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Cannanomics Free Market
Capitalism or Economic Miracle?

By Ray Larsen
Exclusive to




Colorado and it's Capitol city of Denver have experienced major positive changes in the state and local economy since the roll-out of legal recreational marijuana (let's call it Cannabis) on Jan.1, 2014. Teen use has held steady at near the national rate, despite the alarmist predictions of the "just say no" crowd. Fatal car accidents have decreased, not just here, but in all the legal states. Opioid overdose deaths have declined significantly. Alcohol sales have shown a small decline. Tens of thousands of new jobs created. Most importantly, the Rocky Mountains haven't crumbled into the sea and the last time I looked, the sky was still up there, partly cloudy with the occasional chemtrail.


Newcomers have flooded into Denver, many hoping to land a good job with any one of the hundreds of Cannabusiness. Others arrive to have dependable, legal access to medicine not available elsewhere. I've heard many estimates, averaging 5,000 per month! Driving is no fun anymore. Rush hours are now almost continuous. Seems 1/4 of the cars here have license plates from other states which has led to massive traffic jams on roads that were planned 10-20 years ago, providing for projected growth long before the waves of newcomers hit our roads. Reacting to the new driving situation, the state is working on floating Billions in road construction bonds to go on sale soon. These bonds will be a great long term infrastructure investment opportunity with very low default risk. Many Cannibusiness have adopted a section of highway as a way to give back to their community. Hopefully, some of our newly minted millionaires will invest a bit of their cash into improving our overcrowded highways. Safer highways save lives, especially the newcomers who get lost easily and haven't yet mastered severe winter driving.


Home values and rents have reached unheard of highs and show no signs of slowing. Real estate sales agents are getting crazy rich from their commissions. This is free market capitalism at work. Reacting to the the major imbalance in supply vs. demand, real estate investors have been building new apartment complexes at a dizzying rate. Take a look in any direction and you will likely see a new apartment building rising on land that six months ago was a strip mall or a block of aging single family houses.

Rents for these new apartments will dazzle your mind.  It's textbook short supply vs. big demand economics. If these trends continue, I fully expect to see rent controls like New York City and the SF bay area coming to Denver in the next few years.

Denver used to have an abundance of empty warehouses and storefronts. Not any more. Those empty warehouses are now filled with thousands of growing plants and hundreds of employees. Over 500 previously vacant storefronts now house a retail shop or medical dispensary. Several specialty real estate agencies have popped up to serve cannabusiness. Just imagine the commission check for selling a $5M warehouse. I'm simply amazed at how quickly this economic miracle has manifested.


Homelessness has become a major crisis point in Denver. Many people here blame the legalization for this and they are partially right. A significant number of Denver's homeless are newcomers who failed to find a job quickly enough. Rent increases of 20-30% per year have driven waves of evictions, putting people on the streets. If they can't carry it in a big backpack, these newly homeless usually lose all their personal possessions. There are several woefully inadequate, so called shelters. Because the homeless are allowed to keep only a small fraction of their possessions if they decide to enter a shelter. some choose to stay on the streets. Husbands and wives are split up. Couples with children are treated a little better in family type shelters, that is if there is a room available. Perhaps, the most heartbreaking cases are homeless people with animals, which are not allowed in the shelters. I know a woman who has 6 cats, 3 snakes and a dog. When offered shelter at Volunteers of America, she chose to keep her pets and continue living in her car. Random chance or Divine Intervention led her to a private landlord who rented her a small, affordable condo. A miracle in Denver.

Yes, there are a few underfunded programs, like Denver's Road Home, to help a select few homeless make a fresh start at life. Although the Denver Police have a reasonable attitude towards legal Cannabis, they are merciless when it comes to homeless people. The city has a "camping ban" that criminalizes homeless people, allowing police to regularly "sweep" these unfortunate people off the streets. In fact, the city was recently caught using funds donated to DRH to pay Police overtime during the sweeps! What a cruel irony. Of course, it was just an accounting error. Denver treats the homeless like a sub-human race, regardless of the circumstances that landed them on the streets. During these sweeps, homeless people are herded around while all their meager belongings get confiscated, including blankets during Denver’s cold winters. The less cooperative ones are likely to receive a good beating for just not moving along quickly enough.

