Articles Americas New Growth Industry

Americas New Growth Industry

Americas New Growth Industry

It may seem hard to believe but we've had legal medical marijuana usage somewhere in the United States for fifteen years now. It all began in California, of course, in 1996, but since then fourteen other states and Washington, D.C. have authorized the use of cannabis for chronically ill patients who have a recommendation from their doctor. Across the nation it's now being used to treat people with diseases like cancer, AIDS, multiple sclerosis, and chronic pain. It's not just a few patients, either. Recent data suggests that almost 25 million Americans are using - or at least eligible to use - medical marijuana.

What no one predicted in 1996, however, is that an entire industry has grown up around the need for weed. A recent article on the McClatchy news site for Washington, D.C. projected that sales will reach a whopping $1.7 billion by year's end, and just a week ago the ArcView Group, a San Francisco-based organization, created the first investment network to connect wannabe medical marijuana moguls with investors ready to throw some cash into (medicinal) cannabis.

In an interview with McClatchy reporters, Troy Dayton, CEO of ArcView said, "It doesn't take a rocket scientist to realize that this industry is growing and that there are untold riches to be made here."

So far, medical marijuana distribution programs are well established in California, Colorado, Maine, Michigan, Montana, Oregon, Washington and New Mexico, while programs in Arizona, New Jersey, Rhode Island and Washington, D.C., are just getting off the ground. Still it's not all smooth sailing. Law enforcement officers in all of those states have shared their concerns that medical marijuana is too easy to obtain, and that people who are essentially healthy are exaggerating their pain in order to obtain the necessary recommendations from their doctors.

Another common concern is that of volume. Medical marijuana dispensaries, some say, could grow so much pot that any excess product could be pushed to the illegal market. After all, even though those fifteen states (and the District of Columbia) have decriminalized the drug for medical use, under federal law it's still an illegal, controlled substance, and while the Justice Department said in 2009 that it wouldn't prosecute patients, caregivers or growers operating within their states' laws, the concern remains that total control is not possible.

Then there's the financial picture: across the country there are more than 1,500 dispensaries, co-ops and other growing operations, and the industry that has sprung up around them has been successful - even prospered - despite a tanking economy.

Earlier this month, Maine became the first state east of the Rocky Mountains to allow patients to procure their pot from medical marijuana dispensaries. Three weeks in, one of those new businesses, Maine Organic Therapy, is making home deliveries to more than twenty patients, according to company CEO Derek Brock. In that state, patients are allowed to buy a maximum of 2.5 ounces of marijuana every two weeks, or five ounces a month.

Such expansion has been supported by the medical marijuana-using public, but it hasn't been without a few troubles, and one Big Bad: the IRS. Those in the know report that section 280E of the Internal Revenue Code bars legal medical marijuana operations from deducting business expenses from their income taxes (that they're required to pay taxes at all is another issue entirely), and dispensaries in several states are now facing audits because of it.

Another issue is that some banks won't allow dispensaries to open business accounts, because they fear federal repercussions due to their duty to report ties to any business operating in violation of federal law.

In order to help address these - and other - issues, the National Cannabis Industry Association was formed in the latter part of 2010. Last Wednesday, the organization held its first national lobby day, speaking with lawmakers on Capitol Hill and pushing for a louder legislative voice.

Representative Jared Polis (D-Colorado), a strong supporter of the medical marijuana industry, told the press, "These kinds of days are necessary, because they put a face on the industry."

Polis should know. After all, even though Californians are responsible for 76% of national medical marijuana sales, it's his state, Colorado, that has the country's fastest-growing market, with more than 131,000 residents registered as medicinal cannabis users - a significant leap from the mere 7,000 who were registered in 2008.

One of the Colorado-based organizations, Colorado Dispensary Services, operates three commercial growing operations, and three dispensaries and has had five different bank accounts over the last three-and-a-half years because of friction between operators and regulators. Jill Lamoureux, the owner of the company, said that managing roughly fifty employees and almost $120,000 a month in payroll is impossible, and the regulatory officials know it.

"These regulators need to see our bank accounts, and if we do not have access to banking, it makes it impossible for them to regulate," Lamoureux said. "Frustrating is an understatement to say how difficult it is to run a business without banking services."

Last year, Polis was part of a group of eight Democratic legislators who wrote to the U.S. Treasure to give assurances that it wouldn't target banks with account holders who operate their businesses in accordance with state medical marijuana laws, but the Treasury passed the buck back to the banks, claiming it was their call to make. Polis has said since then that he plans to introduce legislation that will clarify banks' responsibilities with regard to cannabis dispensaries. He said that he has bipartisan support for the issue.

