Rocky Mountain high: Pot a $200M industry in Colorado

[Ladywriter 7,783]

Vigorous regulation of a thriving medical-marijuana industry in Colorado offers the best glimpse of what is coming to Washington when it launches its voter-approved social-use market. With continuous surveillance, bar-coded plants and strict financial background checks, Colorado's rules allowed capitalism to be unleased, creating an instant $200 million industry.

 

 

Five-figure licensing and application fees — plus security and requirements that dispensaries grow most of their own product — added up to $500,000 or more. That was intentional, Romer said.

"If you raise the bar high enough, they won't risk their $500,000 or million-dollar investment to sell to youngsters," said Romer.

With a new law in place, a retired liquor regulator and one-time drug cop, Matt Cook, was brought in to broker a five-month negotiation that "had drug dealers on one side, law enforcement on the other, and my staff in the middle," he said.

Cook had one primary goal: no "diversion" of marijuana spilling from regulated grows onto street corners.

The result was a blizzard of rules: 24-7 video surveillance in grow farms and dispensaries accessible to enforcement officers via the Internet; bar codes on each plant; criminal background checks; and hard-copy manifests faxed to Cook's staff each time a pound of pot was moved.

"The process works," said Cook, who retired and is now a consultant to the medical-marijuana industry. "It sort of set the example for the rest of the nation. This commodity won't go away. And it can be regulated."

 

 

I hope my state is paying attention to this

[DeathscytheX 9,732]

I agree with everything except for the expensive licensing and application fees. Tough regulations and penalties is raising the bar enough that growers wont take risks. Not everyone can legitimately come up with the cash for these large fees, and it gives less incentive to go legal for those that cant post the money. This is why there is a moonshine industry, while there are a lot that do it to avoid the taxation, there are many that would go legal if they could afford to post that 5-6 figure application fee. The $500 a year licenses wouldn't be an issue if they had the necessary help to get off the ground and running.

 

This is why the feds need to go ahead and say YES. A loan program for could be formed that would easily be paid back within the taxes they will eventually levy on pot.

[Sledgstone 8,672]

The FED needs to make it legal. As it is all these dispensaries and growers can't even get a business bank account or get an initial loan for the huge start up costs because no bank will lend to them regardless of it being legal in the state:

 

http://www.npr.org/blogs/money/2012/11/16/165245222/its-legal-to-sell-marijuana-in-washington-but-try-telling-that-to-a-bank

 

 

Voters in Washington and Colorado just approved measures legalizing marijuana for recreational use. But businesses that want to sell marijuana in those states will face a problem: No bank wants to do business with them.

 

I called several banks in Washington. I called a local credit union, a tiny bank in the San Juan islands. Everybody said basically the same thing. Even if selling marijuana is legal under state law, it's still illegal under federal law. And banks and credit unions worry that this could get them in trouble.

 

So people who want to go into the marijuana business — who want to legally grow, distribute, sell marijuana in the state — are going to have to operate, basically, like drug dealers. They're going to have to run a cash business.

 

John Davis has been through the problem that future marijuana businesses are going to have. He sells medical marijuana in Seattle (medical marijuana has been legal Washington).

 

And he had a really hard time finding a bank willing to work with him, so for a while he did business in cash.

 

Payroll was a mess. It's impossible to order supplies — baggies, lights, display cases — without a credit card. PayPal works for some things, but not for others.

 

"How do you pay your taxes?" Davis says. "You can't go into the Department of Revenue and give them a wad of cash."

 

Davis learned a bunch of tricks for operating an all cash business, and even teaches a course called "canibusiness."

 

In the end, Davis found a work-around that may be he best option for other people who want to get into the industry: Be vague with the bank. Don't tell them exactly what line of work you're in.

 

Davis says he doesn't feel great about toying with the truth. But, he says, he has a legitimate business, and he needs a bank.

