Inhaling America’s reefer madness

Edward Helmore
June 12, 2013
The Age

Colorado is going to make it legal for anyone over 21 to possess an ounce of cannabis. As big business gets ready to make millions, the rest of the world waits to see what will happen.

Over one recent weekend, the Mile-High City of Denver, Colorado, was a little higher than usual. A conference centre normally reserved for trade shows and shareholder meetings was hosting the Cannabis Cup, a competition to find the world’s best marijuana producer.

The Fillmore Auditorium, a concert hall, was holding a special ”green carpet” event for the rap star Snoop Dogg, who was being presented with a lifetime achievement award. Not for his music, one should hasten to add, but for his prodigious use of cannabis throughout his career.

And in the Civic Centre park, opposite Colorado’s state Parliament building, a crowd of several thousand people was assembling for the most important business of the weekend: exhaling a record-breaking cloud of marijuana smoke.

This was Mardi Gras for pot-heads in America’s most cannabis-friendly state. From January next year an amendment to Article 18 of the Colorado state constitution will be implemented to make it legal for anyone aged 21 or over to possess up to an ounce of the drug for recreational purposes. Legislators in the US and Britain, where a fierce debate rages over legalisation, are watching and waiting to see how the reform pans out.

State Governor John Hickenlooper has made no secret of his opposition to the amendment (known as Amendment 64), saying it will lead to an increase in the number of children addicted to drugs. But campaigners for the reform argue the reverse, saying it will replace the black market in cannabis with a more transparent system that bans sales to anyone under 21, while, at the same time, freeing up the police to focus on ”real” crimes and generating new tax revenues for the government.

The amendment also represents a potential $US50 billion ($A53 billion) business opportunity. Both in Colorado and Washington state, whose citizens voted for a similar reform last November, thousands of entrepreneurs are lining up to take advantage of the new legal landscape.
As soon as the fine details have been worked out, all manner of cannabis-infused products – from butterscotch sweets to soft drinks – are expected to go on sale. Shoppers will be able to buy pre-rolled joints packed with strains of super-strong cannabis produced by ”master growers” or, if they’d prefer not to smoke, a range of other ingenious delivery mechanisms, from odourless vapourisers to tinctures administered under the tongue.

One company – Medbox – is even planning to install vending machines which will sell plastic vials of cannabis leaves and other so-called ”medibles” or edible marijuana products.

Tripp Keber typifies this new breed of entrepreneur. Chief executive of Denver-based Dixie Elixirs, a branch of Medical Marijuana Inc, Keber adopts a ruthless business approach to the nascent cannabis industry. His background is in the Florida property market and he describes Snoop Dogg as the ”poster boy” for what Colorado lawmakers like to call ”adult-use” cannabis, though he later backtracks.

”I wouldn’t say he’s ideal but he certainly personifies it.” (Dixie Elixirs sponsored the Snoop Dogg event at the Fillmore Auditorium, during which various cannabis offerings were thrown on to the stage by the audience and gratefully hoovered up by the singer.)

As soon as the legalisation movement takes hold nationally, as Keber feels it surely must (12 other states are considering legalisation measures), cannabis is going to be a multibillion-dollar industry in competition with, say, the brewing industry. Private equity firms are already scouting investment opportunities and there are rumours that Philip Morris has bought tracts of land in Denver.

”When you invest in cannabis, you’re investing in America!” Keber tells a small crowd of investors gathered at his office. ”You’re not only creating employment, you’re paying taxes and putting narco-terrorists out of business. I don’t know how you can argue with that!”
Keber is shadowed by May, a bodyguard from Chicago. ”I don’t use my full name for obvious reasons,” he says, without further explanation. May sees a gold-rush mentality developing. ”Except it’s not in the hills, it’s in the dirt. It’s the ‘green rush’.”

Of course, some members of the cannabis community have not transformed themselves into red-blooded capitalists just yet. At the Cannabis Cup, in an industrial park near the rail yards, I detect a whiff of woozy hippy idealism more reminiscent of Robert Crumb and the Haight-Ashbury stoners of the sixties than the suits and boots of corporate America.

In the medical marijuana tent, where supposedly only Colorado residents with valid medical marijuana cards should be able to enter, a man offers the chance to win a three-ounce, salami-sized joint in a raffle. Young women in pantomime nurses outfits proffer bongs to passersby. There’s a wedding officiated by the magazine High Times.

Jennifer Strauss, a Colorado state geologist, says cannabis helps her to visualise rocks in three dimensions. ”It helps me see what’s going on under the surface.”

And, although large sums are bandied about, it is far from certain how much profit there is to be made. Two years ago, Colorado voted to legalise the drug for medical use and, although there was an early boom in licensed dispensaries – at one point numbering more than Starbucks and McDonald’s combined in Denver – almost half have closed down.

In the same period, the wholesale price for high-quality cannabis has almost halved to $2400 per pound. Small growers, with no more than a hundred or so plants, can barely afford to keep their grow-lights on and, under the new law, things are going to become even more stringent, with extra regulation and taxes. Some growers may find they preferred it the old way with no licensing, taxes or regulatory oversight – and only the police to worry about.

