Go Quentin!
Nov. 6th, 2003 09:56 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
moominmuppetQuentin's from a previous generation of Peeps, and I found out through our alum list that he recently wrote the cover story that Forbes ran on the marijuana industry, and he's done some pretty cool interviews recently on the topic of economics and marijuana decriminalization.
My favorite quotation from his post about the recent interviews:
" Now that Forbes has pulled the lid (so to speak) off the Canadian dope industry, I demand that High Times do a really hard-hitting piece on variable annuities!"
And now: A whole slew of articles I never thought I'd see in Forbes.
In the quiet countryside just outside Vancouver, B.C. an ambitious young entrepreneur surveys a blindingly bright room filled with lovely plants--dozens of stalks of high-power marijuana. Almost ready for harvest, they hold threadlike, resin-frosted pot flowers, rust-and-white "buds" thickening in a base of green-and-purple leaves. The room reeks of citrus and menthol, a drug-rich musk lingering on fingertips and clothes.
"There's no way I won't make a million dollars," says the entrepreneur, David (one-name sources throughout this story are pseudonymous). He runs several other sites like this one, reaping upwards of $80,000 in a ten-week cycle. Says he: "Even if they bust me for one, I'm covered."
So, it seems, is much of Canada--covered with thousands of small, high-tech marijuana "grows," as the indoor farms are known. Small-time marijuana growing is already a big business in Canada. It is likely to get bigger, despite all the efforts of the antidrug crowd in Washington, D.C. On Oct. 14 the U.S. Supreme Court, by refusing to disturb an appeals court ruling, gave its stamp of approval to doctors who want to recommend weed to ease their patients' pain or nausea. In the U.S. nine states have enacted laws permitting marijuana use by people with cancer, AIDS and other wasting diseases. The Canadians are even more cannabis-tolerant; although they have not legalized the drug, they are loath to stomp out the growers. This illicit industry has emerged as Canada's most valuable agricultural product--bigger than wheat, cattle or timber.
Canadian dope, boosted by custom nutrients, high-intensity metal halide lights and 20 years of breeding, is five times as potent as what America smoked in the 1970s. With prices reaching $2,700 a pound wholesale, the trade takes in somewhere between $4 billion (in U.S. dollars) nationwide and $7 billion just in the province of British Columbia, depending on which side of the law you believe.
In the U.S. the never-ending war on drugs endures, to modest discernible effect. In a largely symbolic act the U.S. Justice Department has just imprisoned an icon of the pot-happy 1970s--Tommy Chong of the old Cheech & Chong comedy team--for selling bongs on the Internet (see box, p. 154). But in Canada the trade in pot, or cannabis (as many Canadians call it), is an almost welcome offset at a time when British Columbia's economy is in the doldrums.
Tourism here is down, and thousands of jobs got axed when the U.S. slapped tariffs on exports of softwood and then banned Canadian beef after an outbreak of mad cow disease. The marijuana business, by contrast, is thriving, not least because Canada shares a thinly guarded 5,000-mile border with the U.S., a big market. Ultimately much of the revenue flows into the coffers of hundreds of legitimate businesses selling supplies, electricity and everything else to the growers and smugglers.
And who are these growers? Not a small coterie of drug lords who could be decimated with a few well-targeted prosecutions, but an army of ordinary folks. "I know at least a hundred [of them], 20 years old to 70," says Robert Smith, who isn't part of the trade but indirectly profits from it at the furniture store he owns in Grand Forks, B.C., 110 miles north of Spokane, Wash. "Of the money coming through my door, 15% to 20% comes from cannabis--we'd be on welfare without it."
Mexico remains the biggest supplier of foreign pot for U.S. consumers, growing valleys of lower-grade grass and sending it north; some 500 tons of pot were seized at the Mexican border in 2001, more than 100 times the volume confiscated at the Canadian boundary. California is a prodigious supplier, as well. But Canada's industry is notable for its dispersion. The scattered and all but undetectable production may well herald a modus operandi for other regions.
Small growers like David bring in $900 a pound at the low end, with net margins of 55% to 90%, depending on quality, depreciation and labor costs. They produce half a pound to 30 pounds every ten weeks, selling their product to local users or peddling it to "accumulators," who then smuggle it over the border or sell it up the chain to larger brokers. Accumulators and brokers typically add $80 a pound to the cost, as do the high-volume smugglers who buy from them. Smugglers returning money to Canada for other dealers skim a 2% laundering fee.
"The first time somebody gives you a bag of money so heavy that you can't lift it, it's surreal. Pretty soon, it's just dirty paper," says Jeff, who recently retired from smuggling up to a ton of weed a week.
Jeff started out a few years ago by growing just 8 pounds of pot with his friends. Within a year they were brokering hundreds of pounds from other small growers to someone with connections to large U.S. distributors. When that person's buyer retired, Jeff paid him $250,000 for the buyer's client list. "Sounds astronomical," he says, "but at the time it looked free."
Once in the U.S. the bud usually stays on the West Coast. In Seattle a pound of top-quality pot sells for $4,000, and by the time it hits Los Angeles it runs up to $6,000. High-grade cannabis then sells at smaller weights, eventually burning up at $600 to $800 an ounce.
Back in British Columbia the business of pot encompasses wholesaling different strains of seeds for 95 cents to $1.90 apiece, the prices depending, among other things, on how well a strain's buds rank at annual (and very public) "breeders' cup" competitions in Amsterdam and Vancouver. Plants can also be propagated from cuttings, sold for $3 to $10 each, wholesale.
This is a job-creating industry. Trimming the dried flowers to maximize look and taste of the top product pays about $15 an hour for a skilled laborer; it takes ten hours for an experienced trimmer to turn out a pound of buds. Consultants get $40 an hour for helping junior growers.
Marijuana underwrites other businesses, too. Vancouver tour guides brag of quality "B.C. bud," and "smokeasies" near the Canadian border cater to Canadian and U.S. customers. Local authorities wink at the offense. The owners of these smokeshops resemble camp followers of a particularly tough Grateful Dead tour. Customers include clean-cut men in golf shirts, grannies and women cradling babies.
Advice magazines offer tips on growing; lighting shops are spread across the country to serve novice farmers; and fertilizer companies target their marketing to pot growers (see box). In the wake of a federal crackdown on makers of marijuana pipes in the U.S., those businesses are relocating north of the border.
In the Kootenay mountains of B.C., Gary Bergvall sold lights from a 15-by-15-foot space in 1996. Now he employs 28 people and runs a factory that ships, each week, lighting systems as well as two tractor-trailers full of air filters. Could the activated charcoal filters be useful for absorbing the telltale odor of certain plants? Maybe. The lights? Bergvall is circumspect. They are used "for a special purpose, whatever that may be," he says.
Marc Emery started a mail-order marijuana-seed business in Vancouver in 1994, moving 100,000 seeds a year at an average $3.75 each. Today the tax-paying entrepreneur sells 350,000 seeds a year, even though he has more than 20 Canadian competitors (plus rivals in Holland, Spain and the U.K.). Selling seeds in Canada is illegal, but just about no one is busted for it.
Web sites from Vancouver to Montreal sell pot to medical patients in Canada; one site requires only a doctor's letter testifying you have one of 192 afflictions (including writer's cramp and hiccups). Barbara St. Jean, a financial planner, got a pot prescription to treat pain associated with lupus. She and her husband, Brian Taylor, a former mayor of Grand Forks who later ran for national office on the Canadian Marijuana Party ticket, have taught college courses on how to grow cannabis indoors. St. Jean once gave a speech to some 40 city planners from across B.C., extolling the potential benefits of cannabis to their local economies.
All of this action owes much to the U.S. and an inflow of draft-dodging pot smokers during the Vietnam War. The marijuana growers among them introduced sinsemilla (Spanish for "without seeds"), the unpollinated female plant, which is far more potent than its male counterpart. In the 1980s refugees from a northern California war on pot also headed to B.C., just as 1,000-watt lights made possible year-round production of top-grade strains. Locals learned to grow for their climate.
The market is now mature enough for precise segmentation. Dealers grade buds like bonds, starting at BB, worth just $800 a pound because of its chemical taste and black ash when burnt. A-quality cannabis tends to be well-grown outdoor product, at $1,300 because of its somewhat loose buds. AAA, the type David grows and Jeff smuggled, is characterized by tight clusters of flowers, a pleasant smell of eucalyptus and enough drug-rich resin to coat the sides of a plastic bag. Even on a carefully grown plant only 50% of the buds are the right size and shape for AAA. The best stuff has odd varietal names--Mango and Blueberry for the fruity-smelling strains, and F---ing Incredible and Romulan (a nod to the warriors with dented heads on Star Trek), a testimony to the euphoric, incapacitating effects.
Producing the seeds of such strains is up to guys like Daniel, a third-year apprentice breeder along western B.C.'s coast. He helps produce about 60 varieties, starting with a dark green bud called "Mighty Mite," a plant for urban window boxes that grows to the size and shape of a corn dog. At the other end are 14-foot-high monsters that reflect their origins in the Brazilian jungle.