Three “campers” cited by police get their day in court.

Unfortunately, all three were convicted by a jury. Sentences pending.


Word has spread all over America that Colorado's economy is doing great and good jobs are plentiful. This is true, but it's not everything people have been led to believe. Moving here with less than $10k in savings is not a good idea. Job seekers have come here from all over America, many escaping from oppressive midwest and deep south states, where a joint can get you 10 years of room and board in the joint, financed by the taxpayers.

They represent a natural cross section of Americans, young, old, black, white, brown, you name it.  They come here for more than just a job. Most want to participate in something they strongly believe in. I like to tell the young ones, often frustrated by the low pay ($10-12/hr) of entry level jobs, to have patience. The smart ones who are willing to work hard are very likely to be making $50k or more within 5-10 years. Talented head growers are like Master Sergeants, they actually run the show, earning salaries in the $150 to $250 k range. They have the power to hire, fire, buy and sell. A university degree in agriculture, plant science, biochemistry, genetics or related science area is usually required to be considered for these positions.

Landing a Cannabis industry job isn't nearly as easy as the newcomers believe it will be. Employers prefer to hire locals who have lived here for at least a few years. They don't like to train new hires, so they want some experience, however, some are so desperate for help, they will hire with no experience. Unlike most employers, they will hire senior citizens, like myself.  

Step 1 is getting a Colorado drivers license or state ID (with ez voter registration if you want). Residency takes 3 months from the date of your lease. To get your MED badge (see previous article "Good People DO Smoke Marijuana" on sooner than 3 months, just find a job, any kind of job with a payroll check, proof you'll need. Now you can skip the 3 month wait and apply for your MED badge, which is step 2, in person. At the end of this process, your picture is taken. It will appear on your badge just like your drivers license. Your fingerprints are electronically scanned and emailed to the FBI. Once you are FBI approved, they will mail it to you to verify your mailing address. Don't waste your time applying for jobs until you receive your badge. Your badge is good for 2 years. Craigslist seems to be the best place to find job openings.

My first MED badge expired last year. Renewal was a simple 1 page form plus a $75 money order. About a month after mailing the renewal and wondering why it was taking so long, I received an email from the MED stating that my badge had been returned by the Postal Service marked "undeliverable". It took 10 days to go 6 miles in the wrong direction back to the MED. The MED rep asked if I wanted it re-mailed. No thanks. I immediately called him and said that I would come pick it up in person. Two days of work missed, thanks to the Postal Disservice.


Legal Medical Cannabis in Colorado began with the passage of Amendment 20 in the Nov. 2000 election. The early years are often called the "caregiver era". Things were so simple back then. Patients had cooperative doctors sign the health department forms. The forms plus a money order were then mailed to the health department. My first "red card" cost about $230 total. After a month of waiting, it finally came in the mail. It was red allright, about the size of a standard #10 envelope, nowhere near wallet size. Someone must have got the message, as the current card is purple and fits right in with your drivers license. Costs to get a new card are now way lower. My most recent renewal cost $20. By designating a certain dispensary as my caregiver, I saved about $60 and got a free 1/8 ounce from that dispensary. So, essentially, it was free. They can now grow 6 more plants. Win, win, again, thanks to free market competition. If only DT could understand this?

Not to be confused with a MED badge, having a red or purple card authorizes the patient to grow up to 6 plants (a standard adopted by many medically legal states since) for personal use. Patients can legally posses up to 2 ounces. For those lacking a green thumb, the caregiver system was created.  Patients designate a caregiver. He or she agrees to grow up to 6 plants for you and up to 4 other patients. Most real caregivers actually care about their patients who usually wind up becoming good friends. They are willing to help with chores like cutting firewood or a ride to doctor appointments, etc. Years later, the health department codified this, requiring caregivers to do materially more than just providing a patient's medicine.

