When Capitalism Meets Cannabis

[Maria_Vanessa]

This article was published four days ago.

ANYONE who thinks it would be easy to get rich selling marijuana in a state where it’s legal should spend an hour with Ravi Respeto, manager of the Farmacy, an upscale dispensary here that offers Strawberry Haze, Hawaiian Skunk and other strains of Cannabis sativa at up to $16 a gram.

She will harsh your mellow.

“No M.B.A. program could have prepared me for this experience,” she says, wearing a cream-colored smock made of hemp. “People have this misconception that you just jump into it and start making money hand over fist, and that is not the case.”

Since this place opened in January, it’s been one nerve-fraying problem after another. Pot growers, used to cash-only transactions, are shocked to be paid with checks and asked for receipts. And there are a lot of unhappy surprises, like one not long ago when the Farmacy learned that its line of pot-infused beverages could not be sold nearby in Denver. Officials there had decided that any marijuana-tinged consumables had to be produced in a kitchen in the city.

“You’d never see a law that says, ‘If you want to sell Nike shoes in San Francisco, the shoes have to be made in San Francisco,’ ” says Ms. Respeto, sitting in a tiny office on the second floor of the Farmacy. “But in this industry you get stuff like that all the time.”

One of the odder experiments in the recent history of American capitalism is unfolding here in the Rockies: the country’s first attempt at fully regulating, licensing and taxing a for-profit marijuana trade. In California, medical marijuana dispensary owners work in nonprofit collectives, but the cannabis pioneers of Colorado are free to pocket as much as they can — as long as they stay within the rules.

The catch is that there are a ton of rules, and more are coming in the next few months. The authorities here were initially caught off guard when dispensary mania began last year, after President Obama announced that federal law enforcement officials wouldn’t trouble users and suppliers as long as they complied with state law. In Colorado, where a constitutional amendment legalizing medical marijuana was passed in 2000, hundreds of dispensaries popped up and a startling number of residents turned out to be in “severe pain,” the most popular of eight conditions that can be treated legally with the once-demonized weed.

More than 80,000 people here now have medical marijuana certificates, which are essentially prescriptions, and for months new enrollees have signed up at a rate of roughly 1,000 a day.

As supply met demand, politicians decided that a body of regulations was overdue. The state’s Department of Revenue has spent months conceiving rules for this new industry, ending the reefer-madness phase here in favor of buzz-killing specifics about cultivation, distribution, storage and every other part of the business.

Whether and how this works will be carefully watched far beyond Colorado. The rules here could be a blueprint for the 13 states, as well as the District of Columbia, that have medical marijuana laws. That is particularly the case in Rhode Island, New Jersey, the District of Columbia and Maine, which are poised to roll out programs of their own.

Americans spend roughly $25 billion a year on marijuana, according to the Harvard economist Jeffrey Miron, which gives some idea of the popularity of this drug. Eventually, we might be talking about a sizable sum of tax revenue from its sales as medicine, not to mention private investment and employment. A spokesman for the National Organization for the Reform of Marijuana Laws says hedge fund investors and an assortment of financial service firms are starting to call around to sniff out opportunities.

“We’re past the days when people call here to ask if marijuana will give men breasts,” says Allen St. Pierre, the executive director of NORML. “Now, the calls are from angel investors, or REITs — people who are looking for ways to invest or offer their services.”

What happens when pot goes legit? How does the government establish rules that allow the industry to flourish, but not run rampant? And given that this is all about medicine, what about doctors, some of whom have turned medical marijuana consultations into a highly lucrative specialty?

These and dozens of other questions are now being answered in cities like Boulder, an affluent, whole-grain kind of college town where the number of dispensaries — anywhere from 50 to 100, depending on whom you ask — is larger than the number of Starbucks and liquor stores combined. During a recent visit, it was clear that for every marijuana seller and physician who thinks that the rules are too strict, murky or fluid, there are others who can hardly wipe the smile off their faces. <nyt_text><nyt_correction_bottom>
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http://www.nytimes.com/2010/06/27/business/27pot.html?src=busln

 

[Carl Carlson]

The title of the article is funny.

Capitalism? I think that's been going for a long time between seller and buyer.

It should say, "When Regulation Meets Cannabis."

But that doesn't make sense either.

 

[Honkytonk]

Should have been titled: When fluff piece author Dave S. meets Dispensaries...

For a serious look at the topic:

Economics and Marijuana (Cambridge)
Consumption, Pricing And Legalisation
by Kenneth W. Clements and Xueyan Zhao

 

[dagnabit]

it should say
"starting a business is hard and expensive"

 

[pearlemae]

It should say that as it (MJ) becomes more legal, the rules and laws are going to become over bearing, zoning sales taxes, you name it and some one will have a rule bor make one up. Not sure if its going to be a good thing at all. And big corporate fingers will worm into anything where there's a dime to be made, much less a product that has sales are in the billions already. Scary!

 

[dagnabit]

It should say that as it (MJ) becomes more legal, the rules and laws are going to become over bearing, zoning sales taxes, you name it and some one will have a rule bor make one up. Not sure if its going to be a good thing at all. And big corporate fingers will worm into anything where there's a dime to be made, much less a product that has sales are in the billions already. Scary!

you mean like any other business?

like i said starting a business is hard...but worth it if your part of the 20% that make it

 

[sob420]

it should say
"starting a business is hard and expensive"

Agreed. And it takes some effort and time to learn all of the laws and policies surrounding the industry in which you operate. This is not exclusive to the mj industry. This is how it goes as a business owner in nearly every industry imaginable. This is one of the first articles Ive seen on here that is not very good. Sry to author, I dont mean to offend, but there are far more legitimate concerns for this industry than just lazy, unprepared entrepreneurs. We all knew the time was coming when the govt would come in and regulate the hell out it. Now we need to educate ourselves and do our parts to shape these regulations so that they are fair, responsible, and reasonable. Thx for hearing my .02

 

[festivus]

Great read MV, thanks. It would probably blow my mind to see all the dispensaries in CO, spent lots of time there growing up. Back then, had to buy weed in Washington Park in Denver (lol).

 

[DIGITALHIPPY]

the farnacy isnt that good anyways, alot of 75$/8th stuff. no real compassion.

 

[GrinStick]

sowing the seeds of consternation among the consuming masses.

 

[turbolaser4528]

the farnacy isnt that good anyways, alot of 75$/8th stuff. no real compassion.

probably isn't even "top shelf" compared to our standards, greedy greedy !