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Shlomo Booklin with a cannabis seedling at Tilray, a medical marijuana grow-op in Nanaimo, August 14, 2014.John Lehmann/The Globe and Mail

Medical pot ball won't drop until top court decides

Re The pot stock problem (Dec. 20): Grant Robertson's "Marijuana Inc." series missed a critical component: the class-action lawsuit initiated by existing Medical Marijuana Alliance & Resources producers challenging the new Marijuana for Medical Purposes Regulations legislation effective April 1, 2014, which is not expected to be heard by the Supreme Court until February.

The business plans of the newly approved (and some publicly traded) commercial producers were predicated on existing buyers being forced into their arms. Until this case is heard, buyers can continue to buy from their existing sources (i.e. no revenue for the commercially scaled operations).

There is a lot of operational and survival risk until such time as the courts opine on the confusion created by Health Canada. Curious to see the landscape once the dust settles! I predict the court rescues Health Canada and a massive consolidation play commences.

Guy Jarvis, Toronto

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Dysfunctional inflation indicator leading to inaccuracy

Re Poloz caught between debt and an oil price (Dec. 16): What links the decline in oil prices to the big increase in household debt is the clear possibility that falling oil prices may lead to a hard landing for housing markets in cities in the Oil Patch, including Calgary, Saskatoon and St. John's. Calgary has already registered a 0.2-per-cent decline in house prices in November according to the Teranet-National Bank house price index. If there were a hard landing in several of these cities, including Calgary, it would have a serious impact on growth and employment at the national level.

At the same time, a big drop in housing prices in these cities would have an undersized impact on the CPI inflation rate, since this dysfunctional measure doesn't include current changes in housing prices in the inflation indicator, only changes in dwelling prices. In the post-recession period, when housing prices were increasing rapidly, there might have been another increase in the overnight rate after September, 2010, if a better inflation indicator had been targeted and some of the household debt that has accumulated wouldn't be there.

A consumer price series with a net-acquisitions approach to owner-occupied housing (OOH) would provide a sounder inflation indicator for a central bank such as the Bank of Canada. The European Central Bank plans to add such a series to its own monetary union index of consumer prices and to this end Eurostat has asked countries in the EEA (the EU plus Iceland and Norway) to provide quarterly indexes of OOH from 2010 Q1 forward. So far, only Finland and Britain have done so.

So, "sometimes it takes a lot of work to do nothing." But how much work is the Bank of Canada actually doing? It should be working to replace its dysfunctional inflation indicator, but it's not. Right now, it looks like the 2016 renewal of the inflation-control agreement will be as damp a squib as its 2011 predecessor.

Andrew Baldwin, Ottawa

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No brotherly love for OPEC members

Re OPEC eats its own with production decision (Dec. 20): I do not agree with your conclusion that Saudi Arabia's cannibalization of OPEC runs contrary to its aim of long-term price support for oil.

As a strategy, this isn't cannibalism, more like fratricide, motivated by competition rather than brotherly love. If less capital investment goes into Nigeria's and Venezuela's oil sectors, Saudi Arabia stands to benefit over the long term.

Levi Folk, president, Transmission Media, Toronto

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