A 2007 court decision removed the 5 patient limit. Caregivers could now help as many patients as they could handle. This naturally led to the opening of storefront dispensaries by enterprising and talented caregivers. Many of these early dispensaries blossomed into lucrative businesses with million dollar cash flows serving hundreds of patients. Rules and regs changed again in 2009, ushering in the Green Rush years. Some big ‘new” money began flowing into our nascent industry. Some of these investors bought into the old money dispensaries. Others opted to start from scratch. During this period, a dispensary had to sell only product grown in their own facility. There was no wholesaling or trading between dispensaries. A grow had to be attached, legally if not physically to a dispensary. This problem was fixed by the legislature just before the 2014 legalization.

The entire industry has evolved dramatically in the last 3 years of full legalization. We now have a full spectrum of Cannabusiness, from tiny to supersized. Some just sell, others just grow, but the biggies are very sophisticated vertically integrated operations with hundreds of employees. Working as a temp at many different places over the last 2 years, I've observed that there is little standardization, they all do things differently. Most are experimenting to find more efficient production methods. All are very secretive.

Fierce competition in the industry along with machine trimming and economies of scale have driven prices down. Once again, the free market at work. Customers tend to go where they receive the best perceived value for their money. Recently, the ounce benchmark around Denver is $100. Five years ago, a typical ounce of quality medical cannabis cost $300 to $400. When there is an oversupply of some particular strain, I've seen prices as low as $85.00, practically giving it away, considering the cost of production is around $50/oz.

Similar to other types of markets, upscale consumers are willing to pay more for top quality, hand trimmed, organic buds. This is how the smaller operations manage to remain profitable competing with the mass producers.


The "black market" has largely disappeared in Colorado. They can't compete here. Who, in their right mind, would buy a baggie of some unknown green leafy substance from a street dealer when they can visit a nice retail shop or medical dispensary and walk out the door with clean, lab tested, satisfaction guaranteed Cannabis for less money. You really don't want to ask a street dealer any questions, but professional Bud-tenders are always happy to answer a customer’s questions.

Cannabis produced in Colorado must stay in Colorado. That is our law, but it's a fact that some of it does leave the state. Money hungry police in neighboring states routinely stop vehicles leaving Colorado. Chances are, a search will turn up something they can use to arrest, convict and fine these unfortunate travelers. Even for small amounts, the legal fees and fines make a lot of money for these places. A very sick woman I know, pulled over by a sheriff deputy for having a lead foot, is now facing 10 years in a Kansas prison along with a $10,000 fine. She was caught with a substantial amount of medicine, including concentrates which are an automatic felony in Kansas, even a small amount qualifies. If they want to, the feds could also prosecute her for interstate transportation of a controlled substance. Total insanity! If you visit Colorado, please, don't take Cannabis across the state line unless you don't care about your money, your car and your freedom.

FedEx, UPS and the USPS transport an unknown, but large amount of Cannabis out of Colorado. Only a tiny percentage gets intercepted, usually on the delivery end. I'm often asked about this and always recommend not to break Colorado law. For those who choose to disregard our law, I hear the best way to evade detection is to use expensive overnight shipping. Carriers just don't have the time to mess with these extremely urgent packages.

A man I know flies here 3-4 times a year to purchase the only medicine that helps his sick wife. He spends about $1,000 per trip and carefully packs it in his checked bag. So far, so good, but if he ever gets caught, the Feds can charge him with interstate transportation. They will probably wind up moving here eventually. I'll bet there are thousands of patients in the remaining “reefer madness” states, taking this risk for their sick family members. Anyone with a state issued medical cannabis card should be allowed to travel with their medicine.

A strange but true trend is now in progress. Wealthy people in Mexico have developed a taste for top shelf Colorado Cannabis. Mexican growers can't even come close. This has led to smugglers doing the opposite of what they used to do. They buy low in Denver & sell high in Mexico City!


