Lack of Vertical Integration Will Kill the Basement Grower

[pRiMo303]

I was joking w you, Squiggs. The graphs were impressive. And your response answered my other q.. I was like, "I know this mofo didn't whip up these graphs JUST for this thread!" Lol

 

[pRiMo303]

Squiggly's graphs assume an open market and perfectly elastic pricing, supply and demand. The reality of our market is that it is defined by its prohibition, and not by free market forces.

This fact makes predicting the eventual price and timing more of a political guessing game than an economic exercise. We can certainly see and even track trends, but that will not tell us when/if/how the Feds decide to act- and thus our market that is beholden to it.

Which is why I didn't vote for 64. Figured feds would say we went too far and shut it all down.

 

[fadetoblack1]

Squiggly's graphs assume an open market and perfectly elastic pricing, supply and demand. The reality of our market is that it is defined by its prohibition, and not by free market forces.

This fact makes predicting the eventual price and timing more of a political guessing game than an economic exercise. We can certainly see and even track trends, but that will not tell us when/if/how the Feds decide to act- and thus our market that is beholden to it.

exactly. We should be discussing the progress of the feds becoming more and more willing to ease up the scheduling. We are getting ahead of ourselves with talking about full out legalization economic models.

whats the time line on marijuana becoming federally legal? More states would have to legalize, which could happen in 2016. Then you are looking at more pressure on the feds..that will go on for a few years. Conservative states will fight federal legalization tooth and nail, that will hold it up a few more years. Then maybe it will happen. So that puts us at 2020ish...give or take. This is all assuming we have a progressive in office like Obama who will even "consider" it.

 

[squiggly]

Squiggly's graphs assume an open market and perfectly elastic pricing, supply and demand. The reality of our market is that it is defined by its prohibition, and not by free market forces.

This fact makes predicting the eventual price and timing more of a political guessing game than an economic exercise. We can certainly see and even track trends, but that will not tell us when/if/how the Feds decide to act- and thus our market that is beholden to it.

This is true, but this is also the type of market you'd see if it were federally legal. The only way "big business" is going to get into this economic space if they see a path to that happening.

However, these trends CAN apply to colorado by itself (economies of scale work in any sufficiently large scale, and a statewide scale versus a basement is CERTAINLY big enough to apply the theory) depending on how the legislation goes.
Here's the thing. Business interest drives legislation in this country. Obviously we all hope that goes away, but for the time being that's how it works. It is my prediction (irrespective of economic theory) that eventually things will gravitate towards a situation that can be represented by these graphs.

This is the way of business in our country. Is it possible things go another way? Sure.

To my mind, though, it is extremely unlikely. This is not just the way trends ebb and flow, it is also the way profit is maximized--and the dollar is king in this country.

Of course this is waaaaaaay more likely to happen quick fast and in a hurry under an entirely free market--but any removal of caps on supply, legal or otherwise, are going to move the graph from this:

Which is A TOTALLY RIDICULOUS AND UNSUSTAINABLE MODEL IN AN ECONOMY WHERE CONSUMERS HAVE EVEN A VOICE THE SIZE OF A SEED. (Caps for emphasis, not anger :p )
To this:

The first graph is where we are now. It's a producers market and it will not last. It's really nice for now--but it absolutely cannot last forever guys. Just look at that graph. It's stupid. There are two words which can describe why you want it to stay that way forever: Blind Greed. It is a dream, you guys. Of course you want it to stay that way. It's fucking awesome for you--but wake the hell up dudes, it will not stay that way once everyone can wet their lips on this shit. When the legal barrier is removed shit will get ugly for a large amount of you who are profiting on this shit (though some I'm sure will maintain in a connoiseur space--absolutely)

Quality matters, yes--but as long as you can make infinitely more money as long as you produce a larger crop (hence the reason why almost ALL optimization efforts focus on pushing a strain to produce as much as possible in this industry) you are operating in fantasy land.

It is a government supplied fantasy land. Unless marijuana is never legal, which I strongly doubt--that graph is going to go bye bye big time. In fact one of the more reasonable conspiracy theories I've heard is that cartels buy off senators and such because they can make 100X the profit if the shit is illegal than they can if its legal.

I mean guys. It grows out of the dirt like that. You don't have a patent on it, it doesn't require assembly, etc. This is precisely why big pharma hates this shit--because perfectly competetive markets and margin shaving is boring as shit and the profit margins are SUPER DUPER THIN. Big pharma prefers their greed sustainable.

It's like trading futures or something like that, it's almost nothing like running a real business. It's a numbers/graphs game more than anything.

The ONLY reason why it isn't like that already is because it's on a black market. If you take that away it will drop a bomb on this shit, I swear to you.

