Pandemic has paralyzed business

…SO LET’S TALK ABOUT DOPE

Kerry Knudsen

I AM AWASH IN COVID, SO LET’S TAKE A BREAK. Let’s talk about dope. I was talking to a landscaper the other day. He said he never thought he’d see the day that it’s legal to smoke grass and illegal to cut it. But there it is: Covid. Folks are out of work. Money is short for employees, and shorter for employers. You can’t run your business, but you can get cash for your workers. Back when my landscaper friend was a kid, help for employees was a job.

But we were talking about dope.

I was looking back at an investment advisory firm’s recommendations Canada a year ago. Actually, it was June. The Motley Fool said, “the marijuana industry is expected to triple in the next five years…. Beyond consumption by Canadians, the upside thesis involves operations or distribution to other countries that have legalized or may legalize marijuana to various extents. This includes Germany and particularly the large market on Canada’s southern border.”

The Motley Fool went on to report, “Arcview Market Research and BDS Analytics project that Canadian marijuana sales will jump from around $600 million last year to $5.4 billion by 2022. That’s a compound annual growth rate of more than 55 percent.”

The April 15, 2020 edition of the Financial Post reports, “As of November 2019, according to calculations by cannabis analyst Chris Damas, there was (sic) at least 23 million square feet of cannabis greenhouses in Canada and more than three million square feet has since been shuttered.” There was a crash in cannabis, and people lost their shirts.

The cannabis crash happened well before the current economic crisis, but it’s worth noting that today’s situation did not happen in a void. There were ups and downs, with the losses in the cannabis sector being one example of a significant “down” that was not well publicized. Not as well as its rise, in any event.

The same edition of the Financial Post warns: “Bank of Canada unleashes billions to aid economy in what will likely be most severe recession ever.”

That’s harsh.

One thing we know from Economics 101 is that when governments print money in excess of the value it represents, the value increases to reflect the change, so a cookie that once cost a loonie now goes up to $1.35. Wages go up, but lag. I’m not endorsing or disputing the Bank of Canada. We will see. But I think the inflation thing is a fact. The problem is, we are entering uncharted territory.

In the past, unemployment was a major indicator of economic health. Today, it may or may not be. With so many employees on CERB, it will be hard to assess whether they are unemployed or employment-paused.

Small business owners are not panicked; they are despondent. Panic is when you do something, anything, as long as it is something. Despondent is when you watch the ax fall. They have been forced to close, forced to pay, forced to borrow, threatened with fines, patrolled, examined and served notice.

As we emerge, what will floorcovering businesses do? It seems as though we can ramp up to meet the old levels of demand, but where is the evidence those levels will exist? Who will remain after weeks or months of leisure?

One thing is of special interest. That is the question of what happens to people on fixed incomes following the shutdown?

Will they have more money as their pensions are pegged to inflation while the rest suffer from depressed production? The fact is, nothing adds up. People are being paid to not work, producers are interdicted from producing. Work has been deemed “not essential,” and laying all day in bed has been deemed critical. It’s like the ghost of Andy Warhol has become emperor.

That said, I personally am not really that concerned. Although we still all have to think about whether our current business models are still valid, we are a country of vast wealth and resources, and it might not be bad to cut and trim here and there.

If not, what the heck! There are some really hot deals on dope stock out there, and they may be back on the rise.

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