The banking issue isn't limited to Colorado, but is a national problem. A nonprofit dispensary in Oakland, CA, Harborside Health Center, pays over $3 million in federal, state, and local taxes, and employs eighty people who get paid vacations and 401(k) plans. Despite this, their bank accounts have been closed three times, and an IRS audit is pending.

Stephen DeAngelo, the executive director of Harborside, said his center, which serves 79,000 patients, is being treated as if it's a criminal entity and not an organization dedicated to community service.

"We do not deserve to have our accounts frozen or to be taxed out of existence," said DeAngelo in an interview with McClatchy. "280E was intended for cocaine kingpins, international smugglers and crystal meth dealers. It wasn't intended for organizations like ours, and it shouldn't be applied to organizations like ours."

Last year, Representative Polis and five fellow Democrats petitioned the IRS to allow legal medical marijuana dispensaries to deduct their business expenses, but the Service said that only Congress had the right to amend either the Internal Revenue Code or the Federal Controlled Substances Act. According to Polis, Representative Pete Stark (D - California) will be introducing legislation to do that.

Eliminating the tax and banking concerns from contention could do a lot to improve the medical marijuana industry's growth. Two years ago, the Justice Department said that people who use or provide the drug in accordance with state laws wouldn't be prosecuted, and that prompted the creation of hundreds of new marijuana businesses, while raids on marijuana operations were reduced by 58 percent, according to David Guard of See Change Strategy, a financial-analysis firm.

So who are these cannabis capitalists? One example is Becky DeKeuster who realized the healing powers of the plant after she quit her job teaching high school to work in a Berkeley, CA dispensary nine years ago.

"On my first day there, I saw a patient in a wheelchair having [multiple sclerosis] seizures. And, literally, with two puffs off a joint, he stopped tremoring, and it was like, 'wow, this is amazing,'" said DeKeuster, who now serves as the executive director of Northeast Patients Group, which operates four dispensaries in Maine. "I'm grateful to be in this industry and I consider it a blessing to be able to do the work I do."

