Ann Arbor Area Business Monthly
Small Business and the Internet
Legal Weed
By Mike Gould
May 2018
…If he trades you dimes for nickels, and calls watermelons pickles
then you know you’re talkin’ to that reefer man.
Popularized by Cab Calloway, 1932
Composed by J. Russel Robinson, lyrics by Andy Razaf
This just in: the November 6th ballot will see a proposal to legalize the recreational use of marijuana in Michigan. If it passes, we will join the eight other states in the union which made this legal. Michigan, as well as 29 other states, already permit medical marijuana – we voted in favor for it by a 63%-37% margin in 2008. I’m going to go way out on a limb here and predict the measure will pass, and changes will ensue.
Setting aside the cultural, medical, political, historical, and folkloric aspects of this for the moment, let’s talk today about the business/financial impact of legal weed. Long story short: there’s a lot of money involved, and it could have a serious impact on the economic future here in the land of the hand.
Bhang for the Bucks
To review: federal law classifies weed as a Schedule 1 narcotic, right up there with heroin. The majority of people in this country feel otherwise, and some individual states have woken up to the fact that ganja can goose the local economy in a lot of different ways, no matter what the feds say.
Fun Fact: in Colorado, the oldest recreational marijuana market in the nation, sales in 2017 were $2 billion. State tax collected was $200 Million. The initial projected tax revenue for Michigan’s plan would be $100 Million (see below).
Don’t Step on the Grass, Sam [Steppenwolf]
From the Detroit Free Press, April 26, 2018:
Legalize the possession and sale of up to 2½ ounces of marijuana for personal, recreational use.
Impose a 10% excise tax on marijuana sales at the retail level as well as a 6% sales tax. The estimated revenues from the taxes are at least $100 million.
Split those revenues with 35% going to K-12 education, 35% to roads, 15% to the communities that allow marijuana businesses in their borders and 15% to counties where marijuana business are located.
Allow communities to decide whether they’ll permit marijuana businesses. Restrict purchases of marijuana for recreational purposes to 2½ ounces but an individual could keep up to 10 ounces of marijuana at home. Allow the Department of Licensing and Regulatory Affairs (LARA), and not the politically appointed licensing board that will regulate the medical marijuana side of the market, to regulate and license marijuana businesses, ranging from growers, transporters, testers and dispensaries. Set up three classes of marijuana growers: up to 100, 500 and 2,000 plants.
Seems legit to me.
If You’re a Viper [Stuff Smith] I’m going to hazard a guess that the average reader of my articles, that’s you, Mr. or Ms. Businessperson, is not going to immediately run out and plant a crop of cannabis in the back forty, or start up a dispensary in a storefront somewhere. For one thing, there will be a period of time while the local Michigan governments grapple with how they are going to respond to the local control provisions of the new law.
I don’t see a plethora of new pot shops opening any time soon. (I could be wrong – there may be an army of merchandizers waiting patiently in the wings with warehouses full of buds ‘n’ bongs, biding their time for when they can spring forth to cash in on cannabis capitalism.)
As this is an ongoing issue regarding medical marijuana dispensaries, expect to see lots of posturing, maneuvering, and machinations by established political interests pro and con, as well as the nascent weed agricultural/industrial complexes. The latter is already a real thing, as quasi-legal growers are by now well-established in rural Michigan, as well as in clandestine facilities around the state.
In other words, the competition is already there for the buzz biz in Michigan; newcomers will face a lot of well-funded push back from the existing industry. So how does one adapt one’s business to take advantage of all this? At the risk of being perceived as a proselytizer, here are some suggestions:
Weed With Willie [Toby Keith]
Partner with an existing business. Once the law is changed, all of the local dispensaries, growers, and support markets are going to be looking to expand their trade. Most of them already have mattresses full of cash they can’t bank, and will self-fund, but there will be a lot of others that could use some investment dollars.
(Roll Another Number) For the Road [Neil Young] If you are a bank, figure out how to get around federal banking regulations so that you can provide all the usual financial services that growing (see what I did there?) businesses need. The federal laws will eventually change and when they do, fortune favors the well-prepared.
If you are a café or restaurant, think about outdoor smoking facilities, or edibles areas.
Speaking of which, there will be a lot of opportunities for knowledgeable cannabis cooks and chefs– see the Viceland cable TV series Bong Appétit for pointers.
Don’t Bogart Me [Fraternity of Man] Finally, if you are a community service organization, remember that there are going to be a lot of jobs opening up for un- and semi-skilled workers. Somebody’s got to do the usual farming jobs, from fertilizing to bud-boxing. I can see a lot of people in, say, the Detroit urban farming community suddenly becoming more employable. (Hopefully, local food production won’t suffer from competition for Ag workers harvesting hemp.) There is already a group called Pott Farms (started by the sisters Robbin and Ellen Pott, URL below) whose goals include all of the above.
The times, they are a changin’.
Pott Farms:
https://www.pottfarms.org
Mike Gould grew up in Ann Arbor in the 60’s. Nuff said. He was a mouse wrangler for the U of M for 20 years, runs the MondoDyne Macintosh Training/Photography mega-mall, is a laser artist, directs the Illuminatus Lasers, and welcomes comments addressed to mgould@mondodyne.com.
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