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Cannabis & Pharmaceuticals: Following The Money

Examine the fine line between Big Cannabis and the mainstream pharmaceutical world to get a better handle on how the situation is unfolding in America.

Preamble

What you’re about to read changed my life and it might change yours as well. In the beginning, I was only looking to spread word concerning a recent survey showing medical cannabis users are either completely getting rid of their conventional ‘meds’ or using less. Then, suddenly, I found myself uncovering one of the most important rots of centralization eating away at America's beating heart.


Rest assured though, it’s not all bad news.


Introduction

American income disparity levels as we venture into the 2020s are largely unmatched in history. We’d surpassed the pre-1930’s era Depression back in 2015-2017 [1], if not anytime after the 2008 ‘Crash’ [re: controlled demolition] depending on your perspective. Year by year you can go back and browse financial headlines proclaiming things like, "Nearly Half of Workers Earn Less than $30,000" while the middle class disappears (around the world actually) and the upper echelons of society get unprecedentedly richer - funding evermore radical globalist and corporate agendas. It would seem at this point no matter what aspect of life a magnifying glass is put to, the same relative degrees of economic and political power concentrations exist: medical, our food supply, education, the service industry, agriculture, transportation, energy, mass media and entertainment, etc.


While the cannabis community paints itself as a somewhat grassroots independent movement driven politically by ‘We The People’, since 2012 the mainstream industry has really become anything but.


Recently some big establishment news being pushed in wake of the 2018 Farm Bill passage, ending federal hemp farming prohibition, yet again proclaims a good percentage of cannabis users are turning away from pharmaceuticals.

“A new study by Daniel Kruger of the U-M Institute for Social Research found that 44 percent of medical cannabis users stopped taking a pharmaceutical drug, or used less of one, or both, in favor of cannabis.” [2]

Social commentary around this news seems to indicate ‘Big Pharma’ is on the run and scared for its life; that the people are walking away and into the arms of recreational cannabis companies.


I have two serious issues with this sentiment:

  • This survey didn’t seem to include non-intoxicating hemp products, only ‘Medical’ cannabis. Growth in the Hemp CBD industry between 2014-2019 has been intense, with projections of billions within another couple years [Brightfield Group]. Strange this is rarely commented on. Hemp CBD is in my opinion, the prime market demand that forced the establishment to accept it and end hemp farming prohibition in America.

  • Are the pharmaceutical companies really suffering?

To answer the second question I began following the money and looked at the three biggest companies in the ‘Marijuana’ cannabis sector along with their largest institutional investors.


Why institutional investors? We'll get to that momentarily...I assure you lol.


3 Biggest ‘Marijuana’ Cannabis Companies (Early 2019)

Constellation Brands Inc.

  • BlackRock Inc.

  • The Vanguard Group, Inc.

  • State Street Corp.

  • JPMorgan Chase & Co.

  • Lone Pine Capital LLC.

Funny how everything in life ties together, because Constellation Brands is in the news recently as well (Jan 4th, 2019), as the Canadian cannabis giant enters the cannabis-hemp industry here in America by building a massive farming and production center in southern New York. None other than U.S. Senate Minority Leader and Democratic Senator from New York Chuck Schumer himself held a briefing to celebrate the announcement [3].


Yes, the same Mr. Schumer who along with House Minority Leader Nancy Pelosi, represent headline leadership of the so-called Democratic Party - both at the center of what would end up being one of the longest U.S. government shutdowns on record.


Yes, in some ways it’s awesome this big corporation plans on investing upwards of $100-$150 million into their own hemp farming operation and create a few hundreds jobs in New York, but in reality, it’s the very same ‘system’ that’s seized control of America’s economy.


Here, let’s keep digging.


Aurora Cannabis

  • Vanguard Total International Stock Index Fund.

  • Horizons Medical Marijuana Life Sciences ETF.

  • ETFMG Alternative Harvest ETF.

  • Vanguard Developed Markets Index Fund.

  • Manulife Dividend Income Plus Fund.

Where in all of this do you find average everyday Americans benefiting - retail investors? Sure, they’re taking less pharmaceuticals, but it would seem the same financial elite system controls both sides - medical marijuana & conventional pharmaceuticals. Speaking of which, this third one is responsible for cannabis-based pharmaceuticals Epidiolex and Sativex, which is partially being used by the FDA to classify Cannabidiol, or CBD (both from hemp and psychoactive cannabis), as a ‘drug’ or ‘medicine’ - ongoing development.


GW Pharmaceuticals Inc.

  • Capital Research Global.

  • Capital World Investors.

  • Scopia Capital Management LP.

  • Prudential PLC.

  • Citadel Advisors LLC.

Some other big institutional investors of note for GW Pharmaceuticals Inc. are Morgan Stanley, BlackRock Inc. Bank of America, Wells Fargo and Company, Deutsche Bank, et al. Starting to see a pattern? Now let’s compare this information to three of the biggest pharmaceutical companies in America with their corresponding major institutional shareholders.


