Imagine your cannabis manufacturing and marketing firm has invested more than $120 million and developed a medical

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Question:

Imagine your cannabis manufacturing and marketing firm has invested more than $120 million and developed a medical cannabis cream that is 100% CBD. (Zero THC and does not produce a high). Clinical trials have shown it is excellent at reducing aches and pains like arthritis, menstrual cramps etc. The world-wide demand is potentially astronomical. (i.e. you are sitting on a gold mine as you will not need to make another product for 5+ years if just 10% of the predicted demand is met by the use of your product). You have also learnt that your product is undetectable by drug dogs and could easily be shipped anywhere within the USA (across borders into states where cannabis is not legal) AND, also anywhere in the world where cannabis is not legal without any detection.

A. Ideally, once you start selling your cream, the price should be set very high to recoup the R&D costs and make as much profit as possible before competitors enter the market. However, the majority of your potential customers are poor to middle income people in who cannot afford expensive medicines. If you set the price high, only relatively 'rich' sufferers will get daily relief but the revenue you will receive will be significantly greater than if you take a mass marketing approach. Why shouldn't you just set the price for the top-end of the market?

B. Following from A. above: If you were to allow resellers to sell your product anywhere (into countries and states where cannabis is currently not legal) then you would pay off all R&D costs within 6 months or less. You would also be able to sell the product for a much lower price so anyone (poor, middle income etc) would be able to afford your product. Why wouldn't you globalize your distribution?

C. Pretend your cannabis manufacturing and marketing firm has invested more than $1 million into moulds and patenting of a gummy bear shaped THC lolly (candy) that gives the user a feeling of euphoria similar to consuming a couple of alcoholic drinks. Sales are going really well in California. However, it has recently come to your attention that a child of one of your employees mistakenly ate one of your trial gummies because they were confused with the teddy bear shaped lozenge. Why wouldn't you produce gummy bear shaped THC lolly?