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Cannabis Industry Faces Sobering 2023

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There are reasons for hope, though. New and emerging adult-use markets in the Northeast region, as well as the Florida medical market, should show considerable growth next year.

Without much meaningful development concerning legalization efforts in 2022, many sobering themes likely will carry over into 2023.

Layoffs will persist, and continued price compression and competition from the illicit channels will drive brand share consolidation in mature markets. West Coast legacy operators will continue to be bogged down by legislative limbo, a lack of access to banking services, and an incredibly competitive gray market unbound by onerous tax regulations — which, in turn, will lead to more operators fleeing the troubled market.

Additionally, companies will shift toward tighter capital management and budgeting as cash becomes more expensive and harder to grab.

“Painfully, we will see more cannabis businesses fail,” said Poseidon Asset Management managing director Patrick Rea. “This culling will thin the competitive herd and hand more power to the established incumbents — increasingly MSOs — with their lower cost of capital and growing footprint of assets and operations.”

There are reasons for hope, though.

New and emerging adult-use markets in the Northeast region, as well as the Florida medical market, should show considerable growth next year.

That’s bolstered by increasing market access. Half of the U.S. population over the age of 21 now have access or live in a state that has adult-use legal, with more than half recorded as past six-month consumers, according to BDSA analyst Brendan Mitchel-Chesebro.

“Even though there’s still these problems with price compression, even though there’re still regulatory issues — people waiting for SAFE Act to pass, people waiting for 280E reform – there’s still a lot of reasons why we think that there’s going to be huge growth in a lot of these markets,” he said.

Likely Winners

Many in the industry remain bullish on Florida, especially as it gears up for a well-funded adult-use ballot initiative push for 2024. BDSA believes Florida will be the biggest contributor to sales growth nationally through 2026, with $2.7 billion in projected medical sales next year.

New York could also emerge as one of the biggest growth opportunities in 2023, though the state’s ability to get more adult-use retail stores up and running will be the greatest indicator of progress — as looming sticker shock awaits legal enterprises.

“In our opinion, that’s the thing that would effectively cut into the illicit market the most, and that’s why some markets that have been up and running for a few years are still having problems with (the gray market),” Mitchel-Chesebro said.

In the Midwest, Missouri shows promise for MSOs and big vertical out-of-state operators. Friendly state taxes, good product split backed by a maturing retail footprint, and a smooth compliance process could make the difference in the Show-Me State.

Additionally, cross-border traffic from Arkansas and Kansas, which have fallen short on their own legalization efforts, should beef up sales in the new market, which is expected to launch in February.

Cy Scott, CEO of cannabis data firm Headset, expects Missouri’s adult-use rollout to put additional pressure on the Illinois market to accelerate license grants, given the number of already-licensed medical dispensaries converting to adult-use locations.

If the rollout is successful, BDSA predicts around $270 million-$280 million in adult-use sales in 2023. Factoring in the maturing medical market, Missouri could very well reach $730 million in total legal sales.

More Normalization

The New Year also could see additional normalization from consumption lounges and bigger retail shifts to raise foot traffic and basket size, Mitchel-Chesebro said.

Dispensaries could begin to move away from the “deli layout” in favor of a more open retail floorplan similar to Apple stores. The BDSA analyst pointed to places like Planet 13, where employees are on the floor to assist shoppers, yet customers can move and browse around and check out display cases on their own.

“I think that that’s going to be a big shift when we’re talking about storefront retail,” Mitchel-Chesebro said. “I think that a lot of people recognize that it is more approachable, especially for newer consumers.”

Still, convenience is king in the industry, which should see a stronger push toward direct consumer sales utilizing delivery and curbside pickup services.

‘The Missing Component is Capital’

Morgan Paxhia, co-founder and managing partner of Poseidon Asset Management, said this year is poised to be “the most bifurcated trajectories we have seen in the legal cannabis industry.”

Paxhia predicts a year full of the most defaults, wind downs, and state-level bankruptcies the legal cannabis industry has ever seen — especially with the sobering lull in meaningful federal banking legislation.

“We see this cycle finally coming to a head as the tight capital markets have persisted for so long combined with onerous cannabis taxes, deflationary cannabis prices and inflationary costs,” he said. “This cycle was well on its way and COVID interrupted it, like many other industries. We think most of this stress is within smaller companies.”

marijuana money
Photo by OlegMalyshev/Getty Images

However, Paxhia also sees a healthy return of M&A for many areas of cannabis, too, such as operators, ancillary technologies, and hydroponics. “We see this driven by companies continuing to seek operating efficiencies, scale, and stronger competitive footprints.

“We see that inward, digestion period running its course and companies getting back on offense,” he said. “We also wouldn’t rule out activity, not likely M&A activity per se, with mainstream strategies, like alcohol, tobacco, CPG.”

A meaningful return of equity capital flows after a long protracted bear market is also possible, likely benefiting the largest companies first due to lower perceived risk.

“Big picture, we know more now than ever about how to run a successful legal cannabis company. There are more experienced operators than ever. There are more legal states than ever,” Rea noted.

“The missing component is capital.”

Source: https://thefreshtoast.com/cannabusiness/cannabis-industry-faces-sobering-2023/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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