It reminded me of a couple of historical events which I think are revealing – in terms of impact of trade within a nation – and can give us a glimpse into what the Act could mean for the cannabis sector.

First, we’ll have to go back to 1864, where an Act of Congress was passed….originally called “H.R. 455”, it’s become known as ‘Act of June 8, 1864’.

A significant amount has been written on it and the conditions that inspired its’ creation and passing. You can probably find a crap ton of information on it, but caveat emptor yourself on sourcing. The act was intended to do something completely different than its’ result (not an uncommon story itself wrt regulation), but the underlying theme and the relationship to self-determination and fiat currencies do attract all sorts. Usually, with all kinds of opinions that are pretty ‘flat earth’ in nature.

Ok, disclaimers out of the way, here’s the short form:

Banking (and currency) in the United States until that day in 1864 was left up to banks, and the individual States.

A bank – say, Mollytime’s Bank of Rock Ridge in Nevada (MBRR) – would get opened by a prospective banker, who would lend out money for more than they paid for it, and now have a going concern on their hands.

They also printed their own money, as currency hadn’t yet been nationalized.

So when Farmer Cytochrome came to borrow money, MBRR would give him a stack of MBRR printed notes, and our good farmer would go and spend it. This was all good, provided you know the bank was good for it. Trouble was, counterfeiting started to become rampant.

The dastardly GoBlue could set up a printing press, have at ‘er, and wander over the border into California, spending his fake MBRR cash at SirE’s Savings and Loan in Sacramento.

Before SirE could figure out he got some bum notes, GoBlue was long gone, and had spent SirE’s paper.

Congress reacted to this dark situation by passing H.R. 455, which, banned inter-state banking. This locked bank currencies to remain inside the state with which deposits (and gold) was held. Thus, banks couldn’t transact business in neighbouring states.

Yet, they were still accumulating deposits.

Now, a banker with a vault full of cash but no loans out….is an unhappy banker. So, if someone with a dream (and some level of collateral presumeably) came in wanting to borrow money….well, let’s say MBRR had more motivation than ever to execute the loan.

The result? Economic booms went off around the country as areas with big existing deposits lent the crap out of their books. The Farmer Cyto’s of the world were able to open that hardware store they’d always dreamt of. Or that factory. Or whatever.

Areas like California, New York, among others – saw economic expansion like never before. And thus, America was on it’s way to becoming a superpower.

Canada’s story is a great contrast, because the British colony was set up under a ‘branch’ system. That is, banking decisions were made in a head office, not at the local privately owned bank. Desires for exposure to certain regions, needs for capital in other places, and even outright dislike of a particular area could influence decisions on lending. Indeed, if you were Farmer Cyto in Western Canada – and you wanted to open up that hardware store, it was virtually impossible. Because even if the branch he’d deal with – even if they wanted to lend – head office wouldn’t have the capital.

The Saint Lawrence seaway was undergoing a massive buildout, and Central Canada – with the population density and trade capacity to drive it – desperately needed ports.

Thus, the major banks in Canada were loaded with loans to the region. And needing more capital to lend more to make more, siphoned much of the capital out of other regions to fuel it.

Fast forward to 1990.

Natural gas in the United States was somewhat in the same state (snicker) as banking was 125 years previously. Intra-state sales and regulation of natural gas created supply bubbles and price differential (basis) that was a cluster-fuck of competing politics and game-players. Utilities were using rate-bases to get around PUCs attempts to minimize privateering, and things needed to change. And so, they did.

Natural gas deregulation in the United States was the sabre.

Intra-state competition changed to inter-state virtually overnight, and the next several years saw a change across the landscape. Natural gas prices fell, consumer and commercial users now had choice, and all in all – society benefited greatly. Tax receipts by the gov’t were more evenly distributed, and more predictable being less subject to state gerrymandering.

It’s also a reason why I’m critical of the fiefs in Canada that install trade barriers and lock themselves down in state monopolies. It’s about nothing more than cash.

But it’s also a ‘feature’ (or bug, depending on your perspective) of Confederation. Canada’s Supreme Court has held that confederation is a ‘living tree’ – that needs to permit the regions a relatively high degree of autonomy. Often at the expense of another. Great distinction between a federation and a republic.

So. TheCannalysts are legal cannabis in focus, so what do these two examples tell us?

1. Legal cannabis in the US is currently an islanded intra-state system.
2. It takes a serious catalyst to change/dislodge vested interests.

While I’d like to see the States Act move forward, American domestic policy is a foreign critter to myself. The only thing I’ve learned while following it is that it defies my expectations consistently. Which, is just as good as getting it right all the time.

My expectations around the States Act: I don’t see it happening.

Hopefully, I’ll stick to my track record, and they defy my expectations once again. And wouldn’t that be a nice thing to see in 2019.

If so – this industry will really launch.