The bottom line is: possessing cannabis is still a criminal offence under federal law. No large, publicly held company will risk violating federal law, banks and commercial lenders won’t touch cannabis while this is the case, and Colorado politicians know the government in Washington is watching what they do with a gimlet eye.

”If we don’t regulate it, we invite the federal government in,” says Senator Randy Baumgardner. ”Then it doesn’t matter what the people of Colorado want because the government will overrule it.”

Late last month ,Governor Hickenlooper signed six marijuana regulatory bills into law while the state awaits a federal response to recreational pot legalisation.

The new laws seek to regulate the newly legal drug and keep it away from children, without being so strict that it stays in the black market. The laws will govern how recreational marijuana should be grown, sold and taxed.

Barbara Brohl, head of the Department of Revenue which will take charge of the regulation, says she’s heard the government has three concerns. ”It wants to know we have sufficient funding to enforce regulations, that we do what we can to not allow diversion to children, and we prevent diversion to other states. So that’s what we’re moving forward on.”

As a scheme to raise tax revenue, there’s a question of where to set the bar. Tax cannabis cultivators and distributors too highly and the underground market flourishes, pushing licensed producers out of business; too low and the burden of regulation and enforcement places further strain on state coffers.

Brohl runs through the proposals. Producers must also be sellers, promoting a so-called ”seed-to-sale” policy. Driving under the influence of cannabis will be treated as seriously as driving while drunk. Cultivation and sale will be forbidden near schools. Some tax revenue on cannabis sales will go to primary school education. Individuals will be allowed to grow six plants, but must only ever have three mature enough to produce tetrahydrocannabinol (the main psychoactive ingredient) at any one time. Citizens can give away cannabis but not sell it.

”A lot of hippie-type people want the tomato-farming, grow-anywhere and sell-anywhere type policy,” says Keith Stroup, legal counsel for the National Organisation for the Reform of Marijuana Laws. ”But that’s not going to happen. It’s more than non-smokers can allow. It scares them. So we’ve made compromises. Responsible use does not mean being stoned 24 hours a day, seven days a week.”

There are also major concerns about the effect the new law will have on Colorado’s tourism industry. Pro-legalisation campaigners claim it will boost the number of people coming to the state. (A company called My 420 Tours organised America’s first ”cannabis tour group” during April’s festivities, escorting 60 aficionados from as far afield as New Zealand to a hashish factory, a bong workshop and a cannabis cookery class.)

But others, including the official tourism office, say the reform could cause damage to the state’s image as a family destination. ”Our office is not going to use legalised cannabis for any marketing purposes,” the director of the Colorado state tourism office, Al White, has said.

”We feel that there’s too much to see and do in the state without having to bang that drum. And, it kind of works counter to the branding effort that we’re going for to get people to recognise the healthy aspects of the state.”

Another official who has been closely involved in Colorado’s regulation discussions says: ”Colorado will become a centre for pot tourism and no one is considering the ramifications.”

Still, Mike Novak, of Burnzwell growers, says he’s not worried by the regulations. He estimates Burnzwell can produce $280,000 of cannabis every six weeks. In his home state of Illinois, Novak could get 40 years for what he’s doing here legally.

”It’s the only crop I’d ever waste my time on,” he says, examining the buds on a strain called Super Lemon Haze. Novak warns that this is a labour-intensive horticultural business, not one for absent-minded stoners.

”Only people who could make a profit on turnips and tomatoes have a chance.”

As the weekend progresses, the Cannabis Cup, predictably, becomes a tableau of intoxication. It is a bacchanalian scene, with attendees courted by scantily clad young women proffering boutique blends in exchange, hopefully, for votes in one of several ”best brand” categories. And at the rally in Civic Centre park, the scene of the record-breaking marijuana cloud, the festival atmosphere evaporates when two people are injured in a shooting.

This wasn’t the outcome organisers such as Louis ”Bubba” Zerobnick were hoping for. Zerobnick, founder of ”Always Buy Colorado Cannabis”, says he hopes cannabis can lose the taint of illegality while resisting the kind of corporatisation that would also strip its link to sixties social idealism. Without care, he fears, political lobbyists will influence the taskforce regulators into concentrating the business in the hands of a few big players.

”It’s going to be an uphill battle for the mum-and-pop growers to survive if they don’t get organised,” Zerobnick warns. ”We don’t necessarily have it right yet. Amsterdam almost had it right, but now they’re rolling it back.”

If Colorado can manage the transition successfully, the number of states seeking some form of cannabis legalisation will likely increase. But that’s a big if.

In Centennial, 20 minutes south of Denver, the Drug Enforcement Agency says it’s business as usual. A plaque at the entrance offers recognition to all those who have fought for a drug-free America. The agency isn’t interested in arresting small-time individuals, but it says it will still go after large-scale manufacturing or smuggling operations.

”If you’re a significant drug trafficker we don’t care if you’re a hippie or a businessman,” says special agent Paul Roach. ”It doesn’t matter to us. We’re gonna be coming after you.”

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