California Referendum Could Deal Devastating Blow to BC’s Lucrative Marijuana Export Industry

British Columbia’s cannabis activists and law enforcement officials are bracing themselves for a political earthquake that’s set to hit California this fall when voters head to the polls to legalize marijuana. Vancouver-based activists fear BC‘s bud industry could be wiped out if California opens the door on pot decriminalization.

If the referendum passes next November, individual growers will be able to cultivate up to 25 square feet of marijuana while local governments would both regulate and tax the sale of cannabis.

“We’ve got to protect our pre-eminent position by legalizing now,” said Marc Emery, publisher of Cannabis Culture and “BC‘s prince of pot.”

Speaking from his magazine office on Hastings Street, Emery (pictured below) said BC‘s marijuana industry could only compete with a possible pot haven in California if the province legalizes cannabis within the first two years of any such move south of the border.

If California legalizes, the demands for BC marijuana at $2,400 a pound will greatly diminish, said Emery, who faces a five-year jail term in the U.S. for drug trafficking and distributing cannabis seeds over the Internet.

According to Emery, the homegrown market will evaporate if Canadian pot users flock to California for cheap, high-quality cannabis that could be available for a little as $10 per ounce, compared to the current rate of C$200 in Vancouver.

Should BC also decriminalize pot, Emery said the provincial economy could benefit from industry innovation focused on developing high-quality cannabis strains.

Hopefully, said Jody Emery, Marc’s wife and fellow pot activist, “our politicians here can no longer say that Canada can’t legalize marijuana because the USA won’t let it happen.”

Jody Emery, a former organizer with the Marijuana Party and current Green Party candidate running on an anti-prohibition ticket in Fraserview, said legalization would decrease the influence of organized crime and cut into profits gleaned from the illegal market.

The BC marijuana industry is estimated at $5 to $8 billion and, if decriminalized, presents significant taxable revenue. William Austin, a BC Marijuana Party activist who phones MPs as part of the anti-prohibition drive, said the province and law enforcers are failing to see the bigger picture.

“The black market won’t go away but [legalization]will be a significant hit and it will allow the police to actually focus on more dangerous things like people-trafficking or weapons smuggling,” said Austin.

Jody Emery said that she and her husband bought weed from friends and acquaintances who grew marijuana in their homes, and were in the business to express their opposition to prohibition rather than to get rich.

“My role is to protect our industry and advocate for people not going to jail for a plant,”  said Marc Emery.

This is not the view of U.S. Drug Enforcement Agency, who alleged in 2005 that Emery engaged in Conspiracy to Distribute Marijuana, Conspiracy to Distribute Marijuana Seeds and Conspiracy to Engage in Money Laundering.

Canadian police arrested Emery on July 29 that year at a local HempFest in Lawrencetown, Nova Scotia, executing a warrant issued by the DEA, although he doesn‘t face any charges this side of the border.

In order to save his two friends and co-accused Michelle Rainey and Greg Williams from similar charges, Emery attempted a plea bargain, whereby he would serve five years in both US and Canadian prisons, but this fell through in March 2008, after the Canadian Government refused to approve its side of the deal.

As a June 2009 extradition hearing loomed, Emery agreed to plead guilty to one charge of drug distribution and accept a five-year sentence in the U.S.

He formally entered his guilty plea on September 21 2009 and was imprisoned at the Surrey Pre-trial Centre a week later prior to extradition, but was released on bail on November 18.  As Federal Justice Minister Rob Nicholson hasn’t yet carried out the extradition order, Emery is still working out of his Cannabis Culture office.

While Emery said he made a total of $4 million from his seed business, he maintains that he donated all proceeds to cannabis activist groups around the world.

Both Austin and the Emerys say they believe criminal organizations with ties to Vancouver prefer pot prohibition because of the profits of the black market.

Yet, if California voters legalized marijuana, the impact on BC police would change little in the short term since pot  “causes a considerable problem for law enforcement,” said RCMP Sergeant Dave Goddard.  “It’s still going to be illegal here in Canada,” he said.

Meanwhile Staff Sgt. Goddard, a 20-year veteran of narcotics enforcement, said criminal organizations in search of new markets may expand their networks further afield to Europe and Asia.

If other U.S. states such as Washington and Oregon legalize cannabis, Staff Sgt. Goddard said the impact would eventually be felt in Vancouver.  “It would certainly reduce the market for BC bud and it would certainly have a domino effect here,” he said.  “But we won’t be seeing that for some time.”

