Profitable pot revolution
When actors Peter Fonda and Dennis Hopper hit the road on their choppers in the counterculture film Easy Rider, they cruised onto the big screen at the heart of the rise of recreational drug use, with marijuana at its epicentre.
That same year, 1969, more than 400,000 fans gathered at the iconic Woodstock Festival in August near Bethel, N.Y. It was a pivotal moment in popular music history. And it further asked the question: “What’s wrong with pot, man?” according to Rolling Stone Magazine.
How things have changed. What was once counterculture is now mainstream big business.
These are high times for entrepreneurs cashing in on the lucrative sale of legal marijuana, proving the grass indeed is greener on the other side of the fence.
The budding industry, taking root since pot laws have been loosened in Canada and the U.S., is predicting a legal harvest worth billions of dollars for growers and government coffers in terms of taxes. In the U.S., officials also anticipate the elimination of the criminal element now associated with marijuana sales, and a huge saving on court costs to prosecute those caught with the weed. Not to mention reducing significantly policing costs related to gang activities linked to the pot trade.
Some U.S. entrepreneurs have been imaginative in marketing legal cannabis, including using vending machines. And cannabis figures prominently in the ingredients of the new-age candy bar ingredients (to satisfy the munchies) and various medicinal products.
“This is a very large and now pretty lucrative market,” says Peter Johnson, of Colorado Green Tours, which gives consumers and investors tours of the Colorado pot business.
Lucrative indeed. The U.S. market for legal marijuana, currently valued at $US1.4 billion, is projected to grow to $2.3 billion this year and $10.2 billion over the next five years, according to a report by ArcView Market.
And in Canada, with its softening stand on the medical use of marijuana, a new industry is looking at mega-profits and the federal government is looking at a tax bonanza.
“It’s a huge market,” says Anton Mattadeen, chief strategy officer for Richmond, B.C.’s legal grow-op MediJean Distribution Inc. The company expects to produce almost 90,000 kg of medical marijuana in its first year, according to CBC. Health Canada predicts upwards of 400,000 patients could be using medical pot within a decade.
Legalizing recreational use in Canada, like our U.S. counterparts, would mean even a bigger windfall.
University of Western Ontario economist Mike Moffatt told CBC that following the U.S. trend makes good economic sense. Statistics Canada reports Canadians now pay $2 billion a year to enforce various drug laws. Moffatt predicts that would be “significantly reduced” with legalized recreational use.
Like it or not, marijuana is here to stay, and experts say the baby boomers are showing the biggest interest in legal pot. And they are the biggest cohort of voters.
“The demographics is considerably older than I had assumed it would be prior to doing research,” Green Tours’ Johnson said. “There are an awful lot of old hippies that are very happy to live to see this day.”
In 2008, Justin Hartfield of California founded Weedmaps, a virtual menu card for pot users looking for the best smoke. Hartfield, then a certified medical marijuana user, saw a business opportunity when he walked into his first dispensary in Los Angeles and found himself staring at a dozen jars filled with various strains of weed, according to an Internet report.
He now serves on the board of directors for the National Cannabis Industry Association, the Marijuana Policy Project and the National Organization for the Reform of Marijuana Laws. Last year, Weedmaps brought in several millions of dollars — all taxed.
Colorado politicians appear happy with the additional tax revenue, believing the new industry could rake in $600 million this year — meaning $67 million in tax revenue, of which the first $20 million has been earmarked for schools.
American Green’s Tranzbyte Corp. of Colorado recently introduced the “ZaZZZ machine,” the world’s first pot vending machine. While not yet in operation, the machines will offer pot-laced goodies, such as Blue Kudu Chocolate bars to satisfy the munchies. Strict government regulations will monitor the placements of the machines and who is allowed to use them.
And Bob Eschino, co-founder of Medically Correct in Denver, is selling 40,000 chocolate marijuana bars a month, and doesn’t have enough of the pot ingredients to meet the demand. “I’ve never seen anything like this and I’ve owned a business for the last 15 years,” said Eschino.
In Canada, some observers see a shift in accepting pot as a recreation drug.
PharmaCan Capital’s CEO Paul Rosen says attitudes towards marijuana are shifting in Canada and around the world — in the industry’s favour. Rosen’s company has invested in three medical marijuana outfits in B.C., Ontario and Quebec, and has raised more than $10 million in the last 12 months.
“There’s a lot of cultural momentum — globally and within Canada — leading to a general, more accepting liberal understanding of what marijuana really is,” Rosen told CBC.
Closer to home, the new medical marijuana rules aren’t being given the red-carpet treatment by various area municipalities in addressing building permit applications for a legal pot operation.
In an April 2 column, the Advocate’s Mary-Ann Barr appropriately points out that area officials “are already scrambling to consider whether they should allow these controversial legal grow-ops ... or whether they can prevent them from establishing once they have a Health Canada licence to produce.”
Among the concerns, Barr points out, is that residents feel medicinal pot producers will attract the criminal element.
But some of those concerned are missing the point. Existing illegal grow-ops — and there are plenty among us — are being run by the criminal element. Illegal grow-op busts by the RCMP in Central Alberta are common. Weapons seized from the premises are frightening.
These clandestine operations are not being taxed, there is no quality control of the product, there’s no screening for criminal records for those in charge, and there is no control on who is allowed to purchase the black-market product.
A controlled, legal growing situation would not attract the criminal element — no more than allowing a craft brewery to set up in a community.
Area municipalities must tune into modern times. If officials reject such building proposals when endorsed by Health Canada, those counties could be subject to a lengthy and expensive court battle that will ultimately rule against their decisions.
Elsewhere in Canada, municipalities that have fallen on tough times welcome the legal pot industry. CBC reports that in Lakeshore, Ont., a town of about 40,000, has actively sought a medical pot producer. Hit hard by the ailing auto industry, the community welcomed a $12-million proposal by a U.S. company to build a legal pot-growing facility close to the town’s Ontario Provincial Police station. Mayor Tom Bain cited increased tax revenues and jobs.
Almost half a century after the drug revolution began in earnest, change really does seem to be all around us.
Rick Zemanek is a former Advocate editor.