 

[squiggly]

Just want to add:

Often I try to play devil's advocate and I love logical debate, but I AM NOT trying to win a debate this time.

I see a lot of you dudes as brosephs and I want you to be prepared for the bottom to fall out here. Don't get caught holding the bag on this one.

I am not a prophet and who knows what will happen in the short term. In the long term, though, if we move towards legalization we will move towards commericialization. It is well beyond wishful thinking to believe otherwise. Just don't overinvest yourself is all I'm saying. Or, to quote my favorite "Shark" from "Shark Tank", Kevin O'Leary, you will get crushed like the cockroach you are to industry giants.

 

[fadetoblack1]

Just want to add:

Often I try to play devil's advocate and I love logical debate, but I AM NOT trying to win a debate this time.

I see a lot of you dudes as brosephs and I want you to be prepared for the bottom to fall out here. Don't get caught holding the bag on this one.

I am not a prophet and who knows what will happen in the short term. In the long term, though, if we move towards legalization we will move towards commericialization. It is well beyond wishful thinking to believe otherwise. Just don't overinvest yourself is all I'm saying. Or, to quote my favorite "Shark" from "Shark Tank", Kevin O'Leary, you will get crushed like the cockroach you are to industry giants.

sounds like the bottom already fell out. 2k for top shelf??

 

[ttystikk]

In the short term, say two to four years, this will be in flux and it's anyone's guess as to what happens and when.

In the longer term, Squiggly's analysis is gospel and what we do will go back to being a cute little hobby.

Now, while you have time and whatever money you can scrounge up, PREPARE. Go back to school, start or buy a business, get an internship or work for an industry certification. Whatever it is, it needs to have more of a future than growing in your basement.

 

[squiggly]

In the short term, say two to four years, this will be in flux and it's anyone's guess as to what happens and when.

In the longer term, Squiggly's analysis is gospel and what we do will go back to being a cute little hobby.

Now, while you have time and whatever money you can scrounge up, PREPARE. Go back to school, start or buy a business, get an internship or work for an industry certification. Whatever it is, it needs to have more of a future than growing in your basement.

This is exactly what I'm getting at. Except I wouldn't say my word is gospel, but rather that economics is pretty clear cut when it comes to shit that grows out the dirt.

 

[ttystikk]

He said 'clear cut' and didn't realize his pun... lol

 

[fadetoblack1]

In the short term, say two to four years, this will be in flux and it's anyone's guess as to what happens and when.

In the longer term, Squiggly's analysis is gospel and what we do will go back to being a cute little hobby.

Now, while you have time and whatever money you can scrounge up, PREPARE. Go back to school, start or buy a business, get an internship or work for an industry certification. Whatever it is, it needs to have more of a future than growing in your basement.

You think in 5 years no one in the US will be able to make a living putting out a few pounds a month in their basement?

the feds still haven't even said they agree with "medical" marijuana yet. You guys are just skipping that and going to full federal legalization.

quote from the feds from 2 months a go. "there is no currently accepted medical use for marijuana in the United States.”

 

[Natural]

You guys are talking future...blahhh!
It's already fubar'd...1,500 miles away from CO in a non-med state and we're seeing units for less than 2 and it's definitely competing with cared for organic headies....already.

 

[ttystikk]

You think in 5 years no one in the US will be able to make a living putting out a few pounds a month in their basement?

the feds still haven't even said they agree with "medical" marijuana yet. You guys are just skipping that and going to full federal legalization.

quote from the feds from 2 months a go. "there is no currently accepted medical use for marijuana in the United States.”

You guys are talking future...blahhh!
It's already fubar'd...1,500 miles away from CO in a non-med state and we're seeing units for less than 2 and it's definitely competing with cared for organic headies....already.

And there ya go... Let the games begin!

 

[fadetoblack1]

You guys are talking future...blahhh!
It's already fubar'd...1,500 miles away from CO in a non-med state and we're seeing units for less than 2 and it's definitely competing with cared for organic headies....already.

i live in a med state and people cant get enough of top shelf at 3k...

 

[outwest]

The assumption everyone is making when it comes to this is that large production facilities won't be able to figure out how to produce dank.

That's a goofy ass assumption if you ask me. If it's legal for them to do it, I'd argue that they have a better chance of doing this than any of us. They have millions of dollars to spend on R&D (and botanists) to figure it out.

Don't count big business out when it comes to producing connoisseur quality weed.

I totally agree with you about people being willing to pay big bucks for the good shit. I live in a "newspaper" state and know full well that while the average cost of an 8th out here is $60--for the really good shit you can get people to pay $75, and they'll do it happily for that increased quality. These are insane prices for what it costs to produce.