3 Major American Pharmaceutical Companies

Merck & Co.

  • The Vanguard Group, Inc.

  • Blackrock Inc.

  • Bank of America.

  • JP Morgan.

  • Wells Fargo & Company.

Pfizer Inc.

  • The Vanguard Group, Inc.

  • Blackrock Fund Advisors.

  • JP Morgan.

GlaxoSmithKline

  • The Vanguard Group, Inc.

  • Capital Research and Management Company.

  • BlackRock Fund Advisors.

  • Fidelity Management & Research Co.

  • BlackRock Investment Management.

And this is where the story unravels. My trail started with cannabis and pharmaceutical companies, then naturally curiosity begged me to try other things to see if the same names kept coming up.


Facebook

  • The Vanguard Group, Inc.

  • BlackRock Inc.

Scotts Miracle-Gro

  • The Vanguard Group, Inc.

  • BlackRock Inc.

  • State Street Corp.

  • Wells Fargo.

Du Pont

  • The Vanguard Group, Inc.

  • BlackRock Inc.

  • Capital World Investors.

  • State Street Corp.

Monsanto

  • The Vanguard Group, Inc.

  • BlackRock Inc.

  • State Street Corp.

Apple

  • The Vanguard Group, Inc.

  • BlackRock Inc.

  • Berkshire Hathaway Inc.

  • State Street Corp.

Activison Blizzard (Gaming)

  • FMR LLC.

  • The Vanguard Group, Inc.

  • BlackRock Inc.

  • Capital World Investors.

  • State Street Corp.

Amazon

  • The Vanguard Group, Inc.

  • BlackRock Inc.

  • FFM LLC.

  • State Street Corp.

PVH Corporation (Clothing)

  • The Vanguard Group, Inc.

  • Fidelity Management & Research Co.

  • JP Morgan.

  • BlackRock Inc.

It doesn’t seem to end folks. Until giving up, there are really only two exceptions I found after Googling (Vanguard, BlackRock, StateStreet, JP Morgan, et al.) around on everything I could think of outside the very few who aren't yet gobbled up - private family companies like Cargill - who’ve kept the majority of all shares away from institutional investors and in the hands of their children and grandchildren, or foreign companies with their own sets of institutional investment giants consuming everything.


That last company mentioned above, PVH Corporation, is another perfect example. That one brand actually designs, produces and distributes clothing for a vast amount of brands most consumers mistakenly think are separate from each other on the bottom line. Some of their own and licensed names include: Tommy Hilfiger, Calvin Klein, Van Heusen, Izod, Arrow and Eagle, Geoffrey Beene, Kenneth Cole, Sean John, Michael Kors, Chaps, DKNY, Nautica, Claiborne, and on, and on. Investigate each one of those corporations, and you're also likely to see Vanguard, BlackRock, State Street Corp, banks, etc.


Is the upcoming American hemp clothing industry going to be consumed by them as well? Will this corporate system seize the majority of profits from American hemp flower, fiber, seed, hurd, the tens of thousands of consumer products, along with biofuel? Will they take control of hemp CBD the way they seem to be seizing recreational cannabis?


And what’s going on with these institutional investment funds, or Index Funds... here’s how things looked around the summer of 2017:

“Institutions own about 78% of the market value of the U.S. broad-market Russell 3000 index, and 80% of the large-cap S&P 500 index. In dollars, that is about $21.7 trillion and $18 trillion, respectively. By comparison, institutions hold about 58% of the companies in the S&P Euro index. Of the 10 largest U.S. companies, institutions own between 70% and 85.8%.” [4]

Whoa, these funds control as much money as the current U.S. Deficit of roughly $21 trillion?


Hmm...


Once you put three of them together, you’re talking about a GDP larger than 1st world nation-state economies. Let's see what that looks like.


The Big Three

Vanguard, BlackRock, and State Street. I’d never even heard of them before, had you? Apparently, well, here’s how one researcher put it in an article for The Conversation in April, 2017:

“In a recently published paper, our CORPNET research project comprehensively mapped the ownership of the Big Three. We found that the Big Three, taken together, have become the largest shareholder in 40% of all publicly listed firms in the United States.” [5]

They must be inching closer to 50% by now...sheesh, and it gets better:

“In the S&P 500 – the benchmark index of America’s largest corporations – the situation is even more extreme. Together, the Big Three are the largest single shareholder in almost 90% of S&P 500 firms...the index in which most people invest.”

All these shares translate into immense economic power over corporate America and voting rights along with them. In an early 2015 letter to 500 of their largest holdings (this includes basically everything in our lives), Vanguard CEO of the time F. William Mcnabb said,

“In the past, some have mistakenly assumed that our predominantly passive management style suggests a passive attitude with respect to corporate governance. Nothing could be further from the truth.” [6]

According to the authors of the piece for The Conversation, the Big Three coordinate this immense power through centralized corporate governance boards, and 90% of their votes revolve around corporate management (and/or against proposals from smaller-time shareholders). If you’ve ever wondered why the American world is almost entirely catering to corporate shareholders, now you know who’s increasingly at the center of it all.


