As Legal Marijuana Spreads, Will Big Business Muscle Out Small Providers?

Sunday, March 09, 2014
Marijuana dispensary in Denver (photo: Brennan Linsley, AP)

In states where medical marijuana has been legal, pot has been sold by cooperatives and small businesses. But with the legalization of marijuana for recreational use in Colorado and Washington, can the corporatization of the marijuana business be far behind?


The state of Washington is mulling regulations that would virtually eliminate cooperatives and the dispensaries that are now giving advice with the marijuana they sell. Instead, they’d have to buy pot from a business where it’s sold for recreational use. Medical users would be required to register with the state, but they’d be exempt from the 25% tax on the drug.


Hilary Bricken, an attorney who works with medical marijuana businesses in Washington, told The New York Times that she isn’t optimistic about her clients’ future. “Prepare for the end,” she said.


Colorado, which also passed an initiative legalizing the sale of recreational marijuana last year, has handled the integration of dispensaries into the pot business a bit differently. The existing dispensaries were put at the head of the line to get licenses to sell marijuana, according to the Times. Washington officials were concerned about the lack of regulation of the dispensaries, and wanted the business to get a fresh start in their state.


“The state failed to regulate, allowing doctors to write these prescriptions to 20-year-old gangbangers on the street who said, ‘Oh, I hurt my knee playing basketball,’ ” Karl Keich, a dispensary operator and founder of the Seattle Medical Marijuana Association, told the Times.


The ArcView Group, a network of cannabis businesses and investors, estimates the current national legal marijuana market (including medicinal and recreational) at $1.44 billion, a figure that is projected to rise to $2.14 billion next year and soar to $10.2 billion over the next five years, according to Douglas Leighton, managing partner of Dutchess Capital, a New York investment firm. With that kind of money involved, it’s natural that big business is going to be interested.


Some businesses are getting a jump on the industry by bringing in experts in the field—Drug Enforcement Administration agents. The new suppliers hire these former law enforcement agents to help the businesses stay on the right side of state and federal laws as the market for recreational marijuana expands.

-Steve Straehley


To Learn More:

Providers of Medical Marijuana Face New Fears (by Kirk Johnson, New York Times)

Coming Soon: The Starbucks of Weed (by Aaron Cantú, Alternet)

Law Enforcement Officers and DEA Agents Jump Ship to Consult Marijuana Industry (by Noel Brinkerhoff, AllGov)

Top DEA Agent Lands Job as Legal Advisor to Marijuana Investment Firm (by Noel Brinkerhoff and Danny Biederman, AllGov)


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