Blog : Follow the Money: Marijuana/Ukraine

by Ed Zwirn on September 9th, 2014

Along with the pros and cons, there are always winners and losers associated with all vexing public policy issues. If you follow the money, the common wisdom goes, you will be able to discern the logic, if you want to call it that, of any policy the government uses to oppress people domestically and kill people internationally:

Two examples of this are acquiring increasing urgency:

1) Marijuana prohibition: Poll after poll has shown that the criminal treatment of weed is a nonstarter for the majority of Americans. And many states are starting to respond to the apparent will of the people. Colorado and Washington have already decided to legalize the stuff that dreams are made of, whether for medicinal or "recreational" purposes. Add to this the many jurisdictions that have made some form of medical use allowable, sometimes under tightly controlled circumstances.

At the same time, many readers of this investment blog and the Peter Leeds Penny Stock Newsletter of which it is a part are eagerly touting the prospects of stocks in companies that plan to capitalize on the legalization of this relatively harmless substance, As Peter has (correctly) pointed out more than once, most of these stocks are set to tank, either because they are poorly run or poorly capitalized companies or because they are not assured of survival even if the dreams of stoners come to fruition.

Also, as I've pointed out previously in this investment blog, the transformation of cannabis from a banned substance to a legal and taxed commodity would also bring a windfall to state and local budgets by increasing tax revenues and decreasing law enforcement costs.

This of course begs the question: Who is standing in the way of the end to prohibition?

If you guessed the vested interests of police and the prison complex and its employees you would be correct. The top opposition, not surprisingly, to the reform of MJ laws comes from this quarter. Police officers get to work overtime, or in many cases owe their jobs, thanks to the enforcement of these generally unpopular laws. The growing private prison sector also has an obvious interest in the status quo.

But the anti-legalization movement is being stymied by more insidious interests.

Chief among these is Big Pharma. I have a good friend who worked hard at hardhat jobs all his life, and has since been forced to retire on a disability with metal reinforcements to his spinal column. As a result, he is frequently in a great deal of pain and has been prescribed opioids. When we hang out together and consume MJ, he often "forgets" to take his pill.

This anecdotal lesson is apparently not lost on the drug companies. According to Howard Wooldridge, a retired police officer who now lobbies the government to relax marijuana prohibition laws, the manufacturers of such goodies as vicodin, oxycodone and other prescription drugs are second only to police unions in their lobbying efforts to stem the legalization tide. Wooldridge estimates that MJ has already cut into their action by about $2 billion annually.

These opioid drugs are not only arguably more detrimental to health than weed, but they are also the impetus for a growing "illegal" use of these legal drugs. News of the abuse of prescription drugs is hard to avoid, but apparently the pharmaceutical companies which make these medications are unaware of the abuse that is propelling their sales figures to huge proportions.

Of course, some of us consume MJ just because we like it. I thank God for the fact that (unlike my retired hardhat friend) my occupation has caused me no more serious work-related injury than carpal tunnel syndrome. I'll admit that I like breaking the law when it comes to cannabis, not the least because I can party all I want and not have to worry about the headache to follow. It is not for nothing that the California Beer & Beverage Distributors were among the biggest contributors to the (successful) campaign aimed at preventing reefer from being legalized and taxed in that state.

I didn't mean to leave out criminals, Mexican drug cartels and terrorists, and although it would be hard to prove that groups like these have contributed directly to Congressional campaigns, I wouldn't be too quick to rule it out.

2) Ukraine: In a conflict that has killed at least 4,000 people so far, it is hard to find winners. But they exist all the same. The understandable shift by the Ukrainians from Russian to Western companies with which to do business has so far produced two clear winners, both in the U.S. Westinghouse has already moved to supplant the Russians as providers of fuel for Chernobyl, Zaporizhia (Europe's largest nuke plant) and other Ukrainian nuclear plants. In addition, Holtec International (a privately held N.J. company) recently won the contract to build a new nuclear storage facility at Chernobyl. This is coming just as companies like these are meeting increasing resistance to nuclear power elsewhere.