These firms hold huge stakes in just about everything at this point, and at such levels, when they call a company’s CEO, they listen! Do you think the average retail investor has this kind of sway, or you and I? No. Look at the state of the economy and everything that’s happened in regards to banks between 2008-2019, then you'll see clearly who 'the government' really represents.


Consider these words from a June 2018 article:

“The largest owners of these banks are, almost uniformly, the same group of institutional investors. BlackRock is the largest owner of JPMorgan Chase, Citigroup and U.S. Bancorp, and the second largest owner of Bank of America, Wells Fargo, and PNC. Vanguard is the second largest owner of JPMorgan, Citigroup, and U.S. Bancorp, and the third largest owner of Bank of America, Wells Fargo, and PNC...the fraction of U.S. public firms held by institutional investors that simultaneously hold large blocks of other same-industry firms increased from less than 10% in 1980 to about 60% in 2010 and has continued to rise since.” [7]

How to Avoid This System

Honestly, I don’t know. Forget about anti-trust enforcement, reasonable regulations to protect common folks, or politicians doing anything anytime soon. However, when it comes to the emerging hemp-cannabis industries, and this includes CBD, textiles, clothing, energy, food, etc., it just takes a little awareness.

  • Before investing in a cannabis company, check to see if they cater to these large institutions. If you see the Big Three, or a long list of banks, it might be time for folks to consider investing elsewhere - local! For fellow Pacific North Westerners, here are 3 Hemp Brands to watch.

  • Before purchasing cannabis products, conduct the same light research and determine where your principles are.

  • Begin considering ways to get by in life without fleecing these people’s pockets. It would seem they've already gotten a good amount.

As an example, one of the core companies at the forefront of the American Hemp CBD industry has and continues to be Charlotte’s Web Holdings, Inc, out of Colorado. They finally went public, but a tiny percentage of the company is held by institutional investors, while the general public - mostly retail investors - own over 80% [8]. There could be plenty of others like them if allowed to prosper.


Look for employee-owned and managed cannabis companies.


The Corporate Hand that Creeps

While these very words are being written in mid-2019, the hemp CBD industry is under threat from synthetic cannabinoids flooding the market. [9] Meaning synthetically made cannabinoids which don't originate from the cannabis plant and are known to be dangerous to human health.


Come on, it's not rocket science, every single solitary aspect of human life has been or is being systematically degraded, eroded, and exploited for corporate gain. Does it really shock anyone to discover a good percentage of products claiming to provide 'full spectrum' cannabis extracts are lying, and using this corporate junk? What's worse, is like pharmaceuticals, most of these synthetic cannabinoids are being produced overseas.


As an example, and these findings echo others from research conducted since 2015, in the Nutra Ingredients USA article I just referenced, Flora Research Laboratories tested hemp CBD vape products - nine of the ten contained an 'undisclosed synthetic cannabinoid'.


Sigh...it gets to me sometimes, you know?


Wrapping Up

If the people so choose, we can avoid over-centralization of American Hemp. Why should we? Because anything the corporate system currently mass produces with inorganic petro-chemical plastics, synthetic fibers, or wood can be made more sustainably with hemp; we can supply the nation with nutritious hemp seed-based food stuffs; rejuvenate family farming communities across the nation; we can revolutionize and decentralize the energy sectors and provide a clean non-intoxicating herbal medicine; we can use hemp industries to take back economic and political power through the soil in peace!


It’s up to the people though, and where we place our support at the end of the day.


Thanks for listening.





References

1: “America’s 1% hasn’t controlled this much wealth since before the Great Depression" Market Watch, Kari Paul, 08/05/2018.

2: “Many users prefer medical marijuana over prescription drugs” University of Michigan News, 01/14/2019.

3: “Sen. Chuck Schumer Welcomes Major Cannabis Company To New York’s Hemp Industry” Marijuana Moment, Chris Roberts, 01/14/2019.

4: “80% of equity market cap held by institutions” Pensions & Investments, Charles McGrath, 04/25/2017.

5: “These three firms own corporate America” The Conversation, Jan Fichtner, Eelke Heemsherk, Javier Garcia-Bernando, 05/10/2017.

6: “Vanguard’s McNabb Says Firm Is Not Passive on Governance” Bloomberg, Charles Stein, 03/04/2015.

7: “Book Excerpt: Are Institutional Investors Too Powerful?” Barrons, Eric A. Posner, E. Glen Weyl, 06/15/2018.

8: “Do Insiders Own Shares In Charlotte’s Web Holdings, Inc.” Simply Wall Street, Dane Simmons, 01/12/2019.

9: "Flood of synthetic cannabinoids threatens to undermine CBD market, experts say" Hank Schultz, Nutru Ingredients USA, 04/15/2019.