The $131 Billion Legal Weed Collapse, Mapped

[Dr Strangelove]

Fundamental Miscalculation (0:30 - 1:37): Investors wrongly treated cannabis like a high-growth tech platform (like Apple or Starbucks) rather than a heavily regulated agricultural commodity, leading to over $131 billion in lost shareholder value.
The IRS 'Death Sentence' (3:44 - 5:33): Under Section 280E of the Internal Revenue Code—a law originally designed to target illegal drug cartels—legal dispensaries are unable to deduct standard business expenses. This results in massive tax burdens that make legal profitability nearly impossible.
The Rise of the Shadow Market (5:33 - 10:14): Due to high legal prices caused by taxes and regulations, consumers often turn to the illicit market. Unlicensed shops can sell the same products at significantly lower prices, effectively outcompeting legitimate, tax-paying businesses.
Micro-Survivors (10:14 - 13:31): Small, agile operators who prioritize personal customer relationships and low overhead costs are currently the only segment of the industry finding success, avoiding the massive debt and scale-based failures of corporate chains.
The Future of the Industry:

Big Pharma Takeover (13:31 - 17:14): Following the move of cannabis to Schedule 3 of the Controlled Substances Act, the industry is shifting toward a pharmaceutical model. This transition requires expensive FDA-approved facilities and compliance frameworks that effectively price out small, independent businesses, paving the way for large pharmaceutical and tobacco companies to consolidate the market.

[al_keda]

I too lost money on weed stock. Did not go the way I thought it would.

But as someone who enjoys weed, the thing that I noticed was I could never get the same thing twice. I'd go to a store, or through the government website and get a product, Then I'd try products, and if there was something I liked, I tried to get more. And there was never more.

The only exception I think was LBS "Sunset". That is Snoop Dogs' brand. He knows about marketing and brand loyalty. There was always something from LBS available. That was the whole problem with the industry. Never consistency. Good products, but they could never develop a following because they were never predictable. I once got some pre-rolls that were good too. 'Flash Bangs' and "Glow Stocks' and a couple similar products from one brand,but never found them again. Good stoff for the mood you were in, but no repeatability.

There was a blend of ground flower that I enjoyed because my whole face went numb. Never found it again.

You can't run an industry that can't develop a regular customer base.

They should have let people who had criminal convictions for producing cannabis take part in the industry. They knew these things.

[testerone]

the hippy era talk that the gpvt would tax it so bad no one would buy there didn't pan out. The market hype that resulted in two ot three weed shops in tiny towns with only one gas station did it.
Friends were whining about their $600 a month hydro bill, mine is only $65. Had to point out to them it was their f*cking grow lights in the shop running 24-7. They tried to justify it by claiming the govt put stuff in their pot to 'control' people, but soon as their friends (read customers) discovered it was easier (and cheaper and more selection} to hit the store beside the grocery they came to their senses too.

[al_keda]

It wasn't the taxing it that killed it.

It was excluding the guys who were growing it in a basement and producing more than a farmer in a huger greenhouse.

They excluded the best growers, businessmen, and marketers from the legal market. So the illegal market did better.