Daniel's newest creation is a straight-stemmed plant that stands 8 feet high and has thick, well-spaced clumps of flowers. "This is a good prairie strain," says the Alberta native. "You could harvest it with a combine or a sunflower cutter. I'd like to produce seeds in 50-pound bags." Like many people in the Canadian cannabis trade, he expects marijuana cultivation will be fully legal before long.
For Daniel, thieves, not the the police, are the big worry. And with good reason: The Royal Canadian Mounted Police, which opposes many of Canada's pro-pot steps, concedes that in B.C. only one-fifth of marijuana busts result in incarceration and the average sentence is only four months. "Maybe the police can take these plants," Daniel says, nodding to a packed greenhouse. "Maybe they'll even take me downtown, maybe arrest me. Maybe. But we have clones and copies of every one of our plants in three more locations."
With seeds or clones an indoor grower can spend just $1,600 to set up a 9-square-foot indoor plot capable of hosting 72 small plants that produce 31/2 pounds of mixed-quality buds in seven weeks. A well-wired operation with 20 lights costs $20,000 to set up. Most growers stop at 10 lights lest they attract attention with a steep electricity bill.
A good rule of thumb in figuring yield is 1 to 11/2 pounds of bud per light. By using cuttings and closely regulating how much light the plants get, indoor gardeners crush a normal five-month growing cycle into ten weeks. Like high-end winemakers, these producers obsess about methods, singing the virtues of organic gardening, hydroponics (soilless agriculture), even aeroponics (with nutrient misted on the plants). Some pot farmers pump carbon dioxide into the room. Growing AAA is labor intensive: The plants need daily watering, spraying and cutting back, producing a trash bag full of unwanted leaves each week for a small grow.
David, the western B.C. grower who dreams of making a million, has hired caretakers to oversee three additional rooms of 20 lights each; the employees include a retired mining executive and a middle-aged American fugitive, he says. They get 25% of the crop, and David splits the rest with his financier, a retired grower/smuggler. His landlords get an extra $1,500 a month on top of the rent, and he pays for repairs from any water or soil damage when production ceases. He lives in a neat house on a quiet cul-de-sac, rigged with radio-controlled motion detectors. Full of kids, dogs and golf clubs, it is prosperous and unremarkable, except for details like the beat-up cracker box brimming with the household pot stash and the note on the fridge that reads: "Gretchen called: Probation!" It seems almost like a game, until Anne, his wife, voices the underlying stress.
"When someone goes down, we all feel really bad, but you can't get too close to someone who's involved with the law," she says as she prepares the kids' breakfast. "You try to keep them away from it as much as possible." A helicopter cuts through the morning fog, and she tenses momentarily. "You do a lot of yoga; you try to pretend it isn't real."
Prepared product is packed in half-pound lots. Forty bags fit into a typical carry-on suitcase. Small-scale marijuana smugglers, or "rabbits," run dope to the U.S in car rides, marathon jogs, three-hour kayak trips or floating hollowed-out logs on the tide. The Mounties, with a patrol fleet of just four boats, are not a big worry on the water.
"You can get 80 pounds into a backpack, and you get big legs running over the mountain," says Paul de Felice, co-owner of the Holy Smoke smokeasy in the eastern B.C. town of Nelson. "I've seen them so nervous they vomit before they take off--but I never see them stop."
As in all business, it is important to manage risk. Jeff would first try a smuggling method with 50 pounds; if it worked, he would try 100, then 300. He moved pot in the fiberglass hulls of yachts and in the false floors of long horse trailers. "No border agent wants to unload all those horses, shovel out that manure," he says.
One method: Drag a shipment underwater behind a fishing boat. A zinc strip fastens a buoy and a length of line to the package. If the boat is stopped, the crew cuts loose the shipment, which sinks, buoy and all. The zinc dissolves in the seawater within 12 to 18 hours, and the buoy surfaces with its line tied to the pot, letting Jeff recover the dope. Another method involves bisecting a propane truck, inserting 500 pounds of bud below a false floor and setting the gas pressure in the truck to read as if it were full.
Eventually "you use a lot of planes," he says. "They're faster, they give you more control and you get better prices if you can deliver 40 miles over the border, past the hot zone." Pilots fly low, hugging mountains on the lee side of fire towers.
Jeff has retired in the face of exhaustion, a fear of snitches in the network and rumors that the U.S. government has planted an agent in the system, who over time is rising high enough to decapitate a big smuggling operation. When asked how many people in the big operations really leave, however, he says, "Maybe 5%. I've got pilots I made millionaires, and they still fly." Jeff's fear of a mole may be well grounded, for the Mounties hope to strike a blow to Canada's cannabis business with a string of big, high-profile busts over the next several years. But the pot business, with a structure less like typical crime rings and closer to that of the Internet--lots of little nodes (in this case, producers) feeding a loosely organized hierarchy--will be difficult to shut down.
The Mounties are not happy about legal marijuana for medical patients--they say the drug needs more study before it is dispensed--but they worry more about the effect of the marijuana-rich gangs on the Canadian economy. It is not just the possible violence (U.S. guns have been traded for Canadian pot), but the business considerations. "There are many millions of dollars here, wrecking the legitimate business," says Rafik Souccar, director general of drugs and organized crime enforcement for the Mounties. The contraband dealers launder money through unprofitable concerns, which then charge artificially low prices for legit goods.
Police also worry about the hazards of poor electrical wiring, hazardous molds and excessive chemical use at grow houses--and a public too blasé about the dangers of drug use. "Part of the problem is a laissez-faire attitude on the part of the public," says Charlie Doucette, a Mountie in charge of drug enforcement in Vancouver. "We don't have an appetite in Canada to say 'This isn't right.'"
Some police think the battle may well be over. Rollie Woods, head of vice and narcotics enforcement for the Vancouver police department, noticed indoor growers throwing out unwanted leaves and dirt at a site the city uses for refuse collection. He told the staff there to note the license plate numbers of every such farmer but called off his plan a few months later. "There were hundreds [of cars]. No way we could track them all." At this point he supports legalization, if only so he can concentrate on Vancouver's growing crack problem.
"If it wasn't for pressure from the U.S., we'd just regulate this," says Woods, who has all of six agents pursuing the pot trade. Investing millions more in a crackdown may be of little consequence, he adds. "You could give me a hundred people, and it wouldn't make a difference."
THE ESTIMATED VALUE OF Canada's marijuana production-up to $7 billion-exceeds its farm receipts of both cattle ($5.63 billion) and wheat ($1.73 billion), or the $4.3 billion taken in by forestry and logging. Only oil and gas extraction, worth $15.8 billion, is worth more.
CANADA'S LEGAL farm operators have net margins of 5.5%. An economist in Vancouver's Simon Fraser University figures pot growers have a 72% annual rate of return, after discounting for costs, labor, thefts and arrests.
MARIJUANA HAS BEEN CULTIVATED FOR ITS fiber since at least 8000 B.C. and used as a drug since about 2000 B.C. In Europe it was cultivated for rope, paper and cloth for centuries, with no broad understanding of the plant's psychoactive properties until the 19th century, after Napoleon Bonaparte invaded Egypt.
"CANVAS" IS DERIVED FROM the word "cannabis." Many of the great paintings are on marijuana fibers.
HENRY VIII, AND many New World governors, mandated the growing of hemp (marijuana) for rope. Many farmers resisted because the crop paid poorly and smelled bad as it was curing.
THC IS CONCEN-trated in marijuana's trichomes, which are tiny stalked glands with a stem and a ball-like tip, clustered around the flowers of an unfertilized female plant.
ACCORDING TO A 1999 study by the Institute of Medicine, marijuana addicts 9% of its users. Alcohol addicts 15% of users, heroin, 23% of users, and tobacco, 32% of users.
ONE MARIJUANA cigarette deposits four to five times more tar in the lungs than a tobacco cigarette. Thus, smoking three or four joints is like smoking up to a pack of cigarettes.
MARIJUANA WAS EFFECTIVELY OUTLAWED in the U.S. with the passage of the 1937 Marijuana Tax Act. There are now an estimated 500,000 marijuana arrests in the U.S. each year.
THE MOST RIGOROUS SCIENTIFIC EVIDENCE of medical benefits from marijuana use centers on ameliorating the negative effects of cancer chemotherapy, appetite loss associated with AIDS, and to a lesser extent, pain management, multiple sclerosis and glaucoma. As a medicine it is considered limited by the side effect of intoxication.
POT SEEDS ARE nutritious and are often used in bird food.
Sources: Statistics Canada, Professor Stephen Easton; "The Science of Marijuana " by Leslie L. Iverson, Oxford University Press, 2000; "The Big Book of Buds " by Ed Rosenthal, Quick American Archives, 2001.
Want dope? Plant seeds. Want high-end dope? Pay attention.
LIGHTS: With 1,000-watt metal halide lights first blasting clones for 24 hours a day, followed by 12-hour intervals of dark to force budding, a half-year grow cycle is cut to ten weeks.
GENETICS: Breeding stock is critical to top-quality pot. Branches of the best female plants are cut and potted. The genetically identical offspring are also cloned.
AIR: Temperatures in the 70s. Added carbon dioxide boosts production, quality.
DIRT: Or hydroponics or aeroponics. Nitrogen for growth, phosphorous and potassium for resinous flowers. Beneficial fungi and bacteria to boost THC.
