Labor steps up in fight against global capitalists

Submitted by: R.E. Graswich

The battle to stop venture capitalists from dominating California’s cannabis industry may depend on an old scourge of industrialists — labor unions.

Global tycoons are pushing to demolish the state’s three-tiered model of independent distribution, which separates wholesalers from retailers and protects customers by creating an open, regulated marketplace.

Tycoons want vertical integration. That way, they control every aspect of commerce, from seed to manufacturing, distribution and retail sale.

Labor unions, led by Teamsters, are the biggest obstacle in the capitalists' way.

Teamsters were instrumental in the passage of three legislative bills that became the Medical Cannabis Regulation and Safety Act of 2015. Teamsters were at the table during negotiations and helped Gov. Jerry Brown’s office work out compromises that pulled the bills back from collapse.

The compromises brought four key interested parties — law enforcement, local governments, labor and cannabis producers — together, empowering them all.

As a result of their persistence in Sacramento, Teamsters are at the front of the line in the race to distribute cannabis. That’s not good news for global tycoons eager to move in and buy up control of California’s $7 billion cannabis market.

Tycoons struck back in 2016 by paying for Prop. 64, the voter-approved adult use initiative. Prop. 64 had minimal political support, and similar measures had failed in California. But venture capitalists pumped millions of dollars into the campaign and drove it across the finish line.

The industrialists said they weren’t interested in dominating the cannabis market, but only fools believed that.

And they exposed their intentions by cleverly cutting out legislative regulatory language that required independent distribution and three tiers of separation among growers, distributors and retailers.

Under Prop. 64, big operators can be licensed to grow, distribute and sell their retail product. They can control the market, start to finish. Under the medical regulations, tycoons can grow and retail, but they can’t distribute.

Today, state officials at the Bureau of Medical Cannabis Regulation are trying to align the 2015 medical legislation with Prop. 64. One big difference between the two is independent distribution. Venture capitalists say Prop. 64 language should prevail. Teamsters and their friends say not so fast.

Independent and craft growers don’t want the tycoons to win, figuring they will be steamrolled by corporate cannabis and its thirst for scalability. But they also worry about Teamsters controlling distribution.

The solution, boutique growers believe, is the formation of co-ops, which would let artisanal cultivators band together and sell directly to customers in farmers markets.

The alcohol model, which has operated efficiently in California since Prohibition ended, is cited by both sides as either a best practice or a disaster.

Politics aside, the three-tiered alcohol model has worked impressively in California. Independent distributors deliver a variety of products from manufacturers to retailers, ensuring taxes are paid and giving customers a wide spectrum of choice. Craft producers can sell straight to market at factories and warehouses.

With vertical integration, customer choice goes away. You buy what the tycoons serve. Or go without.