The Clinch On Cannabis: Immature Industries Eventually Grow-Up

July 6, 2016 by MJ News Network 2 Comments

The cannabis industry is still taking shape. Legislative and regulatory policies can have a profound impact on the direction the movement takes. There are many academic sources available, but what differentiates this report from others is that this author is able to combine economic rigor with direct industry experience. The author has a background in economics, experience in high tech business operations as well as a background in the cannabis industry as a chief operating officer, a governmental affairs officer and a compliance officer. These practical experiences in the cannabis industry has further enabled the author to take the next step and assess the impact policies have on the industry and to make policy recommendations to address them.

Front Runner, an agglomerated cannabis data website, commissioned Whitney Economics to conduct an analysis of the Washington cannabis market. The initial genesis of the project was to ascertain whether or not the 222 additional retail outlets proposed by the Washington Liquor and Cannabis Board were an appropriate number based on the BOTEC analysis.

Once the research commenced, the project extended beyond the initial scope and examined such topics as; the total demand forecast for the market, the total supply available to support the market, the elasticity of demand, taxation and how to maximize the conversion from the black market to the retail market. The data used in this report cites multiple sources, includes original analysis and forecasts, as well as data taken directly from the Washington Liquor Control Board (WLCB) and BioTrackTHC. The empirical data was analyzed and the findings contained herein are an interpretation the impact of policy decisions have on the Washington cannabis market.

The data assesses the empirical results from January 2015 through March 2016 and extrapolates into the 2016 fiscal year and beyond.The methodology was to examine specific aspects of the market to ascertain if the Washington market was able to be sustained at the proposed retail levels, whether the current policies support the development of the market, what policies need to be changed and what indicators to examine moving forward.

The conclusions derived from the data were meant to answer questions about the market that are fundamental to the foundation of economics. For if the data cannot support the most basic fundamentals of economic theory, then the data or policies must be viewed with skepticism.

The findings of this report are simple. The consumer is extremely price sensitive. The black market plays a large role in the marketplace and without a reduction in tax, the market will not realize its true potential. The level of demand is able to support the retail expansion, but without converting the demand over from the black market, the retail system will face challenges in growth. The allocation of the retail outlets can support the demand, but the allocation by county needs adjustment. The supply of product in the market is appropriate for now, however the amount of supply capacity is well in excess of what the market will bear. This, in turn will lead to further commoditization of prices, compression of retail margins and maintain a vibrant black market.

The insights contained in this report are much more applicable to an investor, a policy maker or a regulator than many previous works and that is what differentiates this report from others currently available.The report also provides a list of indicators to track on a regular basis that will allow the investor or regulator to ascertain the health of the industry and the success of the public policies as they currently exist.

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Legal Pot Competes With Dangerous Hash-Oil Black Market

July 19, 2015 by MJ News Network Leave a Comment

OREGON: Amy Zimmerman’s left calf was covered in second-degree burns after a Memorial Day campfire accident. To help heal the burns, she applied a medicinal salve made with hash oil.

The results were better than she had expected.

“My doctor was impressed, saying, ‘What did you use?'” She flashed her calf, its new skin pink and glistening. Just a little bit of oil goes a long way, she said, “but it’s an extract from a plant. That’s all it is.”

Hash oil is an extract of the marijuana plant, and it’s highly concentrated. Just like marijuana itself, hash oil can be smoked or ingested, or as Zimmerman’s wound demonstrated, rubbed into the skin.

Bill To Limit Medical Marijuana Growers Gets Strong 29-1 Vote In Oregon Senate

May 28, 2015 by MJ News Network Leave a Comment

OREGON: The Oregon Senate delivered a powerful message in support of tightening regulation on medical marijuana Wednesday by voting 29-1 for a bill aimed at curbing diversions to the black market.

Although the measure has drawn intense opposition among many patients and growers, lawmakers said that the success of the state’s new recreational pot market depends on getting a tighter handle on marijuana ostensibly grown for patients.

Sen. Ginny Burdick, D-Portland and chair of a House-Senate committee on implementing the marijuana legalization initiative passed by voters in November, said the large amount of marijuana diverted to the black market makes it harder for legal sellers to compete and could even threaten federal action against the state.

Medical Marijuana Patients Fret About New Grower Limits Being Considered By Oregon Legislators

April 28, 2015 by MJ News Network 1 Comment

OREGON: A bill that would limit the size of medical marijuana growing operations in Oregon is generating angry opposition from some patients and activists.

The proposed measure, unveiled late Friday afternoon, is aimed at curbing the black market while prodding larger growers to supply the legal recreational market the state is developing.

