Many often look at the alcohol industry as a way to get ideas about the trajectory that the nascent marijuana industry could take, and this comparison couldn’t be more necessary at this time when inflation is soaring, and different sectors are reeling. Let’s take a look at these two industries to see how exactly they are being impacted by inflation and how they are coping.
As you may be aware, alcohol is legal at the federal level and can be bought in a variety of places, including restaurants, bars and even convenience stores. This varied access somehow provides a cushion for customers to access the product while being pocket wise. For example, someone who could have taken several beers at a bar may decide to purchase a six-pack at a store and consume the beer at home.
The person will still drink as many beers as they usually do, but the unit cost may go down because they changed where they source the beer. This doesn’t mean it is all sunshine and smiles for the alcohol industry because prices are rising in different segments and manufacturers are reeling under the supply chain issues that have come at a time when inflation is surging.
In contrast, marijuana is still prohibited federally and can only be bought at licensed dispensaries or retail outlets in the states where the substance was legalized. You may think that this exposes marijuana consumers to the immediate effects of inflation, but the reality is that cannabis prices have been declining in several states as more players enter the industry and competition stiffens.
However, that doesn’t mean the industry isn’t feeling the pinch resulting from inflation. For now, companies are using different methods, including reducing product variety and laying off staff, to keep their operational costs from skyrocketing. Neither of these mechanisms is ultimately good for the consumer because fewer products mean that a time will come when those carrying what you want will increase the price, and you will have no alternative source for the same product. As for job cuts, you know what that means for the local economy.
As prices of inputs, such as fertilizers, keep rising, a time will come when marijuana growers have no choice but to adjust their prices in order to remain in business. When that happens, the most price-sensitive buyers may find themselves in a tight spot as prices increase across the board. This could have serious ramifications for patients who depend on medical marijuana to manage their health conditions.
At the moment, different industry players such as Cannabis Strategic Ventures Inc. (OTC: NUGS) are implementing their own coping mechanisms while shielding the customer, and it remains to be seen how far these can go before the customer is called upon to bear their share of the burden caused by the current inflationary environment.
NOTE TO INVESTORS: The latest news and updates relating to Cannabis Strategic Ventures Inc. (OTC: NUGS) are available in the company’s newsroom at http://cnw.fm/NUGS
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