Many believe that the sparks were first cast as a result of prohibition in the 1920’s; an alternative had to be found for the bygone beauty of liquor. As a drug, however, marijuana attracted relatively minimal legal scrutiny for several decades, until the introduction of the Controlled Substances Act in 1970. Ever since the declaration of the ‘war on drugs’ by Nixon, marijuana has been deemed to be an illegal substance by almost every nation worldwide. Yet in recent years, legalization of cannabis has been considered and even enacted by certain states in the US and a few exceptional countries.
As seen in states like Washington and Colorado, a power shift occurs once marijuana is legalized. The cultivation of the plant becomes the government’s responsibility. Despite this, not all revenues in the business are collected by the government.
In his 2015 campaign, Canadian PM Justin Trudeau guaranteed to “legalize, regulate, and restrict access to marijuana” in Canada. In apprehension of the legal reconstruction, Canada’s most powerful pharmacy chain, Shopper’s Drug Mart, “formally applied to be a distributor of medical marijuana”.
Shopper’s claim that there is ethical merit in their intentions, what with the social benefit of unquestionably improved access and safety for Canadians resulting from pharmaceutical distribution. At the end of the day, however, this is a strategic business decision. Once Ottawa announces the legalization of recreational use, there will be a colossal amount of money involved in this market. If Shopper’s can establish themselves in the medical marijuana business before the flood gates are opened, they will be perfectly positioned to monopolize.
Rexall, another pharmacy chain, currently stands as Shopper’s biggest rival. Unlike Shopper’s, Rexall are far more hesitant to enter the market. It would seem that they are troubled by the uncertainty of what the legal environment will be one year from now. A PEST analysis must be conducted for an environment that doesn’t exist yet – such fickleness is a worry for Rexall.
Justin Ng discusses the change in “the next PEST analysis” for any producers of Cuban rum and cigars following Obama’s decision to declare a détente with Cuba. When a political situation changes, any decent business must respond accordingly and adjust to a new setting. To gamble, to predict what an environment will exist as in the future and to act prematurely? That is the nature of a truly outstanding business.
Monitoring the progression of Canadian legislation surrounding the use of marijuana is one tactic. It is a safe approach. However, for pharmacy chains across the country that wait until marijuana is entirely legalized and approved for recreational use, it might be just too late to dive in once Shopper’s has a place in the pool.
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References:
http://www.cbc.ca/news/business/shoppers-drug-mart-medical-marijuana-1.3820131
https://www.liberal.ca/realchange/marijuana/
https://blogs.ubc.ca/justinng/2016/10/15/happy-hour-special-rum-and-cigar/