Pot set to become a big business

[lowrider]

High finance and corporate dagga - California style
California’s climate is perfect for growing almost anything, but the best marijuana ‘grow’ is a private world completely divorced from nature that produces a drug with 10 or 15 times the punch as your hippie grandparents’ weed
REUTERS
Published: 2010/07/23 02:46:54 PM

California’s climate is perfect for growing almost anything, but the best marijuana ‘grow’ is a private world completely divorced from nature that produces a drug with 10 or 15 times the punch as your hippie grandparents’ weed.

Mexican drug cartels grow good quality product in California national and state parks, which are the target of frequent police raids and less frequent arrests. Well-heeled consumers buy marijuana “medicine” grown indoors in an environment often devoid of dirt, sun or bugs. In about 10 weeks, a cutting from a mother plant can be grown into a bush of buds, harvested, and sealed in a turkey basting bag, known for its ability to contain the pungent smell of pot.

Big medical marijuana dispensaries offer dozens of types of marijuana, with a spectrum of colors from deep purple to tangerine orange and different tastes to boot. Years and decades of breeding marijuana has produced superior pot, growers say, and once they get a strain right, they stick with it, making cuttings of the perfect bush and then teasing them to the brink of horticultural bliss.

“What you are dealing with is frustrated sex for plants,” says Wilcox, explaining how the goal is to grow female plants to the point they are yearning for fertilization, producing a sticky substance full of mind-bending chemical THC.

The process typically begins in a musky smelling basement dripping with tropical heat from high-powered grow lights, which have contributed greatly to fires in Oakland, city officials say. Clippings from the perfect mother plant, known as clones, are brushed in rooting compound. They are then set in a pot of rock wool in a tub that is regularly flooded with nutrient-enriched water.

Some growers pursue a Sea of Green strategy, raising an ocean of small plants, while others try to produce a few monsters. Farmers also may aim for a continuous harvest, putting plants of different maturity in different rooms or locations so that every week or so they can harvest a crop.

Young pot plants start off with two weeks under grow lights shining 18 to 24 hours a day, helping the plants vegetate. When it’s time to start flowering, lights are turned to 12-hour cycles for six weeks.

When the flowers are at peak maturity and look snowy, the plants are cut down. Leaves are stripped and turned into hash.

Buds are dried and then put in mason jars and ‘burped’ — given occasional breaths of fresh air — in a regime that cures the pot, turning it sticky and stinky. Then it is put in the turkey basting bag and brought to a dispensary for sale.

The costs are minimal, falling as low as 20 cents in electricity and plant supplies for established growers whose pot would retail for as much as $20 a gram, a Los Angeles area law enforcement source estimated. That would take the cost of producing a pound of weed to under $100. The Rand Corporation puts the price a few times that, still offering plenty of room to drastically cut retail prices.

Wilcox’s plan includes a 7-acre site with a 100000-square-foot growing space, a bakery, a testing lab, job training and growing equipment production at the site — which would need to win one of the four Oakland permits to go into business. If it did, it would produce 58 pounds of cannabis a day at wholesale prices of $2500 to $3000 per pound and send the city more than $2 million per year in taxes if a 3% growers’ tax were initiated.

But Oakland could complicate his math. The city is considering an 8% tax on cannabis farms, more than double the top rate in Wilcox’s economic analysis.

MARKET FORCES

The drive to legalize marijuana is based in the hardscrabble reality of California finances, and voters want to get paid. The invisible hand of the market also may act more like a fist on the price of marijuana. Once the Golden State, California is now the poster child for political dysfunction, tied for the lowest credit rating among the 50 states.

The prospect of a sin tax on a culturally acceptable drug has been gaining advocates for years. A bill in the state legislature would legalize pot, charge $50 an ounce tax and, according to state accountants, bring in $1,4 billion per year.

A more likely path to legalization, though, is Proposition 19, the brainchild of the Tax Cannabis movement, which would let local governments decide whether and how to regulate sales and cultivation of marijuana and would let anyone in the state 21 years or older use it.

A just-released study by the independent state Legislative Analyst’s Office says that Proposition 19 could raise hundreds of millions of dollars over time.

California may be overly optimistic, according to a new Rand Corporation study. By the time taxes are high enough to produce the billions that California wants, they will have created a thriving black market. “So now you have the dual evils, lower prices and still a black market to deal with,” researcher Rosalie Liccardo Pacula said, referring to the $50 an ounce charge.

If marijuana were legalized, Rand projects the price of high-quality marijuana to fall to as little as a tenth of current levels and says that usage could more than double as consumers respond to cheaper prices. A single joint, which at today’s potency is enough to get a single person high a couple of times, would cost $1,50, even taxed at $50 per ounce.

