Amazon may sell marijuana earlier than expected – The Fool Motley


The marijuana industry is evolving at a rapid pace. In 1995, barely 25% of respondents in Gallup's annual survey supported the legalization of marijuana, and not a single US state or country in the world gave cannabis a go-ahead.

Today, two-thirds of respondents in Gallup's annual survey are now in favor of pot legalization in the United States, with 33 US states having legalized the drug for medical purposes and 10 allowing consumption by adults. There are also two countries (Canada and Uruguay) in the world where OK is a recreational herb, with more than two dozen medically legal countries.

As the industry evolves, the companies that work there must do the same.

Black silhouette of the United States, partially filled with sacks of cannabis, rolled seals and scales.

Source of the image: Getty Images.

Traditional and non-traditional cannabis players evolve with the cannabis industry

For example, dried cannabis flower has often been considered the most popular product of the cannabis revolution. But it's also the easiest way to over-supply and trivialize the product – at least in the states of Colorado, Washington, and Oregon, which were among the first in the United States to give consent to consumption by adults. As a result, producers in the United States and Canada have modified their production lines to include higher margin (where legal) potted alternatives. These include cannabis oils, spray products, cannabis drinks, concentrates, sublingual sprays and even food.

In the United States, vertically integrated clinic operators also had to be creative in the slow and arduous process of obtaining crop and processing licenses and sales licenses. Rather than waiting for their applications to be examined and potentially losing market share, vertically integrated clinics have been busy acquiring counterparts who have already gone through the licensing process to save time.

Even non-traditional businesses adapt. DSW (NYSE: DSW), the designer shoe retailer, announced in January that it would buy nearly 55,000 topical units of cannabidiol (CBD) from Green growth brands (NASDAQOTH: GGBXF) in 96 of its stores in the United States. CBD is the non-psychoactive cannabinoid best known for its perceived medical benefits. DSW decided to get into CBD-rich topical creams, body balms and body lotions after 74% of Green Growth Brands Seventh Sense product line sold in 10 of its DSW test stores on a 10 weeks period. As noted, since it is high-margin alternative products, DSW can reap substantial profits while occupying a minimum space, while Green Growth Brands enjoys exposure at a time when market share is still very fluid.

The facade of a Whole Foods Market in Plymouth Meeting, Pennsylvania.

A full food market in Plymouth Meeting, Pennsylvania. Image Source: Whole Foods Market, an affiliate of Amazon.

Amazon could be a "first" marijuana player

Another company that is not currently a direct actor, or even an accessory, in the marijuana industry, but could soon find itself with a leading role (pun intended) (NASDAQ: AMZN). More specifically, Amazon's wholly-owned subsidiary, Whole Foods Market, could market marijuana-based products at the earliest.

On Thursday, February 28th, John Mackey, co-founder and CEO of Whole Foods, was led by Texas Tribune for a conversation that would touch a number of topics. Marijuana was one of the topics discussed by the public but mentioned by Mackey. When asked if Whole Foods would ever bring "alternative proteins," such as insects, Mackey took this opportunity to suggest that it was possible – just as possible as Whole Foods soon bringing cannabis .

Said Mackey, courtesy of The globe of Boston"If cannabis is ever adopted in Texas, it's likely that grocery stores will also sell it – you never know what's happening over time with the markets, they're changing and evolving."

according to Moment MarijuanaMackey has long been a supporter of the marijuana legalization movement. In 2013, Mackey expressed support for legalization in an interview with Mother Jones.

In addition to aligning with Mackey's political views, transporting marijuana to Whole Foods stores would make a lot of sense. Whole Foods traditionally targets a more affluent clientele, less resistant to the economic hiccup that occurs from time to time. Carrying high quality cannabis and alternative niche products, which demonstrates Whole Foods' focus on organic and natural products, would simply be an extension of what it's already doing.

For Amazon, it would be a step further to keep consumers in its retail sphere. At first, buying Whole Foods was a headache for Wall Street and investors. However, almost two years after the announcement of the purchase, logistics makes sense. Whole Foods gives Amazon access to more than 400 distribution nodes across the country and, more importantly, is another way to keep consumers in their world, just as grocers build gas stations or suppliers of content combine TV, Internet and telephone packages.

An Amazon fulfillment employee prepares packages for shipping.

Source of the image: Amazon.

Amazon would still have a lot of hurdles to overcome before becoming a true pillar of cannabis

Even though John Mackey is in favor of Whole Foods selling marijuana in the future and the CEO of the Eaze cannabis distribution company, Jim Patterson, predicting that Amazon would eventually enter the cannabis market , the king of e-commerce will meet many obstacles. would have to overcome.

The first problem, in case you have forgotten, is that marijuana is a Schedule I drug at the federal level, which means that it is completely illegal, prone to abuse and has no advantage. Although the federal government was willing to take a non-interventionist approach to state-level legalization, it has set aside the principle of drug transportation from one state to the other. This would create a logistical nightmare for Amazon, even with its extensive network of distribution centers.

Secondly, but on the basis of the previous point, traditional logistic companies do not want to know anything about the transport of illicit substances at the federal level. Even with Amazon taking on logistics giants like UPS and FedExgetting the product on their website online, or even on a shelf from the farm to the store, could prove difficult in some states.

And thirdly, there is the big problem of convenience. The charm of Amazon's eCommerce platform lies in the fact that you can manage your shopping needs in the comfort of your sofa or your bed. Although there are online cannabis distribution networks in the United States, the uncertainty associated with ensuring that the product remains out of reach of minors is uncertain.

Make no mistake, it would make perfect sense for the retail king to enter the marijuana space, either through his Whole Foods stores or through his platform. form of electronic commerce. But the logistics of this move is not as simple as you think. It would almost certainly require a federal legalization of cannabis, or at least a radical reform of the CBD at the federal level, to fully obtain cannabis products in its physical stores and online.

Source link