Sources: Ed Rosenthal; Advanced Nutrients.
Breaking the Two-Pound Barrier
Quentin Hardy, 11.10.03
Except for a few hundred medical users, who are permitted to grow for personal use, and some firms like Prairie Plant Systems, a Saskatoon, Sask. firm with a $4.3 million contract to grow for the Canadian government, cultivators of weed in Canada are operating outside the law. You wouldn't know it, though, from a trip to Advanced Nutrients' fertilizer factory.
"We've got 86 different products, eight labs, 65 employees, and we'll gross $12 million (Canadian) this year, $20 million in 2004," says Michael Straumietis, who with partners Robert Higgins and Eugene Yordanov owns this firm. "I'd say 85% of this is related to the marijuana industry. We hope it's all for medical, but we can't control that." The Advanced factory, 50 miles outside of Vancouver, can produce up to 1.5 million liters of nutrients a month. Products like Dr. Hornby's Big Bud and Sensipro [as in "sinsemilla"] are distributed to some 380 stores in the U.S. and Canada, plus another 260 in Australia.
By supplying medical patients with their products for free (and shipping Voodoo Juice to the University of Mississippi, where scientists grow marijuana for the U.S. government), they have generated testimonials and "studies" showing their products produce bigger, stronger pot plants than the competition.
"Look at this--2.13 pounds per light!" says Yordanov, brandishing a paper. "We beat them in THC [tetrahydrocannabinol], too. A pound per light used to be good--we'll do 3."
For the beginner, there is a $375 kit of seven nutrient boxes, one for each week of a quick grow. "Totally idiot-proof," says Straumietis, a 43-year-old American who fled to Canada from a since-dismissed marijuana charge. "We've revolutionized marketing and packaging."
The trio began business in 1996 with a hydroponic shop, later moving into lighting and electrical supplies. In 2001 they were charged by Canadian authorities with conspiracy to export and conspiracy to traffic in cannabis, stemming from a 200-pound smuggling bust in Washington State. Last March the Canadian government halted prosecution, for reasons unknown, but could start again.
The three deny the charges but also figure increasing liberalization of the law in Canada makes the nutrients more of a promising line, anyway. "There's more money in this than in growing," Straumietis says. "In five to seven years we could gross $100 million. If cannabis is legal[ized], we'll probably charge less, make it up on volume."
http://www.forbes.com/2003/10/31/1031chat_script.html
CEO Network Chat
Q&A: Quentin Hardy
10.31.03, 11:27 AM ET
What follows is the transcript of an Oct. 30 online chat on the Forbes.com CEO Network with Quentin Hardy, our Silicon Valley bureau chief. The topic was Hardy's current Forbes cover story, "Inside Dope," about the unstoppable economics of growing marijuana in Canada.
FDCEDITORS: Welcome everyone. Quentin is here and we're ready to get started. To kick things off, Quentin, just how big is the marijuana business in Canada?
Quentin Hardy: Four billion dollars nationwide to $7 billion just in British Columbia, depending on whose stats you trust. Almost certainly, the biggest agricultural product.
FDCEDITORS: Where's Dudley Do-Right in all this? Don't the Mounties always get their man?
Quentin Hardy: The police are good at targeting kingpins and gangs. Much of this business is structured like the Internet, with many small nodes producing "packets" of a few pounds of high grade pot. That's much harder for the police to target.
Sheena: Do you think Canada really will legalize, or at least decriminalize, marijuana?
Quentin Hardy: Left on their own, almost certainly. The biggest thing holding it back right now is U.S. pressure to keep it illegal.
Sheena: What about the prospects for legalization in the U.S.?
Quentin Hardy: Nine states have some sort of law promoting marijuana for medical purposes. It's still a federal crime, and there's no sign of that changing.
Cheech2: Suppose I wanted to get in on this growth (no pun intended) business, but from a safe distance. Is there any investment play (even an indirect one) in Canadian-grown pot?
Quentin Hardy: The easiest one wouldn't be Canadian, but a British company, GW Pharmaceuticals. They grow marijuana for medical purposes and are working with Bayer.
FDCEDITORS: If the U.S. were ever to legalize marijuana, how long before the big agribusiness players such as Monsanto, DuPont, Dow Chemical and Syngenta would plunge in?
Quentin Hardy: I'd guess about 10 minutes after they decided there'd be no P.R. backlash.
Okiemuskogee: If the dope trade was legalized, what would happen to the growers' profit margins?
Quentin Hardy: They'd collapse. This entire industry is predicated on stiff U.S. laws. Pot prices in Canada rise and fall directly on things like the level of perceived security at the U.S. border.
Sparky: Will there ever be a billionaire on one of the Forbes' lists who made their money from marijuana?
Quentin Hardy: Forbes has run lists of the worlds' richest criminals. I don't think anybody ever got past $1 billion just on marijuana.
Sparky: How long did it take you to research this story?
Quentin Hardy: I began last January. In earnest, I pursued it over the warm-weather months.
Fatfreddie: While researching this story, did you sample the product? In the spirit of objectivity, of course.
Quentin Hardy: My drug of choice is American whiskey, in moderate amounts.
Phineas: Whatever happened to Thailand as a prime source of pot imports? Thai stick used to be the big thing when I was in college.
Quentin Hardy: Thailand still produces lots of pot. But it lacks a key comparative advantage: a long border with the United States.
Caledonia: Isn't it inevitable that eventually Canada's decentralized pot-growing industry will be centralized by some criminal gang?
Quentin Hardy: Excellent question, and the money involved has apparently attracted an increasing amount of organized crime in the past five to ten years. If prices were to collapse due to overproduction or decriminalization, however, criminal gangs would probably look elsewhere for a fast buck.
Franklin: There was a big push a few years ago to legalize the growing of hemp. They claimed it would be non-smokeable due to low amount of THC. Did any state fall for this pitch?
Quentin Hardy: Commercial hemp is grown in Canada and the U.S. for everything from clothing to oil to paper. Much of the world's money contains hemp fibers because they are so strong.
Zinzner55: How many of these Canadian growers are U.S. draft-dodgers from the '60s?
Quentin Hardy: In number, relatively few. In influence, a lot. The draft dodgers brought the first technology to grow stronger strains of marijuana, and often are the most aggressive entrepreneurs.
FDCEEDITORS: You focus on British Columbia. What about the other Canadian provinces?
Quentin Hardy: Every province bordering or near the U.S. has seen increased activity, from abandoned hog farms in Manitoba to broadly tolerated small growers on Prince Edward Island.
Sparky: I see that Tommy Chong lost an appeal today. Do you think the government unfairly targeted him?
Quentin Hardy: Well, he was a very public figure and those are often given more scrutiny in the justice system. Do I think he was unfairly targeted? He was certainly targeted, and no laws appear to have been broken by the feds.
Phineas: Why is Canadian weed so potent?
Quentin Hardy: Twenty years of intensive breeding to concentrate the amount of drug per plant. Arguably, this was as much a response to harsh drug laws that penalized based on weight as it was an effort to give the pot more of a kick.
Okiemuskogee: How much time do you think Tommy Chong will actually serve in prison?
Quentin Hardy: He drew nine months and told me he expected to serve just slightly less than that, due to time served, good behavior, etc. He said he'd use the time to work on some new comedy material.
Calico99: Is he still active in show business?
Quentin Hardy: He still tours, with his wife, and says the notoriety of his arrest increased ticket sales. He also is working on another movie with Cheech.
FDCEDITORS: That's all we have time for today. Thanks to all for participating.
That's Not Funny, Man
Quentin Hardy, 11.10.03
The marijuana business was generally good to Thomas Chong, one-half of the Cheech & Chong comedy duo, until Feb. 24. On that day the comedian, best known for portraying stoned losers in movies like Nice Dreams and Up in Smoke, was nabbed in a nationwide sweep of merchants of pot pipes, bongs and other drug paraphernalia.
Those products, along with small scales, tiny spoons and powder used in diluting cocaine, are prohibited by a little-enforced 1986 federal law. Chong, a naturalized Canadian, was one of 55 people charged as part of Pipe Dreams, a nine-month undercover investigation of paraphernalia vendors. On Sept. 11 Chong landed nine months in jail, one of only two Pipe Dreams jail terms handed out so far.
"They mistook my character for me," says Chong. During his sentencing hearing, the prosecutors, seeking a hefty sentence, noted that he was in the process of making another Cheech & Chong movie. "I just reflect society, the same way Dean Martin reflected drinkers."
Not so, says Mary Beth Buchanan, U.S. attorney for the Western District of Pennsylvania, who instigated Pipe Dreams. "We prosecute people for the deterrent effect," she says. "Thomas Chong was operating an illegal business, and he demonstrated a lack of respect for the law." Buchanan, who says there is "a multibillion-dollar" trade in drug paraphernalia on the Internet, offered her 92 peers around the country involvement in Pipe Dreams, but only five others took action.
Chong plans to use his jail time to work on new material. "This is career-enhancing," he says. "Still, I wish my character was going to jail, instead of me."
Pipe Dreams
Benjamin Fulford, 10.06.03
Yasunao Nakayama wants to turn Japan into the hemp capital of the world. Yah, mon.
