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Why Legacy Cannabis Cultivators Want to Cap New Grow Licenses

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Is capping cannabis grow licenses the answer to over supply in some states?

capping new grow licenses

When places like Oregon, Colorado, Washington and the likes legalized cannabis, they were seen as pioneers. People flocked from all over the world to purchase and smoke “legal weed”. However, now after a decade, the market is saturated and the amount of cannabis being produced far outpaced the demand for the cannabis.

As a result, some legacy license holders are calling to regulators to “cap” the market to stop the prices from plummeting, making it difficult to keep businesses open.

Of course, not everyone agrees about this, but let’s take a closer look at this story and discuss what the optimal solutions might be.

What is actually going on?

Calls are increasing among marijuana growers to stop licensing new cultivation businesses in more established recreational cannabis markets including Colorado, Michigan and Oregon.

Marijuana growers in those states and others in the industry are appealing to their regulators and lawmakers to help cultivators struggling financially because of overproduction of flower and depressed prices on the wholesale market.
SOURCE: MJBIZDAILY

Basically, over the past ten years – these companies jumped through a bunch of hoops in order to be legally allowed to sell to customers. However, as more states legalized and more companies were granted licenses. They began to see an influx of production and at one point, the production outpaced consumption.

What happened as a result was a steady decline in the wholesale price of cannabis. However, due to high costs of operations, this is negatively impacting the bottomline of the companies.

Yet, calling for a “halt” on new licenses isn’t sitting well with everyone.

“We cultivate and certainly want to see the free market do its work,” said John McLeod, co-founder and head of markets at Cloud Cannabis Co., a vertically integrated cannabis company based in Tory, Michigan.

“We think that people putting out the best product will be able to be successful. But we also don’t want to see people fail.”
SOURCE: MJBIZDAILY

This is certainly a “Free market approach” and what the other license holders are activating is for the government to control the market. In Oregon, this happened first in 2019, but this was not due to over production but rather a backlog they had in licenses.

In November 2021, this “halt” on licenses was over, but now the coalition of producers are calling for a halt until 2024 on new licenses to deal with the production issue.

“This time around, the issue is more of what can the market bear?” Pettinger said. “We have considerably more producers now than we did back then.”

Oregon has 2,855 total marijuana licensees, with 1,407 producers and 826 retailers.

The problem with this is that even if you put a pause on the licensing, there is an over production issue mainly due to the federal illegality of cannabis. The overproduction issue is also present in places like California, that would be able to supply to the rest of the states if it wasn’t prohibited by Federal Law.

Why did the Wholesale Price Crash?

The main reason why the wholesale price crashed is because producers are outpacing demand. There is a finite amount of cannabis consumers in any given demographic. Due to the illegality of inter-state commerce, this means that when a state reaches the “consumer threshold” the weed they have goes into vaults.

Also, since there are limited people these producers can sell to, they are stuck with the crop, which just makes them lose money. Also, degradation takes place when cannabis is stored too long, and it loses its value.

The main reason why the prices are crashing is;

  1. Too much weed
  2. Too few places to sell it

While capping the market might deal slightly with the production element, it doesn’t solve the problem. What would certainly solve the problem is if these states could sell to other states and to businesses who might want access to this cannabis.

For example, if Pharmaceutical companies could purchase this cannabis en masse then you’d have additional revenue streams. Yet over regulation makes it difficult for these cannabis producers to unload their crops.

In fact, it’s not only an issue of over production, but over regulation that is causing these markets to crash. License holders have to pay exuberant taxes on their crops and licensing fees, which made sense in the beginning of legalization – but now, after 10-years, needs to be renegotiated.

California for example, over taxes their legal market. This in turn incentivizes illegal growers to compete with the legal market which then becomes more  appealing to the consumer since it’s far cheaper for virtually the same product.

The consumer prefers to buy the black market weed irrespective of it being tested by regulators. Why? Because the value of their money has declined steadily over the past two years.

Ask yourself, how much more could you buy with $100 two years ago than today? If you’re being honest, you’d see a drastic decline in purchasing power.

This means that when it comes to economic motivations, the consumer will rather risk mold over spending more money on something they will smoke away.

Therefore, if you were to reduce the tax burden on the companies, open up inter-state commerce, you’d essentially resolve the problem in a matter of a few months.

Why Capping Licenses is a bad idea!

When you cap licenses, you’ll cap innovation and try to game the market. Historically, this doesn’t fair well for innovation. It makes sense that legacy producers want this, they have invested a lot of money into the industry and for a while gained a decent return on investment.

But now, with newer companies coming into the market, with newer markets coming available – places like Colorado becomes less enticing to tourists. For example, people in Texas would rather travel to New Mexico than Colorado due to proximity.

The Colorado tourism industry has seen a decline in visits from out-of-state-stoners, mainly because they have more options now.

What does this mean for these places?

They’ll need to innovate and create a more appealing offer than the competitor states. The problem is that Colorado is a small state compared to many others, meaning that they can be “outgrown” easily.

However, licensing restrictions will only hurt entrepreneurs who want to break into the market and would foster this climate of “Prohibition 2.0” – where industry is trying to secure their position within the market.

In the US, the idea of free market competition is what makes it so grand. By trying to control the market, you’re only incentivizing the black market to compete – and after 55 years of prohibition you can bet on the fact that the Black Market will most certainly do just that.

Ideal solutions

The best steps forward would be to pressure the federal government to remove interstate commerce barriers, to reduce excessive taxation, and to create a two tier cannabis program as I discussed in this article.

If the government tries to over regulate the market, they will only incentivize organizations such as drug cartels to begin illegal grow operations and compete directly with the legal marketplace.

When things get difficult, innovation is the only way to move forward. If there’s an issue with oversupply, instead of trying to control the supply – figure out new ways on how you can unload it. If you can’t sell it to people, sell it to industries that want to infuse their products with cannabis, allow pharmaceutical companies to buy up as much as they want – innovate, don’t clamp down!

Personally, I find that these legacy companies calling for “license caps” are the ones you should not shop at. It means that they don’t really want to fight to be relevant, to be the best. They are okay with the mediocre way of doing business where they get to limit competition instead of being better than the rest.

Let the free market reign, this is what cannabis stands for…and even if you try to prohibit it…it will still continue to grow.  

Source: https://cannabis.net/blog/opinion/why-legacy-cannabis-cultivators-want-to-cap-new-grow-licenses

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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AI & Technology

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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