments within their industries; they emphasize product quality and innovative product improvement; and they systematically and consistently improve the efficiency of their production and distribution systems.

Harvard Business Review, "How to Compete in Stagnant Industries"

https://hbr.org/1979/09/how-to-compe...ant-industries

notice that the surviving companies take actions that result in better product for the consuming public--so some economic Darwinism sounds worthwhile to me

the choice is benefiting the consuming public vs protecting economically a select class of citizens (growers)

i say bring on the shitstorm for a while to weed out the weak producers

It's not really given that it results in a better product for the public. One scenario that could very easily play out when there's say 3x supply that a single company buys 1/3 of the farms and starts selling their product at a loss or minimal profit till they are the only operator that's left. Monopoly results in a weaker and pricier product fairly often. Licenses might also present a barrier that would serve to protect that monopoly. Invisible hand works in mysterious ways.

there are some good points in your ideas, but...

i believe selling below cost on other than for product introduction is already against the law -- particularly if the goal is to take market share (antitrust laws)

certainly if the market were not regulated to ensure fragmentation and some competition it could result long term in a few big companies dominating the industry with market share sliced up in the classic 50%, 25%, 11% and the rest held by small fries with less than 5%...particularly if the industry has technology that supports a business strategy based on economies of scale

also, innovation is happening in the marijuana industry I believe--witness the various strains/hybrids developed over the last decade, plus the growth in consumables, oils etc...the public is being served with improved selection

like all businessmen, growers want to make money and using government to limit competition is one way: keeping out big companies is the first step, then comes keep out any other entrants, and last is setting production limits to ensure all produced is sold at a profit...from the growers perspective, it's certainly a lot safer to bind together as a coalition of growers to influence regulation than for growers to compete against one another

imho, so far the growers, distributors and retailers have been able to keep big tobacco, shippers and retailers out (that's not bad)...yet apocalypse stories of excess production in California invite market intervention by regulators to take the next steps (notice the source of information for that story)...I say give the market time to work