California sprouts marijuana ‘green rush’
1. By Marcus Wohlsen and Lisa Leff Associated Press
July 19, 2009
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SAN FRANCISCO — A drug deal plays out, California-style:
A conservatively dressed courier drives a company-leased Smart Car
to an apartment on a weekday afternoon. Erick Alvaro hands over a
white paper bag to his 58-year-old customer, who inspects the bag to
ensure that everything he ordered over the phone is there.
An eighth-ounce of organic marijuana buds for treating his seasonal
allergies? Check. An eighth of a different pot strain for insomnia?
Check. THC-infused lozenges and tea bags? Check and check, with a
free herb-laced cookie thrown in as a thank-you gift.
It’s a $102 credit card transaction carried out with the practiced
efficiency of a home-delivered pizza — and with just about as much
legal scrutiny.
More and more, having premium pot delivered to your door in
California is not a crime. It is a legitimate business.
Since the state became the first to legalize the drug for medicinal use,
the weed the federal government puts in the same category as heroin
and cocaine has become a major economic force.
Based on the quantity of marijuana authorities seized last year, the
crop alone was worth an estimated $17 billion or more, dwarfing any
other sector of the state’s agricultural economy.
But pot in California also props up local economies, mints millionaires
and feeds a thriving industry of startups — stores that sell high-tech
marijuana growing equipment, pot clubs that pay rent and hire
workers, chains of for-profit clinics that specialize in medical
marijuana recommendations.
The plant’s prominence does not come without costs, say some critics.
Marijuana plantations in remote forests cause severe environmental
damage. Authorities link the drug to violent crime in otherwise quiet
small towns.
Still, the sheer scale of the overall pot economy has some lawmakers
pushing for broader legalization as a way to shore up the finances of a
state that has teetered on the edge of bankruptcy. The state’s top tax
collector estimates that taxing pot like liquor could bring in more than
$1.3 billion annually.
On Tuesday, Oakland will consider a measure to tax the city’s four
marijuana dispensaries, which the city auditor projects will ring up
$17.5 million in sales in 2010. The city faces an $83 million budget
shortfall, and expects the marijuana tax to raise $315,000.
With a recent poll showing more than half of Californians supporting
legalization, pot advocates believe they will prevail. And they say other
states will follow.
Tim Blake is the proprietor of a 145-acre spiritual retreat center, which
holds an annual marijuana bud-growing contest in the heart of
Northern California’s pot-growing country.
Politicians, he says, are “going to see the economic benefits, they’re
going to see the health benefits and they’re going to jump on the
bandwagon.”
Growing the economy
On a property flanked by vineyards, Mendocino County farmer Jim Hill
grows marijuana for up to 20 patients, including himself and his wife.
Hill’s plants enjoy careful nurturing in a temperature-controlled
greenhouse. On a recent spring day, his college-age son spread bat
guano to fertilize two dozen 6-foot-tall plants.
Hill, 45, says he spent $10,000 to set up the garden. Patients receive
their drugs free in exchange for helping with his crop.
“It’s kind of like living on an apple orchard,” Hill said. “You don’t pay
for an apple.”
Though marijuana is cultivated throughout California, the most prized
crops come from the forested mountains and hidden valleys of
Mendocino, Humboldt and Trinity counties — the Emerald Triangle.
The economic impact of so much pot is difficult to gauge. Authorities
say the largest grows are run by Mexican drug cartels that simply
funnel money from forest-raised crops back into their own bank
accounts.
Still, marijuana money from outdoor and indoor plots inevitably flows
into local coffers. Marijuana increases residents’ retail buying power
by about $58 million countywide, according to a Mendocino County
report. The county ranks 48th out of 58 counties in median income but,
by counting pot proceeds, could jump as high as 18th.
In Ukiah, the county’s largest city at 11,000 residents, business
owners say the extra cash is crucial. “I really don’t think we would
exist without it,” says Nicole Martensen, 37, whose wine and garden
shop is stocked with bottles from county vintners.
Mendocino County Sheriff Tom Allman says medical marijuana
operations that follow state and county laws will face no hassles from
his department. His deputies left intact 154 marijuana grows they
visited last year, he said
“If you’re living in the boundaries, I’m not going to mess with you,”
Allman said.
Which is not to say that there is no legal risk to growing, selling or
buying marijuana. Federal laws still apply, and pot dealings not
deemed medicinal are considered criminal by the state, where police
made about 74,000 pot-related arrests in 2007.
