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Marijuana and Walmart: too bad, so sad…

15 February 2020

If the investment prospects aren’t as rosy in Mexico as some might have hoped, the blame (or… maybe the credit) goes to the new administration’s policies favoring the poor and disadvantaged.

According to Reuters, “Walmart, Mexico’s biggest retailer, reported on Thursday its slowest revenue growth in three quarters, with its core supermarket chain hit by competition after the government altered a welfare spending programme.”

Walmart’s problem is their “Bodega” stores (with a slightly larger selection of goods than a convenience store, but limited selections) now have to compete with the mom-n-pop aborrotes, traditional markets, and even independent farmers selling off the backs of their trucks.  Entitlement payments formerly were doled out through various social service agencies, or were through something like EBT cards in the US, limiting the user to stores that could afford the higher costs of maintaining phone lines and computer equipment.

It seemed counterintuitive for the new government to budget more for social payments (and expand payments for groups like students and indigenous people), but by cutting out the “middle men” and eliminating overlapping programs, not to mention the frauds associated with programs that enrolled clients who never existed (especially for things like day care centers, that just padded their rolls with ghosts), there was more money to spend… and more spending money for consumers.  The benefit checks go directly to the recipient to spend however they want.  Food assistance is most likely to be spent on food… one assumes, though just putting money into circulation isn’t a bad thing.

At any rate, as far as Walmart is concerned, how dare the poor consumer have consumer choice!  How dare small Mexican government put money in the hands of Mexicans who are going to buy from Mexicans and invest what little they make in Mexico, rather than repatriate profits back to Walmart headquarters.  Will no one think of the Walton family?

And… Motley Fool, the investment website… writes that while marijuana legalization is a done deal (or will be by the end of April), despite Mexico’s large marijuana industry, its not likely to be the investment opportunity foreigners had hoped.  Again, blame those durn lefties.  Although the Supreme Court ruling that mandated creating a legal market was based on the rights of users, the government’s rationale for simply accepting the ruling was that the growers themselves… generally small subsistence farmers… need a cash crop — a legal cash crop that is — beyond corn and beans.

When it comes to export crops, small farmers have not been able to compete, and, despite what one may think after watching a show like “Narcos”, the major foreign suoplers are not running secret giant plantations (although there have been a few), but are buying from independent growers and sharecroppers,  Those growers and sharecroppers, no longer harassed by the government, still need to make a living.  If foreign companies come into the trade, the fear is they would turn to giant marijuana plantations, driving out small farmers and simply creating a rural proletariat, rather than peasants… that is, underpaid and exploited workers, rather than farmers with some control over their land and over crop sales.

The upshot being that the big ag corps (and big marijuana investors) are not going to get what they want… but then, the only difference between them and the cartels has always just been where they are located.

One Comment leave one →
  1. norm permalink
    16 February 2020 9:51 am

    though just putting money into circulation isn’t a bad thing.

    No truer words were ever written.

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