This will likely lead to a competitive race of stronger and stronger potency. Market dynamics aren't neutral.

i think we've already approached an asymptote on thc in modern cannabis at like 30% max. people are instead moving towards ingesting concentrates (dabbing) pure/live extracts or rosins.

you say "likely lead to a competitive race" as though that hasn't already been going on for the last decade or more. it's happening now, and has been happening for a long time. it makes sense for everyone to produce a higher yielding plant. it's more efficient, less biomass waste, less physical footprint required, etc.

a lot of medical cannabis patients require very high doses of THC. if you are a caregiver who can only grow X crops per year, legally, you want them to produce as much as possible. this sort of regulation is just bonkers. let people live. let the experiment play out. stop regulating out of fear.

Kind of like how Everclear dominates the alcohol industry?

That analogy doesn't quite fit because as alcohol increases in purity it reaches a point where it starts to damage tissues it comes into contact with.

A better example would be 4loko when it introduced caffeine, which is contrary to the point you were trying to make.

The equivalent to your example would be gummies with added caffeine content to counteract the sleepy effects, which was the same reason 4loko did it. The Everclear example still stands.

There's increasing demand for less potent cannabis. Low THC CBD flower and high CBD percentage flower is kind of secondary but you're right that for the most part customer demand is for stronger flower.

No, it will lead to a saturation level (or S-curve).

There are biological limits to potency - probably about the level of where we are now, in fact.