Sparky Rose sits in the federal prison in Lompoc, serving a 37-month
term. Law enforcement officials insist he is one of many sellers who
have used the medical marijuana law as a guise for old-time drug
dealing. Rose does not disagree, although he would like to think he
helped some legitimate pot patients in the process.
A one-time Web designer, he started out in 2001 making $15 an hour
working the counter at an Oakland pot club. Four years later, he was
overseeing a dispensary chain with stores in seven cities, 283
employees and sales reaching $5 million a month.
Rose says he was making $500,000 a year before his 2006 arrest, a
sum he considers fair given the chain’s volume and the risk he
assumed as the company’s public face.
“While I was still in the business, a lot people would ask me, ‘I’m
thinking about starting a club, what advice do you have?”’ he says.
“And I’d say, ‘The biggest warning is sooner or later, you will start to
think it’s legal.”’
Like the corner grocery
Even people accustomed to buying marijuana over the counter are
impressed when they visit the Farmacy, a dispensary-cum-New Age
apothecary with three locations in Los Angeles. Decorated in soft
beige and staffed by workers in lab coats, the Venice store sells
organic toiletries, essential oils and incense along with 25 types of pot
stored in glass jars.
During a two-hour span, the dozen or so customers who made a
purchase all bought pot products and paid the 9.25 percent state sales
tax on top of their purchases. The clubs, which are not supposed to
turn a profit, call their transactions “donations.”
Allen Siegel is 74; he is dying of cancer and wants to try smoking
marijuana to ease his pain without knocking him out like prescription
drugs do. So his wife, Ina, brought him to the Farmacy for his first visit
as a legal pot patient.
“You go in there and they have so many choices,” she says.
California’s “green rush” was spurred by a voter-approved law 13
years ago that authorized patients with a doctor’s recommendation to
possess and cultivate marijuana for personal use.
Although a dozen other states have adopted similar laws, California is
the only one where privately owned pot shops have flourished. Los
Angeles County alone has at least 400 dispensaries and delivery
services, nearly twice as many outlets as Amsterdam, the Netherlands
capital whose coffee shops have for decades been synonymous with
free-market marijuana.
California’s pot dispensaries now have more in common with a corner
grocery than a speakeasy. They advertise freely, offering discount
coupons and daily specials.
Justin Hartfield, a 25-year-old Web designer and business student,
founded WeedMaps.com, where pot clubs and doctors who write medi-
pot recommendations list their services and users post reviews.
Hartfield says the year-old site brought in $20,000 this month, an
amount he expects to double in August.
Like just about everyone else connected to the cannabis trade,
Hartfield has a letter from a doctor that entitles him to buy medical
marijuana. But he sees no point in pretending he is treating anything
more than his taste for smoking weed.
“It is a joke. It’s a legal way for me to get what I used to get on the
street,” he said.
What does the future hold?
What would happen if marijuana was legal — not just for medical uses,
but for all uses?
Assemblyman Tom Ammiano, D-San Francisco, wants the state to tax
and regulate all pot as it does alcohol. State Board of Equalization
chairwoman Betty Yee, a supporter, projects the law would generate
$990 million annually through a $50-per-ounce fee for retailers and
$392 million in sales taxes. (The state now collects $18 million each
year in taxes on medical marijuana.)
Meredith Lintott, Mendocino County’s district attorney, argues that big-
time growers would never bother filing tax returns. “Legalizing it isn’t
going to touch the big money,” she says.
But others predict the black-market business model would fall apart.
Large-scale agri-businesses in California’s Central Valley would
dominate legal marijuana production as they already do bulk wine
grapes, advocates argue. Pot prices would fall dramatically, forcing
growers to abandon costly clandestine operations that authorities say
trash the land and steal scarce water.
And legalization, supporters insist, would save state and local
governments billions on police, court and prison costs.
But others survey California in 2009 and say the cannabis future is
now. Richard Lee has parlayed a pair of Oakland dispensaries into a
mini-empire that includes a marijuana lifestyle magazine, a starter plant
nursery and a three-campus marijuana trade school. Oaksterdam
University’s main campus is a prominent fixture in revitalized
downtown Oakland.
All without legalization.
“It’s like here’s reality, and here’s the law,” Lee says. “The culture has
gone so far beyond the law, people have gotten used to being able to
get quality product. They are not going to go back.”