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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
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.
REAL ESTATE BOOM
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.
HOMELESS CRISIS
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.
THE JOB SEEKERS
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 Rense.com) 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.
OLD MONEY - NEW MONEY
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
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!
POLITICS
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 Rense.com, 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”
LATEST NEWS
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!
420 COMIN’ RIGHT UP
Denver celebrates 420 on 4-20-17! Look for an upcoming article about the
festivities right here on Rense.com.
WE LOVE OUR TAXES
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. |