The California Regulate, Control, and Tax Cannabis Act would allow the recreational use of up to 28 grams of weed for adults over 21 and cultivation of up to 25 square feet of plant per household.  It would be illegal to smoke in public, in the presence of minors, or on school grounds.  Driving under the influence of pot would remain prohibited.

If cannabis becomes legal in California, the state will take ownership of an industry with an estimated value of $14 billion, which would help its bankrupt government plug a deficit of $42 billion in 2009.

Nonetheless, those who oppose the measure – a coalition including California law enforcement officials – are also gearing up for a legislative fight, as President Obama’s drug czar, R. Gil Kerlikowske, condemned legalisation in an address to police chiefs in San Jose.

Brandon Steele, who works at the Vancouver Seed Bank on East Hastings, points out that if the referendum in California passes, Canadians will get a better deal on purchasing weed at home, as cheaper pot in California would drive down prices throughout the industry.  And anyone with an even minor drug-related charge on their record would have no choice but to continue buying pot in Canada, because anyone charged on a drug-related offence is denied entry into the US.

“If you can’t cross the border you can’t cross the border,” Steele said.

Recent polls show just over 50 per cent of Californians are in favour of legalising marijuana and taxing it to help reduce the state’s budget deficit. A Gallup poll found that 44 per cent of Americans favoured legalisation.

A 2003 report by the Canada parliament concluded that the cannabis export business in BC was worth an estimated $6 billion annually.

– Article from Vancouver Observer.

Comments

7 Comments

  1. Anonymous on

    While the legitimate pot industry may gain some consumers switching from pharmaceuticals, the real gains will be from consumers of alcohol switching to cannabis. There is already evidence of this if you look at the BC stats. The lower mainland has the lowest incidence of alcohol-related harms and the highest proportion of pot smokers. I believe this will snowball once consumers realize the statistics show less hospitalization, violence, brain damage, and death from alcohol as a result of people switching to pot.

  2. Anonymous on

    I don’t expect prices to actually fall that far; I was trying to make the point that there is no rational reason to expect the price of an oz to triple after legalization. I would expect the price of most cannabis to settle around a few hundred dollars per pound. The majority of price variability would come from a combination of how much bud a particular strain produces on an individual plant and how those plants were grown (hydro, indoor organic soil, outdoor). Obviously outdoor would be the cheapest,and the cheapest of the outdoor would still be crap because the only way to really maximize your economies of scale is to engage in industrial farming. Fortunately most of this would be sold by cigarette companies, simply because this is the same model they use for tobacco and they would transfer it to cannabis. However, as far as your apparent belief that outdoor is all crap: I’ve run into lots of city boys with that attitude, and the funny thing is that if you hand them a nug of good outdoor they think it’s headies. When they tell you that, you just charge them $20 a gram and laugh all the way to the bank.

  3. foam on

    I doubt prices will fall for quality product since there has never been an oversupply of the good stuff – everybody and their brother seems to think they can grow but most lose money and grow shit. 2400 a pound is not economically viable unless we’re talking outdoor, pesticides, fungicides, non-organic, mass production, aka shit only a dumbass would enjoy. The 2400 a pound is more a function of the hundreds of thousands of illegals in BC that are unable to work above board. 3200 a pound is much more reasonable if you expect your benefit to out weigh your cost.

  4. Anonymous on

    No offense David, but your estimates sound like a load of bs. First off, if any producer could justify charging almost $2000 an oz, they already would be. Prohibition ADDS costs to production, it doesn’t take them away. Prohibition creates a black market where prices are set, at best, arbitrarily by individual business men, at worst by some form of collusion or monopoly. In all cases, those involved will charge the absolute most possible for their product. Cannabis prices top out around $400 – $600 an oz for even the best shit because that’s what people are willing to pay. Your comparison to the coffee industry actually indicates that cannabis will be cheaper than anticipated. Coffee is extremely labor intensive to produce, and does not offer an immediate return on investment the way cannabis does, which means it should be more expensive than cannabis, just to recoup production costs. A fully mature coffee tree produces something like a pound under the best circumstances. Additionally, you will not get a crop the first year you plant a coffee tree. Much like fruit trees, you have to wait for the tree to mature – this means several years where your investment returns NO money. The end price of a product must reflect all these production costs. Cannabis is less labor intensive, can produce more per plant, and a single seed will return your investment in spades within a year. This means that, in a completely legal market, cannabis should be less expensive than coffee – according to your estimates, less than $50 a pound.

