By Ryan Van Lenning 
(Editor's note: This is the final piece in a six-part series in collaboration with Oakland Local on the business of marijuana.)
Opening any enterprise in an unclear legal and business environment is a difficult proposition. Even more so for cannabis-related efforts. In California, let alone in the rest of the country, a patchwork of regulations make for an ever-shifting and sometimes thorny landscape.
One county may have no limits on dispensaries while the neighboring one prohibits them. Some districts don’t count the number of plants, but strictly regulate the square footage of the dispensary. Similarly, some allow only certain types of products, e.g. plants but not seeds, or both of those but not edibles. Some cities tax cannabis-related businesses, others don’t. Some tax based on square footage (being proposed in Berkeley), others on gross receipts; in Oakland, this went into effect Jan. 1.
Confused yet? You can be sure any budding businessperson better have solid advisors close at hand.
A recent local example illustrates the legal confusion. A father-son team in San Francisco was recently busted by police, who found 70 marijuana plants, two guns and scales in their Sunset District home. They were charged with cultivation of marijuana with intent to sell and the case went to court. However, in early March, a jury acquitted the two when it determined the plants were for personal medical use only. The men had doctor’s recommendations posted on the walls.
One major question is whether those growing and providing medical marijuana to patients in compliance with state law will continue to be prosecuted under federal law. Even in the least restrictive locales, you can’t get around federal policy. The Drug Enforcement Agency still classifies marijuana as a Class I substance, the growing, possession and selling of which carries prison time. The federal agency still conducts raids, even on medical marijuana clinics (like the one in South Lake Tahoe on Obama’s second day after taking office), despite Attorney General Eric Holder’s announcement last October that he was directing the Justice Department to stop such raids on medical marijuana dispensaries operating within state laws.
A more recent case in Colorado has many dispensaries and growers on alert. In February, a man named Chris Bartkowicz was accused of possession with intent to manufacture, distribute or dispense 224 marijuana plants. Bartkowicz could face a fine of $2 million and from five to 40 years in prison.
It’s no wonder people are hesitant to go on record to the media (which, by the way, is how the DEA found out about Bartkowicz in the first place).
“It’s frustrating politically-speaking,” said Somedude (the tech engineer turned cannabis-man from the third part of this series, who preferred to remain anonymous). “There’s a huge groundswell for legalization. But it’s still murky. It’s a strange new beast, legally-speaking,”
The same sentiment seemed to be on the mind of every person contacted for this story. Yet there is no doubt the tone of the discourse statewide and nationally has changed, even in the past couple years.
“The shift has surprised even the activists,” Somedude said.
There are a number of trends that signal the national discourse has moved toward acceptance. Ballot initiatives and legislation decriminalizing medical marijuana are in the works in several states. Recent polls indicate that a clear majority of the public supports medical marijuana. Cities all over California are discussing ordinances, and dispensaries are popping up by the dozens. Cannabis-related retailers are more open about their intended end-use. New medical studies have reported on the benefits of medical marijuana. Public officials have publicly advocated in support of medical marijuana, including legalization for personal use. Even some church officials have come out supporting it, as in a recent op-ed in the San Diego Union-Tribune.
California’s Tax and Regulate Cannabis 2010 initiative is on the November ballot and could likely pass. If it does the floodgates will swing open, and we can expect more of the economic activity discussed in previous parts of this series to proliferate.
“Provided the feds follow along,” Somedude added.
Somedude said he plans to open a cannabis business regardless of what happens in November. He admits that, because things are still in legal limbo, opening a cannabis-related business “could be a dangerous proposal.” He’d like to remain where he lives, a county that has stricter ordinances, but said, “I’ll go where the codes are better.”
Even as the cultural and legal sands shift, expect more people from all walks of life —from smaller players, like Somedude, Green Thumb Consulting and Master Bong, to major players like iGrow, Harborside and Statewide Insurance—to dive in to find their niche in the unfolding cannabis economy. With all the creative entrepreneurs, new taxes, regulations, widespread advertising and even big insurance in the game, it appears the so-called underground pot business is rapidly becoming an aboveground medical marijuana economy.
Posted by Ryan Van Lenning on 04/02/10
