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Will a looming recession sink the cannabis industry, or will it stay afloat?

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With the threat of a recession hanging over the U.S. economy, the nation’s cannabis industry appears to be on shakier financial ground than when the last downturn struck two years ago, at the start of the COVID-19 pandemic.

Marijuana companies weathered the 2020 coronavirus-induced recession relatively well, with sales booming thanks to federal stimulus checks and anxious consumers turning to cannabis for stress relief.

The industry emerged relatively unscathed by the recession.

This time around might be different.

Cannabis industry executives point to rising inflation – which tends to curb consumer purchases – as well as the lack of progress in Washington DC for federal marijuana reform.

Other factors are at play, too.

Newer state markets with limited licenses – think Florida, Illinois, Massachusetts, New Jersey and New York – commonly experience relatively higher wholesale cannabis prices and a less competitive landscape.

Industry officials said marijuana companies in those states are better positioned to weather a downturn than operators in more mature markets such as Colorado, Oregon and Washington state.

Cannabis businesses in those states face overproduction, falling wholesale prices and stiff competition.

As a result, a recession could play out differently depending on the state cannabis market.

“Every state is its own story, with a different regulatory structure,” said Kevin Bush, chief financial officer for Denver-based Sweet Leaf Madison Capital.

George Mancheril, CEO of Bespoke Financial, a Los Angeles commercial lender that works with cannabis companies, said marijuana stands out as one of the only industries where businesses are experiencing deflation.

Mancheril expects that most companies in mature markets won’t have a banner year but should be able to slog through and survive until the end of 2023 or 2024.

“That’s a baseline expectation,” he added.

Dim prospects for reform

Jordan Lams, chief executive officer at Moxie, a vertically integrated cannabis company based in Long Beach, California, said the lack of momentum for marijuana reform at the federal level is making it harder for companies to find capital.

Couple that with falling prices and increased costs stemming from inflation, and “it’s probably one of the more challenging seasons the industry has seen,” he said. “It’s a double whammy.”

Like cannabis companies, marijuana consumers are feeling the pinch of rising costs by way of gas and food prices, among other inflationary pressures.

In response, cannabis consumers could purchase more bargain-priced products and take fewer chances on their selections, according to Skip Motsenbocker, CEO of Pacific Stone, a cannabis cultivator based in Carpinteria, California.

“We do think consumers will be less likely to try new products and stay with brands they know, like and trust (and also) offer great value for their dollar,” he said.

Recession-proof?

Taking into account that the cannabis industry is still relatively young, it’s hard to know whether it is indeed recession-proof, Motsenbocker said.

“However, using the spirits and tobacco industry as an anecdotal guideline, historically these industries have experienced fairly steady demand during a recession.”

Jason Vegotsky, CEO of Petalfast, a sales and marketing agency for the cannabis industry based in Irvine, California, agreed.

“If you look at alcohol beverages, economic downturns typically do not hurt the industry,” he said.

“Instead, what we see is the consumer looking for value alternatives. I would expect the same trend in cannabis during an economic slowdown.”

Government officials and economists, meanwhile, offer a wide range of predictions about the possibility of a prolonged downturn in the U.S.

This week, New York Federal Reserve President John Williams said he expects the country to dodge a recession, but other economists believe the chances as much higher.

Economists at Nomura Holdings, for example, said on Monday that the U.S. economy will likely slide into a mild recession by the end of the year as the Federal Reserve raises interest rates to slow inflation.

Cannabis industry executives, for their part, are crossing their fingers.

Now versus 2020

The cannabis industry boomed during the brief COVID-19 recession and the pandemic lockdowns of 2020.

Then, consumers were flush with cash from government stimulus checks and had fewer options for spending their discretionary income, given that travel shut down and restaurants shuttered.

Ryan Smith, CEO and co-founder of New York-based cannabis wholesaling platform LeafLink, pointed to the resiliency of the marijuana industry during the pandemic.

“We saw this during the early days of the COVID-19 pandemic, when brands and retailers quickly adapted to new remote workflows, socially distanced retail models and changing government rules,” he said.

“The cannabis industry is well-positioned to succeed regardless of the headwinds it faces, economic or otherwise.”

But Gary Cohen, CEO of Cova Software, a cannabis POS and tracking software company based in Denver, said the situation is different this time round.

He pointed to rising inflation leading to less cash in consumers’ pockets – this at a time when shoppers have more options for where to spend their money.

Moxie’s Lams noted that “people are out doing a lot of different stuff now. People are going to have to make tough choices in how they allocate their finite funds.”

However, Lams said, cannabis keeps getting cheaper, much to the detriment of the businesses trying to make a profit selling it.

“You can cut costs and reduce staff to save money, but it hurts productivity. It’s a morale killer, and there’s a lot of morale killers out there,” he said.

Tips for companies to survive

The key to success in the cannabis industry is knowing that prices go down as markets mature, Cohen said.

“If you can’t be a good, efficient operator, then you’ll die,” he said.

“If you want to weather this out, you need to think about the reality of where this market is headed.”

Nirup Krishnamurthy, chief operating officer of Schwazze, a Denver-based marijuana company, agreed, saying cannabis companies must keep their costs under control.

“It’s important that you have a certain percent of your business vertically integrated,” he added, saying that can help absorb large price fluctuations in the market.

John Yang, CEO and founder of San Francisco-based cannabis tech firm Treez, said marijuana companies should be reviewing their profitability and margins via hard data and industry trends.

“People need to focus on operations and on what they’re doing,” he said.

Troy Datcher, CEO of The Parent Company, a vertically integrated cannabis company based in California, said operators need to reduce costs by 20% more than they think they need to.

“Be proactive in managing your costs, reach out to venders and negotiate lower rates, defer all nonessential projects and run your business as efficiently as possible,” he said.

Source: https://mjbizdaily.com/how-would-a-recession-impact-the-cannabis-industry/

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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