The governors of Colorado, Alaska, Oregon and Washington joined forces to write a great letter to AG Sessions and Treasury Sec.Mnuchin. Read the full story courtesy RT right here on, headline:
4 governors ask Trump admin to chill out on marijuana enforcement

Gov. Hickenlooper: Federal crackdowns on the legal Cannabis programs in Colorado would likely lead to “outrage” in the state. I think our reluctant governor is finally beginning to get with the program. Looking in my crystal ball, I predict that we would see millions of Colorado citizens hit the streets, a peaceful, organic protest bigger than any in America’s history. We are proud of what we have worked so long and hard to achieve here. We won’t give it up without defending our state’s rights. Read the full story here:
Hickenlooper, governors of other pot-friendly states tell feds to consult them, not change Cole Memo

President Trump promised us JOBS! Nationwide, the Cannabis industry has created over 120,000 good jobs for Americans with no help from the swamp. In the future, that’s likely to  grow into millions of new jobs if they would just let us be.  If DT does what he’s been saying lately, the future isn’t so bright anymore. Let’s not allow this to happen. Read all about it here:
White House Plans ‘Greater Enforcement’ Against Legal Cannabis

AG Sessions believes Cannabis causes more violence and makes the opioid addiction problem worse. Nothing could be further from the truth. From The Cannabist, Denver Post, America’s first major newspaper to hire a Cannabis editor:
AG Jeff Sessions directs task force to review federal marijuana policies
Jeff Sessions’ fellow Alabamans think his approach to marijuana, opioids “couldn’t be more wrong”


Cannabis Clubs are “on hold”. Please see my previous article, “Good People DO Smoke Marijuana” for more info. In the last week or so, the political winds have changed direction at the state capitol. Our long awaited safe spaces to get together and share the sacrament, have been shelved due to Fear of Sessions.

Colorado Backs Off Plans for Cannabis Clubs

The Colorado legislature passed a bill that sets up a legal mechanism to convert recreational plants into medical plants. A magic wand to save those plants from any federal crackdown. Hopefully, that won’t happen, but we all know it’s wise to “be prepared.”

Colorado Weighs Strategy to Guard Against Federal Cannabis Crackdown

Never a dull moment!


Denver celebrates 420 on 4-20-17! Look for an upcoming article about the festivities right here on


Taxes are a major facet of any economy. Last year, the Colorado Cannabis industry rang up about $1.3 billion total sales, providing $200 million for our State Treasury and many millions more for counties, cities and small towns that levy their own taxes. Contrast that to $996 million sales in 2015, $699 million for 2014. Show me any other industry anywhere with that kind of growth. Arcview Market Research predicts $20.2 billion by 2021.

The Cannabis industry and their customers overwhelmingly agree with these taxes. We gladly pay them for a number of reasons. We no longer have to deal with black market idiots or worry about narcs and getting busted anymore. Making a purchase from a retail shop or dispensary is simple, quick and pleasant. Most of this tax money is sent to public schools, intended for badly needed facility repairs and upgrades. The remainder funds medical research, drug education and treatment programs, etc. The public, the state and schools, all winners!
Marijuana tax revenue hit $200 million in Colorado

The percentage of total tax depends on the location of the point of sale. Medical patients pay 2.9% state + local sales tax. Retail customers pay 2.9% state + 10% special state retail MJ tax + several local taxes. The total taxes on a given purchase vary a lot, as counties and cities can set their own rates.

There is no direct Federal tax, yet. However, the owners of any type of Cannabusiness will pay federal income tax on their GROSS receipts. Thanks to IRS reg 280E, they can't deduct any of their ordinary business expenses, like rent, utilities, employee wages and benefits, vehicles, nutrients, legal fees, computers and software, state licensing fees and taxes, insurance, security guards, toilet paper, etc. We don’t love this tax as it is terribly unfair, but don't think for a second, that the Feds aren't getting their "piece of the action", as Captain James T Kirk once put it.