Legitimizing Marijuana

By DAN MITCHELL
Published: May 31, 2008

JANE WELLS of CNBC keeps a blog called Funny
Business, but her recent reports on California's
medical marijuana industry are about a business
that is increasingly being taken seriously. They
amount to a short primer on how the business
works and how the operators of the state's
estimated 500 dispensaries deal with the high
risks and high costs of working in a legal gray
area (cnbc.com).

Medical marijuana is legal in California, but
federal law still bans sales. Amid the
uncertainty that this creates - including the
occasional raid by federal agents - a
full-fledged industry has blossomed, taking in
about $2 billion a year and generating $100
million in state sales taxes, CNBC reported.

Setting up a clinic "can cost as much as a
hundred grand," Ms. Wells reports. The equipment,
the cuttings from which plants are grown and
office space all tend to be expensive. And from
there, the costs only grow, mostly in the form of
legal fees. Many clinics keep lawyers on retainer.

Nonetheless, "this is the business model of the
future," says JoAnna La Force of Farmacy, an
herbal remedy shop in Southern California. Ms.
LaForce says her business is close to breaking
even (medicalmarijuanafarmacy.com).

A slew of ancillary businesses has grown up
around medical marijuana. Bill Britt, identified
on the Web site as a patient, has found a new
career as an expert witness in cases brought
against dispensaries and patients, earning $250
to $350 a case.

He gained his expert knowledge by attending
Oaksterdam University, a trade school in Oakland,
Calif. At Oaksterdam (oaksterdamuniversity.com),
students learn everything from "The Politics of
Cannabis" to botany to business operations.

Getting into the quasi-legitimate marijuana
business is a challenge, says Jeff Jones,
chancellor of Oaksterdam's Los Angeles campus.
But, he adds, "The investment is well worth it,
except for the federal risk."