Starting
a new business is hard. Starting a new marijuana business is harder.
After
all, not every business is seeking to capitalize on a budding industry that’s
only recently become legitimized, and even then only in the eyes of the local
government. With plenty of green to be made it’s no surprise that people are
jumping in even when the transportation laws are so restrictive. Heck,
sometimes it even gives them a boost.
Last
year legal weed sales rose 17 percent, clocking in at $5.4
billion, and that’s with only four states and D.C.
sanctioning cannabis for recreational use. At least 10 more states are in the
process of considering recreational marijuana, and with the higher voter turnout expect this
November, several could join the ranks in only
a few months. ne report from ArcView Market Research predicts that by 2020
total annual sales will reach $21.8
billion—or, as Fortune points out,
bigger than the NFL is now, with $12 billion in revenue last year.
But even with that goal it wouldn’t reach its full potential as a market: The
same report found that “full legalization of
marijuana nationwide would result in $36.8 billion in retail sales,
larger than the $33.1 billion U.S. organic foods market.” There may only be about 20 million
marijuana consumers, but they’re not exactly hitting this industry
infield.
That’s
a lot of money on the table. And right now, everyone is scrambling to figure
out how to get at it, around the laws in place.
After
all, transporting weed, even where decriminalized, is not easy. Almost every state that has
some sort of restriction on the books, if
they don’t ban the practice outright. A bill that would’ve allowed Seattle weed
delivery is effectively dead, while
Wyoming is taking steps to regulate how medical
marijuana card holders can transport cannabis in
their vehicles. But perhaps no one has it quite as hard as Hawaiians, whose
medical marijuana dispensaries will open their doors July 15, to a number of
complex rules. The Cannabis reports:
However,
the law banned inter-island transport. Marijuana advocates say that will
separate the industry into distinct economies on each island, unlike other
states. It could also lead to marijuana shortages, and go as far as preventing
some dispensaries from even selling marijuana until laboratories are approved.
All
medical marijuana must be tested in a state-approved laboratory before it’s
sold, but currently, there are none in Hawaii. Some worry that high startup
costs and low patient numbers will prevent laboratories from opening on rural
islands.
“Clearly,
not every island can support a full-on laboratory,” said Pam Lichty, president
of the Drug Policy Action Group.
In
response, Hawaii lawmakers are considering whether to allow marijuana to be transported
to another island if a laboratory isn’t available. Rep. Della Au Belatti, who
introduced the bill, said lawmakers are trying to figure out how to get around federal laws that
prevent marijuana from
being transported by sea or air. She said she asked state agencies to look at
other state policies for answers.
It’s no
secret that the federal scheduling is less than sensical
when it comes marijuana, and it’s full of contradictions: The
Department of Justice has said it likely won’t interfere with any state
marijuana programs so long as they’re
well regulated, but that could change depending on how November shakes
out.
Which
leaves any states that aren’t looking to (worst-case scenario) completely
overhaul their system in a year in a bind on how to transport cannabis. Some
airports in states with legalized recreational marijuanaallow travelers
to fly with weed, so
long as they’re carrying within the legal limits. But the FAA can revoke a
pilot’s license if they knowingly commit a federal crime by transporting weed
across state lines—even, as Alison Malsbury points
out on Canna Law Blog, between two states that have both legalized:
More importantly, taking marijuana from
one marijuana legal state to another — even though both jurisdictions legally
allow for recreational marijuana use — still constitutes a federal crime.
Section 812 of Title 21 of the U.S. Code classifies marijuana as a Schedule I
Controlled Substance. Because our Constitution gives the federal government
authority to regulate interstate commerce, it has the ability to prosecute
individuals for transporting marijuana across state lines, even if the
transport is from one legal state jurisdiction to another.
…Although the feds have emphasized that
enforcement will not be a priority in states with tightly regulated
recreational or medical marijuana regimes, they have never said that they will
look the other way when interstate transport is involved.
So just don’t.
But that’s not stopping people from buying
seats at marijuana exchanges, who sell wholesale marijuana to
distributors. Their market is as limited as they come; they can only produce
and sell their product in a limited number of states states, and their
suppliers can’t even ship across state lines. But in some
cases, they’re helping to cement their business plan: While Oregon, Alaska, and
Colorado are more lax about merchants being allowed to use their own raw
materials, Washington strictly forbids retailers from doing so.
“In a system like that, exchanges become
more useful,” Adam Orens, the founding partner of the Marijuana Policy Group, told Bloomberg. As the article details it’s paying off, with seats
jumping from the original price of $2,500 each to the current $10,000.
And they only see that market growing.
“I think that we are going to see in 2016
this next wave of investors, the next wave of business operators, and people
who’ve sort of been watching or dipping their toe in, really starting to swing
for the fences and take it really seriously,” ArcView CEO Troy Dayton is quoted in Fortune.
Clearly marijuana businesses are taking
off, whether or not the federal government wants to make it easy for them to
move their supply. But as more and more states decriminalize marijuana (which
in addition to riding to the polls in a good year also comes with a lot of
public support) it’s
something that federal laws may have to find a higher tolerance for.
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