This approach is winning wide support on the House-Senate committee charged with implementing the marijuana legalization initiative approved by Oregon voters in November. It also has varying degrees of support from many marijuana industry figures who want to develop a successful legal market in the state.

Washington’s Law Ending ‘Wild West’ Of Medical Marijuana May Boost Black Market

April 16, 2015 by MJ News Network 5 Comments

WASHINGTON: For at least three generations of Americans, eradication of marijuana has been among the top law enforcement priorities across the land at every level, and yet here we are: Legal weed in four states, medical in dozens more and a robust black market making pot available in every corner of every state for any purpose.

So, how will Washington’s latest legislative effort to control part of that social and economic reality — the much-maligned “gray market” of medical marijuana — succeed? Won’t most of the hundreds of collective storefronts, more than 300 in Seattle alone, simply slip into the black market?

While the new law, S.B. 5052, directs the state to expand the number of licensed growers and retailers and gives those “good actors” in the medical market priority for those licenses … the number making it through to legitimacy will still be a fraction of those already doing business.

Once those players leave the gray market and disappear into the black market, how will cities, counties and the state fight them? That seems to be the big question now that the legislature has ended medical marijuana as we know it.

Medical Marijuana Growers May See New Limits As Oregon Legislators Move To Curb Black Market

March 21, 2015 by MJ News Network 2 Comments

OREGON: Oregon legislators are moving to put new limits on the large and mostly unregulated pot growers who ostensibly serve medical marijuana patients.

Key lawmakers want to shift the large growers to the tightly regulated recreational marijuana market the state plans to develop after voters last year decided to legalize the drug.

“We have to show we’re doing everything we can to close off the black market,” said Sen. Ginny Burdick, D-Portland. “It’s no secret that medical marijuana [from Oregon] is appearing all over the U.S. in the illegal market.”

Marijuana Is Now Legal In Alaska, The 3rd U.S. State To OK Pot

February 24, 2015 by MJ News Network Leave a Comment

ALASKA: Alaska’s voter initiative making marijuana legal takes effect Tuesday, placing Alaska alongside Colorado and Washington as the three U.S. states where recreational marijuana is legal. The new law means people over age 21 can consume small amounts of pot — if they can find it. It’s still illegal to sell marijuana.

“You can still give people marijuana, but you can’t buy it — or even barter for it,” Alaska Public Media’s Alexandra Gutierrez reports. “So, it’s a pretty legally awkward spot. That probably won’t stop people from acquiring it, though.”

The ballot measure that was adopted in November allows Alaskans to possess marijuana harvested from up to six plants on private property. For now, that’s the biggest change in the state’s pot practices.

“There are no stores yet, but black market sales are still illegal,” Gutierrez adds. “The state is now crafting regulations for marijuana retailers, and the stores will be licensed and operational by next year.”

Colorado’s Tax Income From Legalizing Marijuana Is Less Than Expected, It Still Might Have To Give It Back

February 11, 2015 by MJ News Network Leave a Comment

COLORADO: Colorado found out how much tax revenue it brought in from legalizing recreational marijuana — and it is less than expected. The total for the first year of marijuana sales was $44 million, less than projections of $70 million, the state announced Tuesday.

The state of Colorado is still obligated to refund much of that $44 million unless it can persuade voters to let it keep the marijuana taxes. A 1992 amendment made to Colorado’s state constitution, in an effort to reduce government spending, requires new voter-approved taxes to be refunded if the state collects more than is permitted under the law. Colorado’s politicians will vote this spring on a ballot asking voters if the state can hold on to the marijuana tax income.

Sales tax data, released in December, offer a look at Colorado’s first full year of legal pot sales, which began Jan. 1, 2014. The numbers are lower than many expected, and the state has already lowered spending of the taxes on substance-abuse treatment programs and other initiatives funded by the new income.

Governments around the world are closely watching Colorado, which is the first government to regulate the sale and production of marijuana. The numbers, released Tuesday, show that the tax revenue that pot has brought in is significant, but was likely hindered by producers and users who still choose to avoid government costs by trading on the black market.

Medical Marijuana A Challenge For Legal Pot States

January 2, 2015 by MJ News Network Leave a Comment

WASHINGTON: A year into the nation’s experiment with legal, taxed marijuana sales, Washington and Colorado find themselves wrestling not with the federal interference many feared, but with competition from medical marijuana or even outright black market sales.

In Washington, the black market has exploded since voters legalized marijuana in 2012, with scores of legally dubious medical dispensaries opening and some pot delivery services brazenly advertising that they sell outside the legal system.

Licensed shops say taxes are so onerous that they can’t compete.

Colorado, which launched legal pot sales last New Year’s Day, is facing a lawsuit from Nebraska and Oklahoma alleging that they’re being overrun with pot from the state.