  5. David Malmo-Levine on

    Contrary to what the RCMP want you to believe, legalizing cannabis will in fact increase the size of the market while at the same time reducing the price for SOME but NOT ALL kinds of cannabis.

    The RCMP are not factoring in the probability of cannabis replacing 10-50% of all pharmaceutical drugs.

    “Dr. Raphael Mechoulam, NORML, High Times and Omni magazine (September 1982) all indicate that, if marijuana were legal it would immediately replace 10-20% of all pharmaceutical prescription medicines (based on research through 1976). And probably, Mechoulam estimates, 40-50% of all medicines, including patent medicines, could contain some extract from the cannabis plant when fully researched.”
    http://www.jackherer.com/chapter06.html

    For a better understanding of the scope of the market:

    Chronic Conditions Treated With Cannabis
    Encountered Between 1990-2004
    http://www.mikuriya.com/cw_icd9.html

    http://www.antiquecannabisbook.com/

    Let’s estimate just how big the North American pharmaceutical market is, and then find out just how much “10 to 50%” of that would be…

    “IMS Health reported today that the size of the global market for pharmaceuticals is expected to grow nearly $300 billion over the next five years, reaching $1.1 trillion in 2014. … Global pharmaceutical sales growth of 4 – 6 percent is expected this year, consistent with IMS’s prior forecast. In 2009, the market grew 7.0 percent to $837 billion, compared with a 4.8 percent growth rate in 2008.”

    http://www.thefreelibrary.com/China+%3a+IMS+Forecasts+Global+Pharmaceutical+Market+Growth+of+5-8%25…-a0224447014

    This source provided figures of over 300 billion dollars for the North American pharmaceutical market – and that was back in 2007!:
    http://www.imshealth.com/deployedfiles/…/GlobalSalesbyRegion.pdf

    So …. 10 to 50% of 300 billion is 30 to 150 BILLION dollars. Remember … that 30 to 150 billion isn’t the size of the pot industry post legalization, it’s the size of the GROWTH of the pot industry post legalization (excluding the export market, which would also probably be substantial). The pot industry is already in the tens of billions, and relegalization is only going to make it bigger.

    So what if the price for cheap weed goes down to ten bucks an ounce? Cheap weed has always been around. It’s the expensive stuff that will retain it’s value – right now the difference between average coffee and expensive coffee is a factor of 44 to 60:

    “In 2005, however, the coffee prices rose (with the above-mentioned ICO Composite Index monthly averages between 78.79 (September) and 101.44 (March) US Cent per lb).”
    http://en.wikipedia.org/wiki/Economics_of_coffee

    “If you would like to purchase certified genuine Jamaica Blue Mountain® coffee now from $44.99 per pound (compare in excess of $60 pound in stores, if it can be found) please click here.”
    http://www.bluemountaincoffee.simpleindustries.ca/

    So if cheap cannabis is 10 bucks an ounce and the average price is 30 bucks per ounce then (if the coffee market is any indication) 45 time 30 is 1350 per ounce, and 60 times 30 is 1800 per ounce – for the best cannabis in the world.

    I tend to believe what Marc Emery believes – that “the provincial economy could benefit from industry innovation focused on developing high-quality cannabis strains” … the real money will be in the breeding and the selling of high quality seeds. Growing cannabis will either be about large operations and hash production or “boutique” cannabis grown in greenhouses.

    But the market is going to get bigger, not smaller. We activists should make more of an effort to point that out to reporters, or people will have the wrong idea about what relegalization will look like.

  6. highcrimes on

    The Church of Jesus Christ and ladder day Saints will need some serious attention this summer. 😛

  7. ray christl THC Ministry Cambodia on

    We expats can freely smoke in bars and restaurants.but talking about logical arguments to relegalize usage is taboo. Antithetical thought has always been the REAL ENEMY.Kings=Communists=Colonizers=Big Govt,all want puppet people compliance.Thomas Hobbes who was an originator of social contact used the word LEVIATHAN to describe this phenomenon that Jack Herer taught about govt.MONSTER out of control.Jack,Marc,Jody,Roger Christie, Rev. Jim Kimmel, Barry Cooper and you know all the rest.This is our great hope for humanity. An honest class of people to save our species from extinction.Aloha and love for Cambodia.