California sees green in legal pot
Longtime growers wary of corporate influence as law takes effect
A new gold rush is sweeping California as the state prepares to launch legal marijuana sales Monday, bringing the powerful and largely underground economy finally into public view.
Marijuana long has been one of California’s most important cash crops, albeit one many visitors would never see amid the vineyards and avocado farms. Tens of thousands of entrepreneurs are rushing to carve out a slice of a market that has grass-growing cannabis evangelists colliding with out-of-state suits eager to make a legal buck.
There’s a lot to be made:
The state’s marijuana black market is worth $13.5 billion, according to cannabis financial analysis firm Green Wave Advisors, and the legal market could be worth $5.1 billion in 2018.
“You’re taking an industry that was completely underground and making it the most regulated product of all time,” said Jessica Lilga, who runs a medical cannabis distribution service in Oakland and hopes to expand into recreational pot. “It’s just insane.”
Legalization through voter approval of Prop. 64 raises concerns about whether kids will start using more marijuana thanks to increased visibility and whether the state is creating a Big Tobacco-type industry that puts profits before health.
Though five other states offer legal marijuana sales, the Golden State’s sheer size is likely to reshape the pot industry worldwide, potentially driving down prices for consumers while generating hundreds of millions of dollars in taxes. It holds the promise of wiping out criminal records for some people with cannabis convictions and helping longtime illegal-drug dealers go legal by getting them licensed.
California’s marijuana growers are highly sophisticated when it comes to operating illegal farms in the mountains north of San Francisco. Playing by these new rules is a different proposition. Many longtime cannabis farmers struggle with whether to go legal, in part because getting licensed can cost tens of thousands of dollars. Additionally, many longtime marijuana moonshiners are culturally opposed to playing by the rules.
Matt Karnes of Green Wave Advisors estimated that at least half of the cannabis grown in California is illegally shipped across state lines and sold at two or three times the price it would fetch if sold locally for medical use.
“What we are going to see is not only a legal shift but a cultural shift,” said Michael Steinmetz, CEO of cannabis distribution company Flow Kana.