You can go to jail for seven years for growing marijuana in Japan. (Second-degree murder gets you only three years). So why is Yasunao Nakayama, 39, driving around Japan in a car powered by hemp oil, hawking dope-derived products?
With the exception of researchers, Nakayama is the first person in Japan since the end of World War II to be given official permission to cultivate weed for commercial and experimental uses. The license allows him to run a half-acre farm and to sell any marijuana derivatives, except for the intoxicating buds and leaves. It's also his green light to proselytize on behalf of hemp.
"There is no other plant with such a broad variety of uses," he says. Among them: clothing, soap, fuel, paper, building materials, medicine, liquor and, using flour from the inside of seeds, noodles. Nakayama sells a handful of such goods to bring in $3,300 a month in revenue. He lives modestly in a yurt, a giant Mongolian tent, on Oshima, an underdeveloped island an hour and a half by boat from Tokyo. "The business will get big later, after I have finished promoting hemp," he says. Meantime he is lobbying the government to turn Oshima into a special hemp zone to promote tourism and sustainable development and, he argues most improbably, to help prevent abuse.
Good luck. Masaru Kiuchi, head of narcotics policy at the Ministry of Health & Welfare, represents Japan's official view of marijuana: "It is highly addictive, people can't quit, it causes brain damage and it makes youth antisocial." Arrests have increased by 60% over the last three years; dope-smoking raves among the young are on the rise, Kiuchi says, and are spreading to older crowds.
Yet pot once played an important role in ritual and commerce. Before Japan's occupation by U.S. forces, which imposed antinarcotics laws, at least 200,000 farm households cultivated hemp. During World War II Japanese imperial army soldiers were permitted to smoke marijuana to ease the stress of battle. Hemp was once burned in special urns to help Shinto priests in their divinations. Its smoke also symbolized the passing of the spirit of the old emperor to the new one. When Emperor Hirohito died in 1989, his successor had to plant hemp seeds to produce a crop that would provide fiber for special clothing to be worn during the succession ceremony.
It was to such tradition, as well as to a little-known clause in the drug laws allowing licensed farmers to grow marijuana for nonnarcotic purposes, that Nakayama appealed when applying for his license. Officials in Shizuoka prefecture were shocked at the request, and he was called in to explain himself before a committee of five very suspicious men. Nakayama presented his case, mentioning seeds found in a 12,000-year-old archaeological site, the traditions of the imperial household and the threat that an aspect of the culture was in danger of extinction. The panel bumped up the request to the governor, who granted Nakayama his license.
Perhaps that exception has gone to his head. Nakayama is on a mission to turn pot into a major industrial crop for Japan. He points to research by Ford Motor, begun in 1929, on a hemp car. Don't believe it? The results were published in Popular Mechanics in 1941--a steel chassis with a body consisting of hemp fiber and plastic made from hemp resin. Although the car was tough and lightweight, it was not cost-competitive and the project was dropped. No talks with Toyota or Honda yet. But Nakayama is high on promoting hemp-based gasoline, extracted by pressing the seeds into oil; he is convinced that its costs of production, now projected at four to five times the cost of diesel fuel, can be drastically reduced. Then there are plastics and building materials, which now cost 1.5 times what those derived from petroleum do. "The world is very interesting when viewed through the lens of hemp," he says. Indeed.
High-Fliers
Benjamin Fulford, 03.19.01
A few hundred feet from a police station in downtown Tokyo is a small shop called Booty. It sells a selection of powerful hallucinogens, mainly to young Japanese in dreadlocks and scruffy hemp clothing who look like a cross between Rastafarians and hippies. You can select from a half-dozen varieties that will make your head spin, like Psilocybe cubensis, a mushroom imported from the Netherlands ($10 a gram), Mexican peyote cacti ($120 for five grams), ayahuaska, a vine from the Amazonian jungle ($70 a dose) or ibogaine, a stimulant and hallucinogen from the Congo ($10 per gram). The owner of the shop, Yuichiro Morita, 27, insists he runs a strictly legal business. And the neighboring cops, as well as Japan's Justice Ministry officials, agree.
"You have to understand we only sell these products as botanical samples for people to use for their viewing pleasure or as interior decoration," Morita explains.
He's not being glib. Morita—who has a degree in agricultural economy from Meiji University and is a failed professional kickboxer—discovered a gaping loophole in the law. While Japan has some of the world's toughest laws against marijuana, opiates and amphetamines, magic mushrooms and a range of other psychoactive plants are legal as long as they are not sold for the purpose of human consumption. (It remains illegal to extract or sell psilocybin, the active ingredient in the mushrooms.)
The result was Booty, which opened its first shop last June. Early this year Morita opened the second outlet of what he hopes will become a nationwide franchise. Monthly sales at the first store have hit $15,000 and are still rising, he says. Buyers of mushrooms are given instructions saying these are not to be eaten, but "if you should by chance accidentally ingest them, after about 30 minutes to one hour you will experience symptoms, including hallucinations that will last for four to eight hours." Another popular item in the shop is video-head cleaner. Be warned, though, that "the accidental inhalation of the fumes may cause a temporary euphoric rush."
Morita may have been the first to open an actual store, but others have caught on. Several Web sites offer such substances to Japanese buyers. And an outfit called Chaos International has been selling them through street stalls.
Cracking down on foreign imports wouldn't do much to crimp business, since Japan has an old and thriving domestic industry. Mushroom experts say the country's tolerance for botanical hallucinogens has roots deep in the conservative countryside that is the backbone of support for Japan's ruling Liberal Democratic Party. For thousands of years Japanese farmers have been harvesting psychoactive mushrooms like Amanita muscaria, which is used in religious rites by tribesmen in Siberia and is believed to be the drug Soma, featured in early Hindu religious texts. To this day it is packaged and sold in the countryside for use in New Year's soups, says Kazumasa Yokoyama, a professor of mycology (the study of mushrooms) at Shiga University.
Farmers in remote villages also pickle something known as "giant laughing" mushroom (Gymnopilus spectabilis). "They say it can be given to women to get them to dance naked," says Nihachiro Sasaki. A 60-year-old grade-school dropout, Sasaki is revered among mycologists for discovering how to cultivate maitake, a delicious edible mushroom that is now a staple in Japanese grocery stores and has begun to appear in U.S. gourmet outlets.
But the rage for mushrooms among Japan's young has little to do with culinary or decorative passions. The government is gathering data and reconsidering whether to crack down. Not as easy as it sounds. "It is very difficult to regulate these mushrooms, because some species only contain hallucinogenic ingredients at certain times of the year," says Yokoyama, who advises the Ministry of Health, Labor & Welfare.
Lost Your Stash? You're In Good Hands
Mark Lewis, 08.16.01, 11:00 AM ET
NEW YORK - Usually when police arrest a pot smoker and confiscate his stash, he calls a lawyer. In California, he calls his insurance agent and files a claim for lost property. If he can prove he uses marijuana for medicinal purposes, chances are his claim will get paid.
Until now, that is. A U.S. Supreme Court ruling has emboldened some insurance companies to change their stance on this controversial issue. "We will not pay any future claims," says Elenore Williams, a spokeswoman for State Farm Insurance in California. "Our policies are such that we don't pay claims on illegal contraband."
This was a non-issue until 1996, when California voters legalized marijuana for medical purposes, such as when cancer patients use it to ease chronic pain. Since then, a small number of patients whose pot was lost or stolen have successfully filed claims for reimbursement based on their property-protection insurance policies. Insurers also have paid a handful of patients for marijuana plants confiscated by police, in cases where the charges later were dropped.
These payments have not exactly been a major drain on the insurers' finances. "We've seen fewer than 10 of these claims," State Farm's Williams says. "Maybe three or four have been paid." Allstate (nyse: ALL - news - people ) spokesman Bob Daniels says his firm has paid out only four marijuana claims in California--and none since the Supreme Court issued its ruling in May. Allstate is trying to determine how the ruling applies to its business and has not yet come to a conclusion. "It's a complex legal issue," Daniels says.
Although a number of states have now legalized marijuana for medical use, Congress has not followed suit, so federal law recognizes no such exception. In practice, federal prosecutors rarely go after small-time marijuana users, so it didn't matter. But the "buyers' cooperatives" established in California have attracted more attention, and the high court ruled in May that these cooperatives cannot claim medical necessity as a defense if they are busted for distributing marijuana.
The idea behind the cooperatives is to give patients easy access to the drug, rather than have them skulking in alleys to buy it from street dealers. Keith Stroup, executive director of the National Organization for the Reform of Marijuana Laws (NORML), says the court's ruling was regrettable, but he adds that it was narrowly drawn and does not invalidate the state laws allowing medical use of marijuana. Stroup says insurance firms that have changed their policy either have misunderstood the court's ruling or are using it as an excuse to stop paying these claims. Corporations tend to be conservative, he says, and paying for somebody's marijuana "makes them nervous."
Here's something else to make the insurers nervous: Stroup says that firms that stop paying marijuana claims may find themselves hauled into court. "If in fact a legitimate patient contacts us, we will offer them free legal assistance," he says. "We are not going to stand by and watch an insurance company gouge a sick and dying patient."