More than half of that cost would be the tax, though, and as the novelty of legalized pot wore off, consumers who at first found a $1,50 joint a rock-bottom deal, might start to see it as a rip-off. The same joint could be had, untaxed, for half price on a street corner. “As time goes on, the black market prices will look more appealing,” said Pacula.

But there is one way, Rand found, for California to boost tax revenue substantially: exports. “California could actually make a lot of money from taxing marijuana and then exporting it to other states,” said study author Beau Kilmer.

Using publicly available prices of marijuana throughout the United States, researchers imputed the costs of smuggling and calculated that high-quality California marijuana, even at taxed prices, could undercut current prices of comparable pot in 42 of 48 continental US states, even with the $50 per ounce tax that Pacula calculates would create a black market.

Six times as many marijuana users are outside California as in the state, Rand quoted federal studies as showing.

One industry source, who is still involved in illicit drug circles and requested to remain anonymous, said he recalls prices falling in Los Angeles as medical marijuana dispensaries exploded there. Early on in his career, high quality marijuana went for $6000 to $7000 a pound. “Now you are getting $3500.

What’s going to happen when you legalize? You are going to take it a couple of states (east),” he said. Growers and vendors with expensive taste would not be able to continue to lead the high life at legal prices, he said.

Also, not everyone buys the theory that California will become a rogue drug state that can undermine national efforts to put a lid on marijuana. The free market is pitting different cities eager for marijuana revenues against one another, and small growers at the Oakland council meeting threatened to leave the city if taxes were too high.

US drug czar Gil Kerlikowske, director of the Office of National Drug Control Policy, in an interview cast cold water on California export potential. “I quite frankly don’t see that,” he said. “I just don’t see it as being something that suddenly people in Kentucky say, ‘Ah now marijuana can be shipped in from California.’”

http://www.businessday.co.za/articles/Content.aspx?id=115788

[oldbootzz]

excuse my anger but none of these fuckheads are even concerned with the morality of it all. they just want the money. so they think MJ is okay to grow, but only if you give them tax incentives first ... until they get the tax money, growers can keep on getting tossed into jails to get ass raped by real criminals. cherry on the top is that they throw us in jail for our own protection. i dont know how i manage to live in this world.

[Gruff]

take it easy oldbootzz...here, have another toke, yes?

Yepo oldboy I agree

none of these fuckheads are even concerned with the morality of it all. they just want the money!!! (my emphasis)

As soon as it makes monetary sense to these politicians and diplos they push the bill...and then pocket it. hmph!!
Their fingers are green(not like ours) and their noses are brown (you know what I mean).

I wonderthen if it is 'legalized' one day, if it will also become illegal to grow your own like with Tobacco?? I think so.
Ooh! this gives me a headache just thinking about it.

[DurbanPoison]

Just arrived in California on Sunday and I have already seen first hand how the medical MJ scene has grown since I was last here 3 years ago I used to have to drive an hour to the nearest dispensary now I can order from a local delivery and they are at your door in less then 15 mins with stuff so strong that you wake up high the next day!

[redvox]

Damn DP sounds nice!, "High by day, high by night". I think this isn't what we all had in mind, when we thought about legalization. They will push the tax % so high, that they will make the black market BOOM with better and lower prices.

[lowrider]

They will push the tax % so high, that they will make the black market BOOM with better and lower prices.

True, but there will always be a black market in any industry. Its just like on Crate Blanche the other day, give us options as to what we want to buy, where we can buy it and our safety, aswell as grow at home. Illegal markets go with the world we live in today. Yeah DP is one hell of a lucky guy to be where he is, and all the best for him to make something of it, and then come back and share some crazy genetics.

[redvox]

Fore sure, I do hope he brings us some real nice seeeeeeds lol. I see your point lowrider, the fact that you can feel save by going to you rearrest smoke shop and picking up your decent bag of bud, not afraid you're going to get mugged, ripped off or shot by the police is a good feeling.

What I don't understand clearly is, say you grow only for your own consumption, would you also have to pay tax on the amount you grow?

[DurbanPoison]

What I don't understand clearly is, say you grow only for your own consumption, would you also have to pay tax on the amount you grow?

You dont pay tax on what you grow, purchasers pay tax on what you sell to them . If you grow as a job then you would also pay income tax with money generated from growing not just vat or sales taxes.

[redvox]

I see so it would work just like any small business corporation. Sweet deal I'd say, come on then SA do it do it!

[Sopbeen]

lol, I doubt whether its going to happen on its own. The current black market vendors want to keep the laws as is, it provides them with the best profit model. When you legalize you have to start worrying about quality and customer satisfaction, which SA grower/dealer wants that?

[redvox]

True words, most of the stuff we bye are mostly seed ridden or overpriced for good section. And absolutely no quality control or customer satisfaction. That's why I'm fed up with that kind of attitude, and I'm growing my own...

Awe