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Drugs

We’ve Probably Got About a Year Before Weed Prices Go Way Up

On April 1st 2014, new federal legislation will strip current medical marijuana users of their right to grow, and/or have a designated grower. There are approximately 2,800 growers producing for the over 26,000 medical marijuana users in this country.

On April 1st 2014, new federal legislation will strip current medical marijuana users of their right to grow, and/or have a designated grower. There are approximately 2,800 growers producing for the over 26,000 medical marijuana users in this country. Currently licensed growers will be required to apply for a new license if they wish to continue growing next year. Feds claim the new legislation will stem the flow of illicit marijuana from licensed growers to the black market. Critics of the new legislation claim it will only serve corporate interests in the emerging medical marijuana market.

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The federal government’s new “tough on crime” legislation asserts that the flow of surplus weed from small licensed farmers to organized crime networks contributes a significant amount to the estimated 6 billion dollar a year business, in B.C. The fallacy is that the RCMP are barking up the wrong plant: small growers don’t sell their surplus to transnational criminal organizations. Sure, the amount of excess plants per license is enough to cover costs like hydro, nutrients, rent, and then some, but not enough to be of interest to large crime cartels, and it’s not like organized criminal organizations go door to door collecting the surplus yield from medical pot growers.

Instead organized crime run their own commercial scale production facilities (see the busted 30,000 plant grow-op in the Barrie Molson Brewery, valued at $30 million). But the feds would have you believe that all black market weed, regardless of it’s origin, will get flipped for meth or coke somewhere down the line.

In reality, small growers have their own networks, which provide the market with an alternative to the pesticide sprayed, poorly flushed, chemical ridden weed the larger crime syndicate operators produce. The new legislation consequently rids the black market of small, quality producers and awards organized crime cartels, with their commercial scale grow ops, a monopoly on the black market, while leaving large corporate bio-tech, tobacco and pharmaceutical companies to corner the medical market.

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Of the 26,000 medical marijuana users in this country, only 13% currently buy direct from Health Canada. Prairie Plant Systems of Manitoba, a bio-tech company founded in 1988 to develop micropropagation protocols for the Saskatoon berry tree, produces the ms-17 strain, dubbed “chemo” on the black market. The strain has become marketable on the streets due to its moniker being synonymous with chemotherapy pain alleviation, a misnomer since most users claim the Health Canada strain to be weak, and riddled with stems and seeds. Prairie Plant Systems grows 29 varieties of plants, from apples to cherries to miniature roses, so you’d be forgiven to surmise that marijuana cultivation isn’t their top priority. Much as pharmaceutical companies produce various pain relief drugs for a variety of ailments, most marijuana users require plant strains to be personalized for their respective illnesses, and require the option to switch strains when they develop a tolerance to the pot they’re using.

Here’s the problem: all indications point to companies like Prairie Plant Systems being awarded licenses under the new legislation. Large corporate farms, with little to no experience growing pot, will presumably deliver a mass produced, single varietal, non-organic product to the ill, at a price far exceeding what patients currently pay for weed they grow themselves.

While on the west coast last month I dropped in on my old friend Reggie who’s been growing pot for 20 years, and medical marijuana for the last ten. He gave me a tour of his facilities, and broke down how the new laws will affect patients, growers, and in the end the recreational smokers on the streets.

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VICE: Can you break down a medical weed grower’s expenses?
Reggie: Say the patient has a 20-gram a day prescription. This equals 21.5 ounces a month, totaling about 16 pounds annually. That's 7196 grams annually for that single person. The gold standard for growers is a pound per 1000w light, per crop. Longer strains can produce as much as 2+ pounds per light.

So lets say I have 16 1000w lights to grow my 16 pounds for the year.  In ONE crop, I can produce my annual prescription. Hydro would cost me roughly $3000 for that period. Plant-food: maybe $400. As in any endeavor there are many incidentals, which ultimately add up over the course of a crop, but lets keep this simple.

So lets say $4000 to produce 16 pounds. That's $1.79 per gram cost. There's no way the cost will stay as low as $1.80 a gram under the new guidelines.

How high will it go under the new legislation?
It's gonna go through the fucking roof. It's going to make the production, distribution, and sale of medical weed a free market run by corporate types, whose only involvement in the industry is directly associated and motivated by the almighty dollar. Who the fuck else is going to spend, conservatively, 300-grand, to abide by the governments new standards per security, location, employee standards etc.? Just to start up?

Take a look at this place, I slapped this bitch together for under 30-grand. It produces product as good as any I've come across.

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You don’t think big companies competing with each other will drive the market value down?
Of course these new producers will be competitive, and possibly try to under cut the competition in order to sell more of their own product. And this could drive prices down. But I don't see that happening. The overhead, payroll, and red tape costs under the new regime are guaranteed to be prohibitively more expensive than, for example, mine are now. I don't have to employ a quality control person, or have a $100 000 security system with triple vault doors between the outside world and my garden.

What will become of current licensed farmers who are denied a license under the new legislation?
I think most small farmers who lose their licenses will quit altogether.  Guys like me will split down the middle. The ones who had decent jobs and paychecks will go back to whatever they were doing before. Most small growers are simply augmenting their income with their gardens, and not living entirely off of them anyways.  More people will be on welfare. There will be a push for the cost of filling a medical marijuana prescription to be subsidized be either the government, or medical services plans, as many people won't be able to afford it anymore.

The people that do continue to produce illegally will have to downsize their operations considerably to stay under the radar. Or, instead of having one big garden, they could have multiple small ones, which would cost more to operate, as they'd be having to drive all over hells half acre just to tend to the plants which, previously, would have been under one roof in one location.  Also, overhead would multiply, as they would be paying rent on more than one location.

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You’ve been approached recently by foreign venture capitalists looking to get a foothold in the emerging market. Can small farmers compete with these guys?
Corporate types with no experience in this field are looking to recruit guys like me to run their farms. The reality is that as more investors with deep coffers start up legitimate large-scale farms, small producers won’t be able to compete. The prospect of having to be a bonded business, with armored cars, insurance, a chemist, plant biologist, and accounting department, makes the switch to running a legitimate operation under the new legislation too expensive for small farmers.

How do you think patients will adjust in the coming year?
Conservative estimates from Health Canada anticipate a 3gm a day user to be paying over $1000 a month under the new guidelines. That’s more than twice what most patients currently pay. For patients that grow themselves, or use a designated grower, the price augmentation will make it impossible to afford. Most will likely begin buying illicit weed, or continue growing their own, and risk falling victim to the draconian laws set out in the new crime bill, in effect sentencing poor and sick people to prison terms.

What will happen to the street price of pot?
Illicit pot will go up because of the additional risk associated with producing it, like mandatory minimums for production of as few as six plants. Therefore there will be less illegal growers, hence, less available illicit product. Less supply for same current demand equals higher prices.

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Watch:

B.C. Bud

More about Canadian Weed:

These Canadian Cops Are Fighting to Legalize All Drugs

The Liberal Party of Canada Wants to Decriminalize Weed