That is just the sort of line a plaintiff's attorney could use to win a big award from a sympathetic jury. The insurance firms may find it far cheaper to pay these penny-ante property claims than to reject them and get sued as a result.
My favorite quotation from his post about the recent interviews:
" Now that Forbes has pulled the lid (so to speak) off the Canadian dope industry, I demand that High Times do a really hard-hitting piece on variable annuities!"
And now: A whole slew of articles I never thought I'd see in Forbes.
In the quiet countryside just outside Vancouver, B.C. an ambitious young entrepreneur surveys a blindingly bright room filled with lovely plants--dozens of stalks of high-power marijuana. Almost ready for harvest, they hold threadlike, resin-frosted pot flowers, rust-and-white "buds" thickening in a base of green-and-purple leaves. The room reeks of citrus and menthol, a drug-rich musk lingering on fingertips and clothes.
"There's no way I won't make a million dollars," says the entrepreneur, David (one-name sources throughout this story are pseudonymous). He runs several other sites like this one, reaping upwards of $80,000 in a ten-week cycle. Says he: "Even if they bust me for one, I'm covered."
So, it seems, is much of Canada--covered with thousands of small, high-tech marijuana "grows," as the indoor farms are known. Small-time marijuana growing is already a big business in Canada. It is likely to get bigger, despite all the efforts of the antidrug crowd in Washington, D.C. On Oct. 14 the U.S. Supreme Court, by refusing to disturb an appeals court ruling, gave its stamp of approval to doctors who want to recommend weed to ease their patients' pain or nausea. In the U.S. nine states have enacted laws permitting marijuana use by people with cancer, AIDS and other wasting diseases. The Canadians are even more cannabis-tolerant; although they have not legalized the drug, they are loath to stomp out the growers. This illicit industry has emerged as Canada's most valuable agricultural product--bigger than wheat, cattle or timber.
Canadian dope, boosted by custom nutrients, high-intensity metal halide lights and 20 years of breeding, is five times as potent as what America smoked in the 1970s. With prices reaching $2,700 a pound wholesale, the trade takes in somewhere between $4 billion (in U.S. dollars) nationwide and $7 billion just in the province of British Columbia, depending on which side of the law you believe.
In the U.S. the never-ending war on drugs endures, to modest discernible effect. In a largely symbolic act the U.S. Justice Department has just imprisoned an icon of the pot-happy 1970s--Tommy Chong of the old Cheech & Chong comedy team--for selling bongs on the Internet (see box, p. 154). But in Canada the trade in pot, or cannabis (as many Canadians call it), is an almost welcome offset at a time when British Columbia's economy is in the doldrums.
Tourism here is down, and thousands of jobs got axed when the U.S. slapped tariffs on exports of softwood and then banned Canadian beef after an outbreak of mad cow disease. The marijuana business, by contrast, is thriving, not least because Canada shares a thinly guarded 5,000-mile border with the U.S., a big market. Ultimately much of the revenue flows into the coffers of hundreds of legitimate businesses selling supplies, electricity and everything else to the growers and smugglers.
And who are these growers? Not a small coterie of drug lords who could be decimated with a few well-targeted prosecutions, but an army of ordinary folks. "I know at least a hundred [of them], 20 years old to 70," says Robert Smith, who isn't part of the trade but indirectly profits from it at the furniture store he owns in Grand Forks, B.C., 110 miles north of Spokane, Wash. "Of the money coming through my door, 15% to 20% comes from cannabis--we'd be on welfare without it."
Mexico remains the biggest supplier of foreign pot for U.S. consumers, growing valleys of lower-grade grass and sending it north; some 500 tons of pot were seized at the Mexican border in 2001, more than 100 times the volume confiscated at the Canadian boundary. California is a prodigious supplier, as well. But Canada's industry is notable for its dispersion. The scattered and all but undetectable production may well herald a modus operandi for other regions.
Small growers like David bring in $900 a pound at the low end, with net margins of 55% to 90%, depending on quality, depreciation and labor costs. They produce half a pound to 30 pounds every ten weeks, selling their product to local users or peddling it to "accumulators," who then smuggle it over the border or sell it up the chain to larger brokers. Accumulators and brokers typically add $80 a pound to the cost, as do the high-volume smugglers who buy from them. Smugglers returning money to Canada for other dealers skim a 2% laundering fee.
"The first time somebody gives you a bag of money so heavy that you can't lift it, it's surreal. Pretty soon, it's just dirty paper," says Jeff, who recently retired from smuggling up to a ton of weed a week.
Jeff started out a few years ago by growing just 8 pounds of pot with his friends. Within a year they were brokering hundreds of pounds from other small growers to someone with connections to large U.S. distributors. When that person's buyer retired, Jeff paid him $250,000 for the buyer's client list. "Sounds astronomical," he says, "but at the time it looked free."
Once in the U.S. the bud usually stays on the West Coast. In Seattle a pound of top-quality pot sells for $4,000, and by the time it hits Los Angeles it runs up to $6,000. High-grade cannabis then sells at smaller weights, eventually burning up at $600 to $800 an ounce.
Back in British Columbia the business of pot encompasses wholesaling different strains of seeds for 95 cents to $1.90 apiece, the prices depending, among other things, on how well a strain's buds rank at annual (and very public) "breeders' cup" competitions in Amsterdam and Vancouver. Plants can also be propagated from cuttings, sold for $3 to $10 each, wholesale.
This is a job-creating industry. Trimming the dried flowers to maximize look and taste of the top product pays about $15 an hour for a skilled laborer; it takes ten hours for an experienced trimmer to turn out a pound of buds. Consultants get $40 an hour for helping junior growers.
Marijuana underwrites other businesses, too. Vancouver tour guides brag of quality "B.C. bud," and "smokeasies" near the Canadian border cater to Canadian and U.S. customers. Local authorities wink at the offense. The owners of these smokeshops resemble camp followers of a particularly tough Grateful Dead tour. Customers include clean-cut men in golf shirts, grannies and women cradling babies.
Advice magazines offer tips on growing; lighting shops are spread across the country to serve novice farmers; and fertilizer companies target their marketing to pot growers (see box). In the wake of a federal crackdown on makers of marijuana pipes in the U.S., those businesses are relocating north of the border.
In the Kootenay mountains of B.C., Gary Bergvall sold lights from a 15-by-15-foot space in 1996. Now he employs 28 people and runs a factory that ships, each week, lighting systems as well as two tractor-trailers full of air filters. Could the activated charcoal filters be useful for absorbing the telltale odor of certain plants? Maybe. The lights? Bergvall is circumspect. They are used "for a special purpose, whatever that may be," he says.
Marc Emery started a mail-order marijuana-seed business in Vancouver in 1994, moving 100,000 seeds a year at an average $3.75 each. Today the tax-paying entrepreneur sells 350,000 seeds a year, even though he has more than 20 Canadian competitors (plus rivals in Holland, Spain and the U.K.). Selling seeds in Canada is illegal, but just about no one is busted for it.
Web sites from Vancouver to Montreal sell pot to medical patients in Canada; one site requires only a doctor's letter testifying you have one of 192 afflictions (including writer's cramp and hiccups). Barbara St. Jean, a financial planner, got a pot prescription to treat pain associated with lupus. She and her husband, Brian Taylor, a former mayor of Grand Forks who later ran for national office on the Canadian Marijuana Party ticket, have taught college courses on how to grow cannabis indoors. St. Jean once gave a speech to some 40 city planners from across B.C., extolling the potential benefits of cannabis to their local economies.
All of this action owes much to the U.S. and an inflow of draft-dodging pot smokers during the Vietnam War. The marijuana growers among them introduced sinsemilla (Spanish for "without seeds"), the unpollinated female plant, which is far more potent than its male counterpart. In the 1980s refugees from a northern California war on pot also headed to B.C., just as 1,000-watt lights made possible year-round production of top-grade strains. Locals learned to grow for their climate.
The market is now mature enough for precise segmentation. Dealers grade buds like bonds, starting at BB, worth just $800 a pound because of its chemical taste and black ash when burnt. A-quality cannabis tends to be well-grown outdoor product, at $1,300 because of its somewhat loose buds. AAA, the type David grows and Jeff smuggled, is characterized by tight clusters of flowers, a pleasant smell of eucalyptus and enough drug-rich resin to coat the sides of a plastic bag. Even on a carefully grown plant only 50% of the buds are the right size and shape for AAA. The best stuff has odd varietal names--Mango and Blueberry for the fruity-smelling strains, and F---ing Incredible and Romulan (a nod to the warriors with dented heads on Star Trek), a testimony to the euphoric, incapacitating effects.
Producing the seeds of such strains is up to guys like Daniel, a third-year apprentice breeder along western B.C.'s coast. He helps produce about 60 varieties, starting with a dark green bud called "Mighty Mite," a plant for urban window boxes that grows to the size and shape of a corn dog. At the other end are 14-foot-high monsters that reflect their origins in the Brazilian jungle.
Daniel's newest creation is a straight-stemmed plant that stands 8 feet high and has thick, well-spaced clumps of flowers. "This is a good prairie strain," says the Alberta native. "You could harvest it with a combine or a sunflower cutter. I'd like to produce seeds in 50-pound bags." Like many people in the Canadian cannabis trade, he expects marijuana cultivation will be fully legal before long.