[Ladywriter 7,783]

I dislike the idea that growers also have to be the sellers. Corn farmers don't make Fritos yo. They should be separate so that there is a little competition amongst the new businesses.

I'd like to see the laws be family farm friendly. There are a lot of farms around here, mostly dairy. Most farmers grow their own corn and hay but when we have shitty summers like the last one it puts them in the position of buy feed or sell animals. They screamed about it all summer on the news covering the drought. I think farmer Brown should be able to have a Morton building full of supplemental income. I think the ones growing/raising our food and supplying our milk should be the ones to grow the pot.   

[DeathscytheX 9,732]

How different are the conditions to grow pot than say corn? I'm no expert, but if its more sustainable during a bad growing season for corn/wheat, it would definitely be a nice fallback for farmers that could lose a lot of money otherwise.

You make an excellent point. The ABC store doesn't make any liquor they sell it. They should be able to make contracts with parties willing to sell their product. That is a lot of work to put on one person, it gives them more security with cash up front from the seller to license their product and sell it for their own profit minus a kickback % that goes to the grower.

[Ladywriter 7,783]

not that I'd know how to grow pot without googeling it...

 

smoking/eating weed is best grown indoors hydroponically, controlled conditions produce better yields. At a point in the plants life cycle it needs different hrs of light a day, fertilizer is a must and the plants need it to be warm. Seed to produce doesn't take long, but cloning a mother pant expedites the process. Indoor crops are usually harvested in rotation several times a year.  Hemp for biofuel or textile use can be grown in fields just like corn. It could replace timber for paper, it could replace corn for bio fuel. There is $ to be made in this business and the industries that be can't hide that anymore. We see the bullshit behind its prohibition in the first place, and we're still paying for a fucking failed war on drugs putting people in prison for weed. We can haz the internet and we haz use it

[DeathscytheX 9,732]

There is another problem with forcing the growers to be the sellers. Monopoly... by making one person both, It eliminates a step... howbeit a small step in competition. Lets say there's a farmer Jim. He does extraordinarily well, his business grows into a successful industry. Meanwhile farmer Joe is failing, hes doing some decent business here and there, but lacks the management skills to sustain his company. Farmer Jim finds out about this, and offers to buyout farmer Joe's land, and all of his assets... BAM! He now owns the growing and selling of his competitor's product... a few mergers later and you have the 1970's AT&T of hemp. There were never price competitions to a separate selling entity to begin with, but now there is no competition at all and Big Hemp sets the price, distribution, and says screw quality!

But wait! Here comes the feds! Time to use tax payer money for a massive antitrust suit to break up the monopoly... and it all could have been avoided in the first place if they wouldn't have had a stick up their ass about weed.

[Sledgstone 8,672]

Big Hemp

 

LMFAO!

 

First there was Big Oil, and now Big Hemp.

 

Its true tho. Sellers and growers should be a seperate business. The only reason I could think to justify the sellers and growers being one entity is because of sellers importing their product from out of state or out of country. The large marijuana trade out of Mexico is huge and maybe these states are trying to prevent the imported marijuana from making sales in those states, because it would mean the export of US money for a imported substance. Maybe once they get the regulations in place for crop grown on US and in-state soil then they can ease off on the combined "grower = seller" marketplace they have in place now.

[DeathscytheX 9,732]

Big Weed and Big Pot sounded dumb next to Big Oil and Big Tobacco... BIG HEMP FTW!

Yes, getting the ball rolling will hurt the Mexican cartels, we could undercut them in price... At the same time we could allow their product in legally... and tax the shit out of it.

 

Kinda like Bombay Sapphire... good Gin, but since New Amsterdam is made in New York, its only $20 for a big bottle and its almost as good as the $60 of bombay... Tito's vodka is another great example... US made, awesome quality, way cheaper than imported vodka.

[DeathscytheX 9,732]

http://apnews.myway.com/article/20130204/DA482F300.html