Guest | Apr 1, 2012
I have MS and Diabetes and a bad back and all I want is to have the government leave me alone and allow me my right to use a safe natural medication without trying to jam synthetic drugs down my throat and supporting those big pharma industries that are a killing us slowly saying they are healing us. The FDA is mostly supported by the very industries they are suppose to be monitoring, not the federal government. Marijuana was used to out law Industrial Hemp so Nylon could take it's place and wipe out the whole US hemp industry. It was a subterfuge to force us to use synthetic materials over natural materials and that is why Marijuana was used since it is the same family and they played it off and did not let the general public know that Industrial Hemp is the same species of plant as Marijuana so they scared the general public into thinking Marijuana was a dangerous drug, which it is not, and used it to full the public into passing laws to outlaw it so they could wipe out that Textile Hemp Industry to make way for DuPont's new Synthetic Nylon industry in 1937. What originally got me interested in Hemp was the use of it in Sails for sail boats. I was thinking of making a small sail boat and using a Chinese Junk Sail rig then I learned the truth of the hemp vs nylon industry in finding the best material for the sails. Then I ran into this information on Medical Marijuana and being that I also have Multiple Chemical Sensitivity on top of everything else I am against any synthetic fibers and medications as they all affect my health. Then when I saw the scam that has been perpetuated on the American Public I personally became infuriated. I also found out that the FDA is one of the big ring leaders in attacking anything that is natural and safe and cures people or has a medicinal quality. (Herbs, Vitamins and etc. Supplements to be exact.) Then also finding out that most of their funding actually comes from the very industry that they are meant to police shows they are obviously in conflict of interest and as the old saying goes, "You don't bite the hand that feeds you.". So they are corrupted already. To be honest I think they need to be abolished personally and be replaced by state run organizations that have one small Federal oversight office to prosecute those Industries that break Laws and don't protect our health in the food and drug and so forth industries. As far as Marijuana goes. The US needs to remove that law banning it and allow the hemp industry back into the US. One Acre of Hemp is equivalent to Once Acre of Trees in Bio Mass and so forth. The Seeds are the best source of Protein you can think of. These plants are pretty much drought resistant and they can produce fuel, plastics, super long fibers for plastics, building materials, cloths that are rot resistant and UV resistant. You name it and they are medicinal and a good source of food. The way I see it the US is a now the Third World Country while Third World Countries are taking advantage of this resource and becoming the new First World Countries. The US has already lost all it's large industries to overseas countries and this is one that could put us back on the map and the government is to busy catering to the Oil and Large Pharmaceutical Industries and synthetic manufacturers and AMA and etc. to even think & realize this could actually save this countries economy. They are blinded by power and greedy Corporations. They want to fix this country they need to legalize hemp and marijuana and put tariffs back on imports and make our other industries come back to the US. Nothing else will fix it. They need to wipe out the monopoly's like they have laws to prevent and fix this countries economy. They need to down size government and give it back to the people and get ride of Corporation law that makes it be considered a person and basically punishable. Also anyone or organization or institution that scams the people or public like this law did needs to have it considered as Treason to the US people. Because that law made someone very rich at the expense of our peoples loss of income by ruining a whole textile industry. In law enforcement they always say follow the money and you will find the culprit. Follow the money in this case and arrest them for treason. Start with DuPont Nylon. One other thought. Jehovah God put that plant on this earth for a reason and it turns out it has many reasons to use that plant and they are all good. What God gave us, no man or government should take away from us. In around 1942 one car maker demonstrated the use of plastics made from Hemp. He took a sludge hammer to it and did not even crack it. The sludge hammer bounced right off of it without any damage. This would have saved our Metal resources here in the US. Less mining needed and etc. This is a sad time in the US if we do not legalize this plant again!!! That is my thoughts on this. Joe P. Hawkins also known as Envirohawk.
chronic sufferer | Jun 10, 2011
I love this article. The government needs to stand up and realize this is a perfect way to help America get back up on it's economic feet by allowing the growth of marijuana. It could be the wave of the future for all of us, the government included.
Kushie Q | Apr 23, 2011
When is the federal government going to realize that it is medicine and it is needed, not just wanted by medical patients. This is an important factor in their quality of life. I know I keep hearing people talk about the modern day gold rush that is the pot industry. which is kind of sad, because the fact that it is medicine gets lost in those simple words. But when is the world going to get past it. Thank God there is a medicine that I can grow myself for my pain, instead of the hundreds of dollars that are spent on the pharmaceuticals that do nothing.
SkillitHits247 | Apr 15, 2011
Good for you, smokestack; you get to witness first hand how much this medicine is needed. It is also people like you who can help spread the word to the people who have a bias opinion or just do not know about this great flower. Best of luck to you, and the MMJ residents of MI.
| Apr 14, 2011
i BELIEVE THAT IT IS A MATTER OF TIME FOR PEOPLE TO REALIZE AND TAKE ADVANTAGE OF THE MMJ INDUSTRY. People whom are not patyients do not understand why peoplle need the medicine. Where i live there are so many dispensaries collectives what ever u want to call them.
smokestack | Apr 7, 2011
I work in a new dispensary here in Ann Arbor Mi. We are still in our first year of operation and I cannot believe the amount of truly sick individuals who need this medicine to have a decent quality of life. I am honored to volunteer here and help them out.
SkillitHits247 | Apr 4, 2011
Great article! Something that I think should be emphasized more is the fact that these legal marijuana users are sick & ill people! Not criminals! People with cancer, diseases, people who are in pain all day, and for those who hate-on the people they claim exaggerate their ailments to obtain marijuana; hey at least the person is trying be a law abiding citizen , they are giving their information to the state which is governed by the feds, they are still tax paying citizens. And these legal business dispensaries are just trying to provide for the sick in need of their medicine, still trying to abide by state law and not trying to disturb the community but give back to the community. THESE PEOPLE DO NOT SOUND LIKE CRIMINALS; where is the article on how many crack/cocaine drug houses are being busted down VS. Medical Dispensaries?...
Herb Lady | Apr 3, 2011
The article is informative with the review of how medical marijuana related businesses have progressed over the past 15 years. I think it's totally unfair to not allow dispensaries to claim business expenses. They should have the right like anyone else and simply adhere to the rules and regulations. On the up side it's good to know they have put a committee in place to monitor this and numerous other issues.
lindzzz | Apr 1, 2011
It is only a matter of time before a big 'pot rush'. We are already considering the taxation of medical cannabis federally, which is a step, but once that happens I think it will be a short time until all of the states authorize medical use. Of course the ideal would be complete legalization, but I think that the most important issue at the moment is to make sure that everyone across the country who has medical need can get access. How can it not happen when it would be so advantageous to us? We should try to tap this resource for everything we can get, and do away with outdated industries.