For Daniel, thieves, not the the police, are the big worry. And with good reason: The Royal Canadian Mounted Police, which opposes many of Canada's pro-pot steps, concedes that in B.C. only one-fifth of marijuana busts result in incarceration and the average sentence is only four months. "Maybe the police can take these plants," Daniel says, nodding to a packed greenhouse. "Maybe they'll even take me downtown, maybe arrest me. Maybe. But we have clones and copies of every one of our plants in three more locations."
With seeds or clones an indoor grower can spend just $1,600 to set up a 9-square-foot indoor plot capable of hosting 72 small plants that produce 31/2 pounds of mixed-quality buds in seven weeks. A well-wired operation with 20 lights costs $20,000 to set up. Most growers stop at 10 lights lest they attract attention with a steep electricity bill.
A good rule of thumb in figuring yield is 1 to 11/2 pounds of bud per light. By using cuttings and closely regulating how much light the plants get, indoor gardeners crush a normal five-month growing cycle into ten weeks. Like high-end winemakers, these producers obsess about methods, singing the virtues of organic gardening, hydroponics (soilless agriculture), even aeroponics (with nutrient misted on the plants). Some pot farmers pump carbon dioxide into the room. Growing AAA is labor intensive: The plants need daily watering, spraying and cutting back, producing a trash bag full of unwanted leaves each week for a small grow.
David, the western B.C. grower who dreams of making a million, has hired caretakers to oversee three additional rooms of 20 lights each; the employees include a retired mining executive and a middle-aged American fugitive, he says. They get 25% of the crop, and David splits the rest with his financier, a retired grower/smuggler. His landlords get an extra $1,500 a month on top of the rent, and he pays for repairs from any water or soil damage when production ceases. He lives in a neat house on a quiet cul-de-sac, rigged with radio-controlled motion detectors. Full of kids, dogs and golf clubs, it is prosperous and unremarkable, except for details like the beat-up cracker box brimming with the household pot stash and the note on the fridge that reads: "Gretchen called: Probation!" It seems almost like a game, until Anne, his wife, voices the underlying stress.
"When someone goes down, we all feel really bad, but you can't get too close to someone who's involved with the law," she says as she prepares the kids' breakfast. "You try to keep them away from it as much as possible." A helicopter cuts through the morning fog, and she tenses momentarily. "You do a lot of yoga; you try to pretend it isn't real."
Prepared product is packed in half-pound lots. Forty bags fit into a typical carry-on suitcase. Small-scale marijuana smugglers, or "rabbits," run dope to the U.S in car rides, marathon jogs, three-hour kayak trips or floating hollowed-out logs on the tide. The Mounties, with a patrol fleet of just four boats, are not a big worry on the water.
"You can get 80 pounds into a backpack, and you get big legs running over the mountain," says Paul de Felice, co-owner of the Holy Smoke smokeasy in the eastern B.C. town of Nelson. "I've seen them so nervous they vomit before they take off--but I never see them stop."
As in all business, it is important to manage risk. Jeff would first try a smuggling method with 50 pounds; if it worked, he would try 100, then 300. He moved pot in the fiberglass hulls of yachts and in the false floors of long horse trailers. "No border agent wants to unload all those horses, shovel out that manure," he says.
One method: Drag a shipment underwater behind a fishing boat. A zinc strip fastens a buoy and a length of line to the package. If the boat is stopped, the crew cuts loose the shipment, which sinks, buoy and all. The zinc dissolves in the seawater within 12 to 18 hours, and the buoy surfaces with its line tied to the pot, letting Jeff recover the dope. Another method involves bisecting a propane truck, inserting 500 pounds of bud below a false floor and setting the gas pressure in the truck to read as if it were full.
Eventually "you use a lot of planes," he says. "They're faster, they give you more control and you get better prices if you can deliver 40 miles over the border, past the hot zone." Pilots fly low, hugging mountains on the lee side of fire towers.
Jeff has retired in the face of exhaustion, a fear of snitches in the network and rumors that the U.S. government has planted an agent in the system, who over time is rising high enough to decapitate a big smuggling operation. When asked how many people in the big operations really leave, however, he says, "Maybe 5%. I've got pilots I made millionaires, and they still fly." Jeff's fear of a mole may be well grounded, for the Mounties hope to strike a blow to Canada's cannabis business with a string of big, high-profile busts over the next several years. But the pot business, with a structure less like typical crime rings and closer to that of the Internet--lots of little nodes (in this case, producers) feeding a loosely organized hierarchy--will be difficult to shut down.
The Mounties are not happy about legal marijuana for medical patients--they say the drug needs more study before it is dispensed--but they worry more about the effect of the marijuana-rich gangs on the Canadian economy. It is not just the possible violence (U.S. guns have been traded for Canadian pot), but the business considerations. "There are many millions of dollars here, wrecking the legitimate business," says Rafik Souccar, director general of drugs and organized crime enforcement for the Mounties. The contraband dealers launder money through unprofitable concerns, which then charge artificially low prices for legit goods.
Police also worry about the hazards of poor electrical wiring, hazardous molds and excessive chemical use at grow houses--and a public too blasé about the dangers of drug use. "Part of the problem is a laissez-faire attitude on the part of the public," says Charlie Doucette, a Mountie in charge of drug enforcement in Vancouver. "We don't have an appetite in Canada to say 'This isn't right.'"
Some police think the battle may well be over. Rollie Woods, head of vice and narcotics enforcement for the Vancouver police department, noticed indoor growers throwing out unwanted leaves and dirt at a site the city uses for refuse collection. He told the staff there to note the license plate numbers of every such farmer but called off his plan a few months later. "There were hundreds [of cars]. No way we could track them all." At this point he supports legalization, if only so he can concentrate on Vancouver's growing crack problem.
"If it wasn't for pressure from the U.S., we'd just regulate this," says Woods, who has all of six agents pursuing the pot trade. Investing millions more in a crackdown may be of little consequence, he adds. "You could give me a hundred people, and it wouldn't make a difference."
THE ESTIMATED VALUE OF Canada's marijuana production-up to $7 billion-exceeds its farm receipts of both cattle ($5.63 billion) and wheat ($1.73 billion), or the $4.3 billion taken in by forestry and logging. Only oil and gas extraction, worth $15.8 billion, is worth more.
CANADA'S LEGAL farm operators have net margins of 5.5%. An economist in Vancouver's Simon Fraser University figures pot growers have a 72% annual rate of return, after discounting for costs, labor, thefts and arrests.
MARIJUANA HAS BEEN CULTIVATED FOR ITS fiber since at least 8000 B.C. and used as a drug since about 2000 B.C. In Europe it was cultivated for rope, paper and cloth for centuries, with no broad understanding of the plant's psychoactive properties until the 19th century, after Napoleon Bonaparte invaded Egypt.
"CANVAS" IS DERIVED FROM the word "cannabis." Many of the great paintings are on marijuana fibers.
HENRY VIII, AND many New World governors, mandated the growing of hemp (marijuana) for rope. Many farmers resisted because the crop paid poorly and smelled bad as it was curing.
THC IS CONCEN-trated in marijuana's trichomes, which are tiny stalked glands with a stem and a ball-like tip, clustered around the flowers of an unfertilized female plant.
ACCORDING TO A 1999 study by the Institute of Medicine, marijuana addicts 9% of its users. Alcohol addicts 15% of users, heroin, 23% of users, and tobacco, 32% of users.
ONE MARIJUANA cigarette deposits four to five times more tar in the lungs than a tobacco cigarette. Thus, smoking three or four joints is like smoking up to a pack of cigarettes.
MARIJUANA WAS EFFECTIVELY OUTLAWED in the U.S. with the passage of the 1937 Marijuana Tax Act. There are now an estimated 500,000 marijuana arrests in the U.S. each year.
THE MOST RIGOROUS SCIENTIFIC EVIDENCE of medical benefits from marijuana use centers on ameliorating the negative effects of cancer chemotherapy, appetite loss associated with AIDS, and to a lesser extent, pain management, multiple sclerosis and glaucoma. As a medicine it is considered limited by the side effect of intoxication.
POT SEEDS ARE nutritious and are often used in bird food.
Sources: Statistics Canada, Professor Stephen Easton; "The Science of Marijuana " by Leslie L. Iverson, Oxford University Press, 2000; "The Big Book of Buds " by Ed Rosenthal, Quick American Archives, 2001.
Want dope? Plant seeds. Want high-end dope? Pay attention.
LIGHTS: With 1,000-watt metal halide lights first blasting clones for 24 hours a day, followed by 12-hour intervals of dark to force budding, a half-year grow cycle is cut to ten weeks.
GENETICS: Breeding stock is critical to top-quality pot. Branches of the best female plants are cut and potted. The genetically identical offspring are also cloned.
AIR: Temperatures in the 70s. Added carbon dioxide boosts production, quality.
DIRT: Or hydroponics or aeroponics. Nitrogen for growth, phosphorous and potassium for resinous flowers. Beneficial fungi and bacteria to boost THC.
Sources: Ed Rosenthal; Advanced Nutrients.