The problem is assuming that dudes in basements have some kind of monopoly on dank. You don't. If the profit margins are there to be abused (as you've just said they are) then big business will spend the capital to meet demand (IE, indoor greenhouses, research, and the like).

While I admit that for now you are better than them at growing pot--what you are, generally, not better at is running a profitable business and having shitloads of money to throw at roadblocks in your path (and knowing how to throw that money wisely for maximum effect--this is where they will really fuck your ass in the long run, the economic sense will win out if its applied properly. And it will be).

If Phillip Morris gets into weed and realizes they need to grow dank (they will) motherfuckers have problems.

Coors and Budweiser have not been able to produce connoisseur grade beer, and their efforts have been laughed at by beer lovers. It's not their niche. I don't see Phillip Morris cultivating connisseur grade herb either.

outwest

 

[squiggly]

Coors and Budweiser have not been able to produce connoisseur grade beer, and their efforts have been laughed at by beer lovers. It's not their niche. I don't see Phillip Morris cultivating connisseur grade herb either.

outwest

Connoiseur beer companies feed on the ashes that these companies left in their wake post prohibition.

"Basement brewers" got thoroughly shellacked initially when prohibition was lifted. This was, in effect, the whole point of making the stuff legal. If federal action comes on this shit it will have the same goal. Tax and regulate.

Live in a dream if you like, but where there's money to be made the little guy is going to get fucked.

Please understand that while connoisseur beer companies abound today--it STILL takes significant investment to make them profitable. There are VERY VERY VERY few exceptions to this the world over. These are still very much businesses, and they are typically not run out of basements.

AT BEST one out of every 10 basement growers doing it for profit will survive legalization in the long term--and that's being hugely optimistic. Wait until the regulators come in, then you'll REALLY have fun. Heed the advice or don't, it's not changing.

 

[Natural]

i live in a med state and people cant get enough of top shelf at 3k...

that's actually nice to know..I still get 4 but I have to haggle a bit..the organic headies are always in demand...my point is that the mersh ain't beasters anymore it's become much higher quality and there is plenty of it. I don't think I'll be able to hold down the 4 mark for very long.

 

[fadetoblack1]

Connoiseur beer companies feed on the ashes that these companies left in their wake post prohibition.

"Basement brewers" got thoroughly shellacked initially when prohibition was lifted. This was, in effect, the whole point of making the stuff legal. If federal action comes on this shit it will have the same goal. Tax and regulate.

Live in a dream if you like, but where there's money to be made the little guy is going to get fucked.

Please understand that while connoisseur beer companies abound today--it STILL takes significant investment to make them profitable. There are VERY VERY VERY few exceptions to this the world over.

AT BEST one out of every 10 basement growers doing it for profit will survive legalization in the long term. Wait until the regulators come in, then you'll REALLY have fun. Heed the advice or don't, it's not changing.

You make great points and i love this thread. Economics is one of my favorite topics. But this is a unique situation. Prohibition was much different then what marijuana faces currently. No one ever went to jail for personal use in prohibitons history. It was a simple amendment that was changed. Marijuana is ilegal because of our agreement with the united nations, it is a very complicated issue. I honestly don't think politicans really have time for it now. Sure it will be legal one day. But i think it will take 10 years + for a president to even slightly back it.

Who knows though, will be interesting indeed.

 

[outwest]

This isn't about basement growers, it's about commercial entities producing weed. The AAA won't come from Phillip Morris, just like AAA beer doesn't come from Coors. Has nothing to do with prohibition.

outwest

 

[squiggly]

You make great points and i love this thread. Economics is one of my favorite topics. But this is a unique situation. Prohibition was much different then what marijuana faces currently. No one ever went to jail for personal use in prohibitons history. It was a simple amendment that was changed. Marijuana is ilegal because of our agreement with the united nations, it is a very complicated issue. I honestly don't think politicans really have time for it now. Sure it will be legal one day. But i think it will take 10 years + for a president to even slightly back it.

Who knows though, will be interesting indeed.

Economically speaking, it's precisely the same thing going on. In fact it's more likely to follow perfect competition because there is no bulk pre-process transporation or processing involved.

Politically it's different, not economically. Economically it's prohibition.

 

[squiggly]

This isn't about basement growers, it's about commercial entities producing weed. The AAA won't come from Phillip Morris, just like AAA beer doesn't come from Coors. Has nothing to do with prohibition.

outwest

That's a guess. Phillips and Coors went based on profit margins.

What do most Americans drink, please remind me?

That's right. Domestic swill that "conoisseurs" scoff at. If they wanted trappist style beer than you'd see Coors brewing it, but the truth is they don't give a shit.

In this case most Americans want dank, and that's what they'll get. Don't kid yourself into believing that only you in your special basement can grow dank. It's just not true.

You're assuming that market research doesn't exist, and you're wrong.