The Merriam Webster dictionary defines the term conflict of interest as:
a conflict between the private interests and the official responsibilities of a person in a position of trust
It goes on to include the legal definition of conflict of interest as follows:
1: a conflict between the private interests and the official or professional responsibilities of a person in a position of trust
We live in a society….no… a world where the phrase “conflict of interest” carries the connotation of an imaginary line that should never be crossed. Unfortunately, in business, industry, and government oversight that line seems to be increasingly crossed and the nascent Cannabis Industry has had an abundance of, and continues to have, less than a stellar track record in that regard.
It’s probably a wise move for anyone in the Cannabis Industry to take a long hard look at these definitions because I have never seen more so-called “professionals” violating these very tenants on a daily basis.
Don’t get me wrong, certainly the majority of the stakeholders in the industry, whether they be licensees, ancillary businesses or regulators are not intentionally violating the definition of conflict of interest, but in many cases the allure of generating enticing returns as a part of the green rush is too much to pass-up for those lacking a solid moral compass, a glutinous need to use their wealth to capture not only the market that their core competency provides them a fair chance of success, but also in any market where they decide to play (I certainly hesitate to include investors in this statement because by their nature they make a lot of competing bets to hedge their ultimate success).
Let’s consider first the whole idea of a legally, regulated industry, let’s say, ideally, a public-private partnership that ultimately serves the interests of the consumer of the products that the industry brings to market. And, make no mistake, it is that consumer demand that is fueling the industry’s rapid growth.
It is in the grower or manufacturer’s interest to bring the highest quality product, that delivers on the product/brand’s promise to consumers at a price that represents the value that the consumer is willing to pay…but at a profit margin that meets their or their investor’s requirements or personal needs. Simple supply and demand… right… with a mix of establishing and building brand preference thrown in to assure success. And the retailer is ultimately deciding the mix of products that they will sell to consumers whether it serves their suppliers interests or in many cases their patrons at times.
Now add a regulatory system that is designed to assure that the products being delivered are safely grown, processed and packaged to protect all that are exposed to the industry’s goods. And let’s make sure that the products are distributed to end users (keep in mind that the end-user may be a processing licensee first before their refined product makes its way through the channel to retail and then consumers) and impose licensing fees, lab testing requirements, packaging and advertising/marketing/promotion regulations, and, let’s not forget the taxes that need to be collected to regulate the industry to meet the promise that our government has to serve and protect its citizens. Also, did I mention compliance requirements to assure that licensees are meeting the mandated requirements to help the regulators measure the effectiveness of their rules in serving the public’s interest including making sure product isn’t being diverted to the back market which is clearly the licensee’s biggest competitor (as well as the caregiver or home-grown market where allowed) for revenues bar none.
Then, let’s throw in the interests of ancillary businesses, like hard goods manufacturers of lighting, HVAC, shelving, water filtration systems, grow mediums, nutrients, green houses, builders, contractors extraction and lab equipment, real estate but also the soft service suppliers like consultants, lawyers, associations, media and event producers, realtors etc. Without these stakeholders, there is no industry.
Now mix them all together and after 7 (plus or minus) short years of legalization, take a step back and think about all of the potential conflicts that all of the stakeholders in the industry face on a daily basis. Add human nature and the “Seven Deadly Sins” (according to Christian tradition the “Seven Deadly Sins” are: envy, gluttony, greed or avarice, lust, pride, sloth, and wrath.) and you have a toxic mixture that is and has been ripe for abuse in the Cannabis Industry since day one.
Regulators need tax dollars to pay for the overhead of attracting talent with the skill sets to protect the publics interest. More times than not we see rules and regs being drawn and influenced by advocates and activists, licensees and ancillary businesses and their investor stakeholders because there just isn’t enough talent and experience to go around at the overhead prices required to effectively oversee the industry.
The legal and consulting professions have been guilty of violating the tenants of conflict of interest since day one, how often have we seen legal or consulting firms representing clients for licenses while pursuing their own piece of the pie in the same market?
The association business is thriving in the Cannabis Industry, in large part due to the inherent conflict of interests that exist between members of the channel and the ancillary businesses that exist to provide goods and services that allow the industry to run. NORML, MPP, The Drug Policy Alliance and NCIA have pursued the honorable missions of ending the War on Drugs, cannabis legalization, fair and equal treatment for the industry etc. and the funds they raise are by and large going to pay for the dedicated individuals that day in and out give their best efforts for a worthy cause. Unfortunately, in far too many cases, their boards are composed of folks that have the resources to pay to play and to shape rules that they benefit directly from. Throw in the nuances associated with unlimited or limited license regulatory programs and there aren’t enough dollars from the core industry stakeholders, licensees, to support competitive lobbying efforts at the state level.
And everyone, including the media is exposed to conflicts of interest and the temptation posed by the “Seven Deadly Sins” if not the practical need to operate at a profit. These issues are clearly in play for those of us that publish, who make our living providing content to stakeholders supported by advertising and sponsor dollars. Pay for play editorial coverage is available at every turn covering the Cannabis Industry it seems (whether in the print, online, or event world) and the consumers of content need to be very aware of the bias that comes with the consumption of our words and advice.
Capitalism is obviously a system of inherent conflicts of interest; we as a society have decided that the freedoms and opportunities that this economic system provides is a better choice than the other options available. But I am not so sure that human nature and the temptations of the “Seven Deadly Sins” outweigh the advantages the system we operate under offers and new approaches should be considered to fulfill the promise and destiny of doing it “right”.
The Cannabis Industry has to and must do a better job of avoiding the many pitfalls it faces in dealing with conflicts of interest to thrive and prosper. The unique opportunity of forming an efficient and effective public/private partnership demands that each and every one of us do our part to balance the needs of the many over the temptations greed, gluttony, lust etc. After all, we are all operating under and serving the trust and interest’s of our consumers.