Breaking the Two-Pound Barrier
Quentin Hardy, 11.10.03
Except for a few hundred medical users, who are permitted to grow for personal use, and some firms like Prairie Plant Systems, a Saskatoon, Sask. firm with a $4.3 million contract to grow for the Canadian government, cultivators of weed in Canada are operating outside the law. You wouldn't know it, though, from a trip to Advanced Nutrients' fertilizer factory.
"We've got 86 different products, eight labs, 65 employees, and we'll gross $12 million (Canadian) this year, $20 million in 2004," says Michael Straumietis, who with partners Robert Higgins and Eugene Yordanov owns this firm. "I'd say 85% of this is related to the marijuana industry. We hope it's all for medical, but we can't control that." The Advanced factory, 50 miles outside of Vancouver, can produce up to 1.5 million liters of nutrients a month. Products like Dr. Hornby's Big Bud and Sensipro [as in "sinsemilla"] are distributed to some 380 stores in the U.S. and Canada, plus another 260 in Australia.
By supplying medical patients with their products for free (and shipping Voodoo Juice to the University of Mississippi, where scientists grow marijuana for the U.S. government), they have generated testimonials and "studies" showing their products produce bigger, stronger pot plants than the competition.
"Look at this--2.13 pounds per light!" says Yordanov, brandishing a paper. "We beat them in THC [tetrahydrocannabinol], too. A pound per light used to be good--we'll do 3."
For the beginner, there is a $375 kit of seven nutrient boxes, one for each week of a quick grow. "Totally idiot-proof," says Straumietis, a 43-year-old American who fled to Canada from a since-dismissed marijuana charge. "We've revolutionized marketing and packaging."
The trio began business in 1996 with a hydroponic shop, later moving into lighting and electrical supplies. In 2001 they were charged by Canadian authorities with conspiracy to export and conspiracy to traffic in cannabis, stemming from a 200-pound smuggling bust in Washington State. Last March the Canadian government halted prosecution, for reasons unknown, but could start again.
The three deny the charges but also figure increasing liberalization of the law in Canada makes the nutrients more of a promising line, anyway. "There's more money in this than in growing," Straumietis says. "In five to seven years we could gross $100 million. If cannabis is legal[ized], we'll probably charge less, make it up on volume."
http://www.forbes.com/2003/10/31/1031chat_script.html
CEO Network Chat
Q&A: Quentin Hardy
10.31.03, 11:27 AM ET
What follows is the transcript of an Oct. 30 online chat on the Forbes.com CEO Network with Quentin Hardy, our Silicon Valley bureau chief. The topic was Hardy's current Forbes cover story, "Inside Dope," about the unstoppable economics of growing marijuana in Canada.
FDCEDITORS: Welcome everyone. Quentin is here and we're ready to get started. To kick things off, Quentin, just how big is the marijuana business in Canada?
Quentin Hardy: Four billion dollars nationwide to $7 billion just in British Columbia, depending on whose stats you trust. Almost certainly, the biggest agricultural product.
FDCEDITORS: Where's Dudley Do-Right in all this? Don't the Mounties always get their man?
Quentin Hardy: The police are good at targeting kingpins and gangs. Much of this business is structured like the Internet, with many small nodes producing "packets" of a few pounds of high grade pot. That's much harder for the police to target.
Sheena: Do you think Canada really will legalize, or at least decriminalize, marijuana?
Quentin Hardy: Left on their own, almost certainly. The biggest thing holding it back right now is U.S. pressure to keep it illegal.
Sheena: What about the prospects for legalization in the U.S.?
Quentin Hardy: Nine states have some sort of law promoting marijuana for medical purposes. It's still a federal crime, and there's no sign of that changing.
Cheech2: Suppose I wanted to get in on this growth (no pun intended) business, but from a safe distance. Is there any investment play (even an indirect one) in Canadian-grown pot?
Quentin Hardy: The easiest one wouldn't be Canadian, but a British company, GW Pharmaceuticals. They grow marijuana for medical purposes and are working with Bayer.
FDCEDITORS: If the U.S. were ever to legalize marijuana, how long before the big agribusiness players such as Monsanto, DuPont, Dow Chemical and Syngenta would plunge in?
Quentin Hardy: I'd guess about 10 minutes after they decided there'd be no P.R. backlash.
Okiemuskogee: If the dope trade was legalized, what would happen to the growers' profit margins?
Quentin Hardy: They'd collapse. This entire industry is predicated on stiff U.S. laws. Pot prices in Canada rise and fall directly on things like the level of perceived security at the U.S. border.
Sparky: Will there ever be a billionaire on one of the Forbes' lists who made their money from marijuana?
Quentin Hardy: Forbes has run lists of the worlds' richest criminals. I don't think anybody ever got past $1 billion just on marijuana.
Sparky: How long did it take you to research this story?
Quentin Hardy: I began last January. In earnest, I pursued it over the warm-weather months.
Fatfreddie: While researching this story, did you sample the product? In the spirit of objectivity, of course.
Quentin Hardy: My drug of choice is American whiskey, in moderate amounts.
Phineas: Whatever happened to Thailand as a prime source of pot imports? Thai stick used to be the big thing when I was in college.
Quentin Hardy: Thailand still produces lots of pot. But it lacks a key comparative advantage: a long border with the United States.
Caledonia: Isn't it inevitable that eventually Canada's decentralized pot-growing industry will be centralized by some criminal gang?
Quentin Hardy: Excellent question, and the money involved has apparently attracted an increasing amount of organized crime in the past five to ten years. If prices were to collapse due to overproduction or decriminalization, however, criminal gangs would probably look elsewhere for a fast buck.
Franklin: There was a big push a few years ago to legalize the growing of hemp. They claimed it would be non-smokeable due to low amount of THC. Did any state fall for this pitch?
Quentin Hardy: Commercial hemp is grown in Canada and the U.S. for everything from clothing to oil to paper. Much of the world's money contains hemp fibers because they are so strong.
Zinzner55: How many of these Canadian growers are U.S. draft-dodgers from the '60s?
Quentin Hardy: In number, relatively few. In influence, a lot. The draft dodgers brought the first technology to grow stronger strains of marijuana, and often are the most aggressive entrepreneurs.
FDCEEDITORS: You focus on British Columbia. What about the other Canadian provinces?
Quentin Hardy: Every province bordering or near the U.S. has seen increased activity, from abandoned hog farms in Manitoba to broadly tolerated small growers on Prince Edward Island.
Sparky: I see that Tommy Chong lost an appeal today. Do you think the government unfairly targeted him?
Quentin Hardy: Well, he was a very public figure and those are often given more scrutiny in the justice system. Do I think he was unfairly targeted? He was certainly targeted, and no laws appear to have been broken by the feds.
Phineas: Why is Canadian weed so potent?
Quentin Hardy: Twenty years of intensive breeding to concentrate the amount of drug per plant. Arguably, this was as much a response to harsh drug laws that penalized based on weight as it was an effort to give the pot more of a kick.
Okiemuskogee: How much time do you think Tommy Chong will actually serve in prison?
Quentin Hardy: He drew nine months and told me he expected to serve just slightly less than that, due to time served, good behavior, etc. He said he'd use the time to work on some new comedy material.
Calico99: Is he still active in show business?
Quentin Hardy: He still tours, with his wife, and says the notoriety of his arrest increased ticket sales. He also is working on another movie with Cheech.
FDCEDITORS: That's all we have time for today. Thanks to all for participating.
That's Not Funny, Man
Quentin Hardy, 11.10.03
The marijuana business was generally good to Thomas Chong, one-half of the Cheech & Chong comedy duo, until Feb. 24. On that day the comedian, best known for portraying stoned losers in movies like Nice Dreams and Up in Smoke, was nabbed in a nationwide sweep of merchants of pot pipes, bongs and other drug paraphernalia.
Those products, along with small scales, tiny spoons and powder used in diluting cocaine, are prohibited by a little-enforced 1986 federal law. Chong, a naturalized Canadian, was one of 55 people charged as part of Pipe Dreams, a nine-month undercover investigation of paraphernalia vendors. On Sept. 11 Chong landed nine months in jail, one of only two Pipe Dreams jail terms handed out so far.
"They mistook my character for me," says Chong. During his sentencing hearing, the prosecutors, seeking a hefty sentence, noted that he was in the process of making another Cheech & Chong movie. "I just reflect society, the same way Dean Martin reflected drinkers."
Not so, says Mary Beth Buchanan, U.S. attorney for the Western District of Pennsylvania, who instigated Pipe Dreams. "We prosecute people for the deterrent effect," she says. "Thomas Chong was operating an illegal business, and he demonstrated a lack of respect for the law." Buchanan, who says there is "a multibillion-dollar" trade in drug paraphernalia on the Internet, offered her 92 peers around the country involvement in Pipe Dreams, but only five others took action.
Chong plans to use his jail time to work on new material. "This is career-enhancing," he says. "Still, I wish my character was going to jail, instead of me."
Pipe Dreams
Benjamin Fulford, 10.06.03
Yasunao Nakayama wants to turn Japan into the hemp capital of the world. Yah, mon.
You can go to jail for seven years for growing marijuana in Japan. (Second-degree murder gets you only three years). So why is Yasunao Nakayama, 39, driving around Japan in a car powered by hemp oil, hawking dope-derived products?
