Opinion

Spender in the grass

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Pot, Inc.

Inside Medical Marijuana, America’s Most Outlaw Industry

by Greg Campbell

Sterling

To a nation of pot smokers, President Obama’s campaign slogan may as well have been “Yes, We Cannabis.”

One of Obama’s first-term policy shifts, on Oct. 19, 2009, was a memo to the Justice Department’s 93 US attorneys deterring prosecutors from using their resources to pursue marijuana users “in clear and unambiguous compliance with state laws providing for the medical use of marijuana.”

At the time, 13 states had medical-marijuana laws on the books (the number is now 18) — the movement having begun in California in 1996 with the Compassionate Use Act.

But state laws had not stopped the DEA from torching crops, seizing boats and automobiles or raiding pot dispensaries — until the Obama memo. Then it was Amsterdam in America. And the great economic cannabis boom — the “green rush” — began in earnest.

Freelance journalist Greg Campbell examines the macro and micro of the new “legal” cannabis economy. The macro examines state revenues through licensing, taxation and job creation; the micro being the author’s own “experimenting with pot” in his dropping about $800 on young plants, lights, fans and fertilizer to try and profit by building a grow room in his suburban basement.

The author uses Colorado as his test case, since he lives in the college town of Fort Collins. But also because Colorado’s medical-usage law differs in significant ways from California’s — the two states being at the leading edge of the marijuana-legalization push. In California, for example, getting a doctor’s approval is famously easy (“anxiety” ought to do it), but it’s only legal to buy your “meds” from a not-for-profit collective or co-op dispensary (of course, with nearly 200 dispensaries in LA alone, enforcement of “not-for-profit” intent is highly dubious).

Colorado, on the other hand, allows for-profit dispensaries, and thus the state reaps greater revenues from business licenses and taxation.

These “health clinics” have grown in number and sophistication — something like Baskin-Robbins for stoners. Behind a glass case are liter-sized mason jars of strains with names like Super Lemon Haze, Grand Daddy Purple, Jack the Ripper and Blue Dream. All weighed to order by the proprietor, who drops the cannabis by the gram into labeled medicine bottles with the expertise and enthusiasm of a sommelier.

Then there’s the issue of growers. In Colorado, for example, any medical-marijuana cardholder is legally entitled to grow six plants for personal use. Here’s the loophole: If a patient so chooses, those six plants can be designated to a “caregiver,” who can gather up six-plus-six-plus-six rights until they’ve got enough plants to fill a small warehouse.

Ironically to those pushing freedom-to-grow privileges, from an Econ 101 theory standpoint, there is a supply-side saturation point at which an unrestrained number of growers would eventually harvest enough pot to send prices in the open market into a nosedive far below profitability.

Last year, at the time of California’s failed Prop 19 vote for full legalization, some economists theorized that while the bill’s passage might mean a $1.5 billion windfall in sales-tax revenues for the Golden State, an oversupply could have lowered the price of pot from its current $300-$450 an ounce at dispensaries (or roughly $50 an eighth ounce, meaning about $10 a joint) to a flooded-market bottom-out price of $40 an ounce or a buck a joint.

Campbell himself fell victim to this glut. After three months of toiling away in his grow room, he was unable to find a dispensary that needed any more weed. He finally sold his buds to a buyer on Craigslist, for a $300 loss.

Nevertheless, Campbell is unabashedly in favor of decriminalization. He says the US could save $13.7 billion a year by not enforcing pot laws or incarcerating the offenders. Why not make money instead, by taxing and regulating “the biggest cash crop in the United States,” which at $35.8 billion per years is more than corn and wheat combined?

Still, Campbell acknowledges that a backlash is brewing. As dispensaries have gotten more brazen — picture big neon pot leaves in the windows and names like Dr. Reefer and Here We Grow — neighborhoods have cracked down. In LA, for example, the city council tightened already restrictive zoning rules (no operating near schools, parks, churches, and most constricting even near other dispensaries), a move that forced roughly 400, or about two-thirds, out of business. In Colorado, a 2010 law required that dispensary owners have spotless criminal records — not even a single decades-old possession rap — and forced them to throw open their ledgers for inspection by the state tax department.

And there’s always the chance that the next president will reverse Obama’s memo, meaning the DEA will go back to cracking down on marijuana, no matter what the state law.

In the meantime, it’s boom times on the wild frontier. In one year, Colorado earned $7.34 million from license-application fees, another $9.45 million from patients’ registration fees and nearly $2.5 million in sales tax.

It seems the grass really is greener.