A Glimpse into the Prohibition Parallels

To fully grasp the roots of today’s messy cannabis market, let’s first glance back at a
significant historical event:
Prohibition
in the United States (1920–1933). When the country ended its ban on alcohol, the transition to
legal status was anything but smooth. States wrangled with one another to set unique production rules
and taxation rates; newly legalized businesses struggled with supply chains and quality-control
measures; and numerous local jurisdictions placed their own constraints on alcohol distribution.

Despite the confusion, this era laid the groundwork for a regulated alcohol industry that endures today.

Similarly, cannabis has emerged from decades of stigma to become a major economic force
in states like California, Colorado, and Washington. Each state’s program is akin to those
fractious “wet vs. dry” counties of the 1930s. Today, we see the same patchwork nature reflected
in local cannabis ordinances, city-level taxes, and unique “track-and-trace” software solutions.
Although this patchwork can be an administrative headache, it’s a clear sign of
normalization.

Disruption as a Healthy Sign

Every industry that transitions from illegal (or barely regulated) status to mainstream acceptance
endures operational and cultural turmoil.
Historiography
teaches us to view such disruption as a necessary forging process.

If there is no upheaval, no conflict, then an industry likely has not truly broken from its underground origins.
– Dr. Helena Mills, Economic Historian

Over the past decade, states regulating cannabis have rapidly expanded
compliance frameworks.
Although complex to navigate, these frameworks have prompted the industry to adopt best practices
in product testing, labeling, and distribution oversight. Our historical method shows that
thoroughly regulated industries—like modern pharmaceuticals—begin with confusion but ultimately
create long-term stability for both businesses and consumers.

Federal Scheduling & Banking Challenges

At the heart of today’s growing pains is cannabis’s current classification as a Schedule I
substance under U.S. federal law. This outdated placement inhibits interstate commerce,
stifles formal research, and keeps traditional banks at bay. Businesses are forced to rely on
credit unions, small local banks, or cash-based transactions, leading to heightened security
risks and compliance burdens.

Historians compare this predicament to the post-Prohibition era, when alcohol distributors faced
inconsistent federal guidelines and limited financial support. Over time, national banking systems
adapted, building trusts, specialized lending branches, and eventually mainstream finance solutions.
Cannabis must undergo a similar realignment, where
the SAFE Banking Act
or broader descheduling can reshape the market’s financial ecosystem. As the legal barriers come down,
the turmoil of non-traditional banking will give way to seamless, legitimate financing tools.

Track-and-Trace: Vital Yet Burdensome

A prominent pain point for cannabis businesses is the requirement to meticulously track a plant
from seed to sale. Systems like METRC have become industry mainstays, tying each stage
of cannabis production to a unique identifier. Many cultivators find these protocols expensive
or complicated, particularly those with smaller boutique operations.

Yet from an historical standpoint, rigorous track-and-trace rules strengthen the industry’s consumer trust.

Consider the transformation of alcohol labeling from the 1930s onward, when producers had to
adopt bar codes, tax stamps, and formula approvals. Once viewed as a hassle, these measures
established consistency, deterred illegal bootlegging, and raised product quality. In cannabis,
a well-run tracking system does the same: it curbs diversion to the black market and helps regulators
recall problematic batches. This is precisely how chaotic industries mature and normalize.

Consolidations: Trend or Trouble?

Another hallmark of a rapidly growing industry is business consolidation. Critics warn
that large Multi-State Operators (MSOs) could squeeze out smaller, artisanal growers, leading to
reduced diversity and local ownership. Conversely, historical parallels—like the ascension of
major breweries after Prohibition—reveal that consolidation often coexists with niche brands.
Over time, mainstream corporations will refine distribution, marketing, and supply chains,
leaving room for boutique cultivators who offer specialty products and unique craft identities.

Consolidations can indeed intensify competition, but they also carry potential upsides for the
market as a whole: capital inflow, new technologies, workforce development,
and expanded product lines. From a historian’s angle, both large players and nimble
independent producers can thrive, provided regulation remains transparent and consumers maintain
a taste for variety and quality.

The Promise Beyond Chaos

Disruption in the cannabis industry can feel harshly negative. Strict regulations, shifting
compliance standards, heavy taxation, and the absence of cohesive federal policies might
suggest the market is on shaky ground. Yet historians frequently see the opposite:
these growing pains are signs of evolution. Just as the alcohol industry emerged
from the post-Prohibition haze more structured and profitable, cannabis looks poised to stabilize
once federal scheduling aligns with state regulations, financial institutions adapt, and track-and-trace
tech gains user-friendly sophistication.

We can learn from historical parallels that uneasy transitions form the bedrock of future maturity.
– Prof. Elaine Carter, Historian of U.S. Social Policy

In the meantime, smaller operators can strategize by refining cultivation practices, embracing
compliance as a trust-building asset, and highlighting unique value propositions. While unpredictable,
this phase also fosters creativity and resilience, spurring the industry to develop more
sustainable, transparent systems.