With the exception of researchers, Nakayama is the first person in Japan since the end of World War II to be given official permission to cultivate weed for commercial and experimental uses. The license allows him to run a half-acre farm and to sell any marijuana derivatives, except for the intoxicating buds and leaves. It's also his green light to proselytize on behalf of hemp.
"There is no other plant with such a broad variety of uses," he says. Among them: clothing, soap, fuel, paper, building materials, medicine, liquor and, using flour from the inside of seeds, noodles. Nakayama sells a handful of such goods to bring in $3,300 a month in revenue. He lives modestly in a yurt, a giant Mongolian tent, on Oshima, an underdeveloped island an hour and a half by boat from Tokyo. "The business will get big later, after I have finished promoting hemp," he says. Meantime he is lobbying the government to turn Oshima into a special hemp zone to promote tourism and sustainable development and, he argues most improbably, to help prevent abuse.
Good luck. Masaru Kiuchi, head of narcotics policy at the Ministry of Health & Welfare, represents Japan's official view of marijuana: "It is highly addictive, people can't quit, it causes brain damage and it makes youth antisocial." Arrests have increased by 60% over the last three years; dope-smoking raves among the young are on the rise, Kiuchi says, and are spreading to older crowds.
Yet pot once played an important role in ritual and commerce. Before Japan's occupation by U.S. forces, which imposed antinarcotics laws, at least 200,000 farm households cultivated hemp. During World War II Japanese imperial army soldiers were permitted to smoke marijuana to ease the stress of battle. Hemp was once burned in special urns to help Shinto priests in their divinations. Its smoke also symbolized the passing of the spirit of the old emperor to the new one. When Emperor Hirohito died in 1989, his successor had to plant hemp seeds to produce a crop that would provide fiber for special clothing to be worn during the succession ceremony.
It was to such tradition, as well as to a little-known clause in the drug laws allowing licensed farmers to grow marijuana for nonnarcotic purposes, that Nakayama appealed when applying for his license. Officials in Shizuoka prefecture were shocked at the request, and he was called in to explain himself before a committee of five very suspicious men. Nakayama presented his case, mentioning seeds found in a 12,000-year-old archaeological site, the traditions of the imperial household and the threat that an aspect of the culture was in danger of extinction. The panel bumped up the request to the governor, who granted Nakayama his license.
Perhaps that exception has gone to his head. Nakayama is on a mission to turn pot into a major industrial crop for Japan. He points to research by Ford Motor, begun in 1929, on a hemp car. Don't believe it? The results were published in Popular Mechanics in 1941--a steel chassis with a body consisting of hemp fiber and plastic made from hemp resin. Although the car was tough and lightweight, it was not cost-competitive and the project was dropped. No talks with Toyota or Honda yet. But Nakayama is high on promoting hemp-based gasoline, extracted by pressing the seeds into oil; he is convinced that its costs of production, now projected at four to five times the cost of diesel fuel, can be drastically reduced. Then there are plastics and building materials, which now cost 1.5 times what those derived from petroleum do. "The world is very interesting when viewed through the lens of hemp," he says. Indeed.
High-Fliers
Benjamin Fulford, 03.19.01
A few hundred feet from a police station in downtown Tokyo is a small shop called Booty. It sells a selection of powerful hallucinogens, mainly to young Japanese in dreadlocks and scruffy hemp clothing who look like a cross between Rastafarians and hippies. You can select from a half-dozen varieties that will make your head spin, like Psilocybe cubensis, a mushroom imported from the Netherlands ($10 a gram), Mexican peyote cacti ($120 for five grams), ayahuaska, a vine from the Amazonian jungle ($70 a dose) or ibogaine, a stimulant and hallucinogen from the Congo ($10 per gram). The owner of the shop, Yuichiro Morita, 27, insists he runs a strictly legal business. And the neighboring cops, as well as Japan's Justice Ministry officials, agree.
"You have to understand we only sell these products as botanical samples for people to use for their viewing pleasure or as interior decoration," Morita explains.
He's not being glib. Morita—who has a degree in agricultural economy from Meiji University and is a failed professional kickboxer—discovered a gaping loophole in the law. While Japan has some of the world's toughest laws against marijuana, opiates and amphetamines, magic mushrooms and a range of other psychoactive plants are legal as long as they are not sold for the purpose of human consumption. (It remains illegal to extract or sell psilocybin, the active ingredient in the mushrooms.)
The result was Booty, which opened its first shop last June. Early this year Morita opened the second outlet of what he hopes will become a nationwide franchise. Monthly sales at the first store have hit $15,000 and are still rising, he says. Buyers of mushrooms are given instructions saying these are not to be eaten, but "if you should by chance accidentally ingest them, after about 30 minutes to one hour you will experience symptoms, including hallucinations that will last for four to eight hours." Another popular item in the shop is video-head cleaner. Be warned, though, that "the accidental inhalation of the fumes may cause a temporary euphoric rush."
Morita may have been the first to open an actual store, but others have caught on. Several Web sites offer such substances to Japanese buyers. And an outfit called Chaos International has been selling them through street stalls.
Cracking down on foreign imports wouldn't do much to crimp business, since Japan has an old and thriving domestic industry. Mushroom experts say the country's tolerance for botanical hallucinogens has roots deep in the conservative countryside that is the backbone of support for Japan's ruling Liberal Democratic Party. For thousands of years Japanese farmers have been harvesting psychoactive mushrooms like Amanita muscaria, which is used in religious rites by tribesmen in Siberia and is believed to be the drug Soma, featured in early Hindu religious texts. To this day it is packaged and sold in the countryside for use in New Year's soups, says Kazumasa Yokoyama, a professor of mycology (the study of mushrooms) at Shiga University.
Farmers in remote villages also pickle something known as "giant laughing" mushroom (Gymnopilus spectabilis). "They say it can be given to women to get them to dance naked," says Nihachiro Sasaki. A 60-year-old grade-school dropout, Sasaki is revered among mycologists for discovering how to cultivate maitake, a delicious edible mushroom that is now a staple in Japanese grocery stores and has begun to appear in U.S. gourmet outlets.
But the rage for mushrooms among Japan's young has little to do with culinary or decorative passions. The government is gathering data and reconsidering whether to crack down. Not as easy as it sounds. "It is very difficult to regulate these mushrooms, because some species only contain hallucinogenic ingredients at certain times of the year," says Yokoyama, who advises the Ministry of Health, Labor & Welfare.
Lost Your Stash? You're In Good Hands
Mark Lewis, 08.16.01, 11:00 AM ET
NEW YORK - Usually when police arrest a pot smoker and confiscate his stash, he calls a lawyer. In California, he calls his insurance agent and files a claim for lost property. If he can prove he uses marijuana for medicinal purposes, chances are his claim will get paid.
Until now, that is. A U.S. Supreme Court ruling has emboldened some insurance companies to change their stance on this controversial issue. "We will not pay any future claims," says Elenore Williams, a spokeswoman for State Farm Insurance in California. "Our policies are such that we don't pay claims on illegal contraband."
This was a non-issue until 1996, when California voters legalized marijuana for medical purposes, such as when cancer patients use it to ease chronic pain. Since then, a small number of patients whose pot was lost or stolen have successfully filed claims for reimbursement based on their property-protection insurance policies. Insurers also have paid a handful of patients for marijuana plants confiscated by police, in cases where the charges later were dropped.
These payments have not exactly been a major drain on the insurers' finances. "We've seen fewer than 10 of these claims," State Farm's Williams says. "Maybe three or four have been paid." Allstate (nyse: ALL - news - people ) spokesman Bob Daniels says his firm has paid out only four marijuana claims in California--and none since the Supreme Court issued its ruling in May. Allstate is trying to determine how the ruling applies to its business and has not yet come to a conclusion. "It's a complex legal issue," Daniels says.
Although a number of states have now legalized marijuana for medical use, Congress has not followed suit, so federal law recognizes no such exception. In practice, federal prosecutors rarely go after small-time marijuana users, so it didn't matter. But the "buyers' cooperatives" established in California have attracted more attention, and the high court ruled in May that these cooperatives cannot claim medical necessity as a defense if they are busted for distributing marijuana.
The idea behind the cooperatives is to give patients easy access to the drug, rather than have them skulking in alleys to buy it from street dealers. Keith Stroup, executive director of the National Organization for the Reform of Marijuana Laws (NORML), says the court's ruling was regrettable, but he adds that it was narrowly drawn and does not invalidate the state laws allowing medical use of marijuana. Stroup says insurance firms that have changed their policy either have misunderstood the court's ruling or are using it as an excuse to stop paying these claims. Corporations tend to be conservative, he says, and paying for somebody's marijuana "makes them nervous."
Here's something else to make the insurers nervous: Stroup says that firms that stop paying marijuana claims may find themselves hauled into court. "If in fact a legitimate patient contacts us, we will offer them free legal assistance," he says. "We are not going to stand by and watch an insurance company gouge a sick and dying patient."
That is just the sort of line a plaintiff's attorney could use to win a big award from a sympathetic jury. The insurance firms may find it far cheaper to pay these penny-ante property claims than to reject them and get sued as a result.
