 "Photo: David J. Olender / Assistant Photo Editor")
 "Photo: David J. Olender / Assistant Photo Editor")
EDITOR’S NOTE: Some names have been changed to protect the privacy of those involved.
In October of last year, President Barack Obama’s administration directed the U.S. Department of Justice to end the prosecution of state-compliant medical marijuana clinics. Today, many entrepreneurs are using this calm time as a business opportunity, and the business of medical marijuana is booming.
Marijuana was declared legal in the state of California in 1996 and is currently lawful in 14 other states. However, during former President George W. Bush’s administration, marijuana remained illegal by the federal law. Experts predict that Obama’s lifting of this federal policy will result in a legal pot business boom.
Because of the nature of this industry, selling cannabis is strictly regulated and must comply with numerous state laws. One legislation requires dispensaries to operate in a nonprofit business model.
“Dispensaries work as a nonprofit (by saying) their prices are a donation,” a former Cannabis Club employee, Laura Magana, said. While not forced to give back to the community, many “give free medication to terminal patients such as people who have AIDS and cancer,” Magana said.
Despite the nonprofit business model, owners can potentially make huge profits, according to Magana. An average customer at an Orange County dispensary spends around $80 per visit and daily traffic ranges from 25 to 50 people a day. The two owners at the dispensary where Magana worked made anywhere from $100,000 to $200,000 each month between them.
According to Magana, start-up costs to open a dispensary average about $50,000, which includes rent, products, security system, supplies, employees and an attorney. Although financial risks are prevalent when opening any type of business, it is more risky to start a cannabis club because of the legal ambiguity.
“In Los Angeles, they are closing a lot of dispensaries because there are so many and the city can close them down whenever they want,” Magana said.
Cities are mainly concerned with the security risks that go hand in hand with allowing these types of businesses to operate, such as vandalism, theft and illegal soliciting.
“There have been policemen who hang outside the dispensary and when patients leave, they would pull them over because some patients … come multiple times a day and sell illegally,” Magana said.
“There are a lot of hazards such as the extensive electricity used, the chemicals, the gas for heating, etc,” a local government who will be issuing permits in the near future, said.
“Additionally, the sheriff is worried about where these can be placed and the zoning requirements. There is also lighting needed for safety since they are subject to criminal activity.”
According to this employee, dispensaries have extensive building requirements such as intrusion alarms and cameras, 24-hour lighting, vandal-resistant glass panes and on-site uniformed security personnel during business hours.
The City of San Diego Legislature wrote, “Dispensing cooperatives and collectives … shall not be located within a 1,000-foot radius of schools, playgrounds, parks, libraries, places of religious worship, child care facilities and youth facilities.”
One firm has formed its business model by starting a pot-growing college. Oaksterdam University in Oakland has educated 6,000 students on the details of owning a dispensary.
They teach those interested about the essentials of mass pot growing, state laws, federal laws, etc. Although there is no official accreditation program required to own a dispensary, this type of educational certification program benefits both the owners and the community. The more responsible and knowledgeable the entrepreneur’s are, the more likely they will run a safer and more efficient business. Therefore, training facilities such as Oaksterdam may possibly lead government officials toward a pro-medical marijuana stance while reducing community risks.
Federal and state laws seem to be moving in a direction in favor of the solicitation of medical marijuana, but the future of the industry remains unknown.
“Nationally, I think dispensaries are eventually going to be just like it is for liquor stores,” Magana said. “For the next generation, it will be as normal as alcohol. Marijuana will be regulated and legalized.”
Although it is a very controversial matter, some see it as beneficial for the future.
“One reason I believe in medical marijuana is because it is the clean, natural alternative to treat symptoms such as pain,” Magana said. “And (it) is better than going to get Oxycontin or other horribly addictive drugs for medicating purposes.”
Although there is ambiguity regarding the future of medical marijuana, it is certain that this profitable industry is erupting because of people who are selling legal pot and those who are educating others about how to sell it.
7 comments
Its not completely legal, but regular users will certainly figure-out how to take advantage of the rules, as will those looking to make a buck off the loopholes in the system.
The article does in fact say that marijuana is illegal under current federal law, but that Obama directed the end of prosecution for the dispensaries.
Granted, the Compassionate Use Act of 1996 is not exactly the same as legalizing marijuana, but in reality to a large degree it really is. The ridiculous process of having to get a doctors note is basically the same thing as legalizing it and is a level of bureaucracy that is easily skirted by those in the know.
The article also goes on to say that retail sales of marijuana is not legal, nor is generating a profit, but that there are ways of getting around that too. Read the article a little closer. You will see that though you may not like it Mr. Anonymous #1 that it is the truth about what is going on out there with the ambiguity in the laws and those taking advanatge of it.
The way the rules are written make true enforcement a ridiculous proposition, and the terms of use are just a smoke screen. The article gets that point accross!
I'm surprised that you also didn't go into Senate Bill 420. You might want to look that up as well. It specifically says that retail sales of marijuana is not legal, nor is generating a profit. Any profit that is made must go back to the membership in the form of better products and services. Also...what about the states findings that marijuana smoke is a carcinogen?