Sunday, 24 September 2017 04:32:59 (AST)
 

Americas·Opinion

This is NOT a Marijuana Blog (Part 2 – Show Me The Money)

A marijuana plant in St. Vincent. (IWN Image)
The views expressed herein are those of the writer and do not represent the opinions or editorial position of I-Witness News. Opinion pieces can be submitted to news.iwitness@gmail.com.

America’s Grand Hustle

Picture, if you will, a crop –let’s say tomatoes — being grown on farms and sold to consumers worldwide. Now imagine if one country — let’s say the United States — declared that (1) the importation of tomatoes into the USA was illegal; (2) it would take political and economic measures against any country that grew tomatoes; (3) it would fund the eradication of tomatoes in other countries, and use military hardware to destroy tomatoes or interdict tomato shippers; and (4) any foreigner convicted of growing, selling, eating or otherwise possessing tomatoes would be forever denied entry into the USA.

Imagine also, that while the USA erected this impenetrable wall to foreign tomato imports, the growth and consumption of American-grown tomatoes was actually legal within American borders, and that individual U.S. states were making millions of dollars from the sale of American tomatoes. Picture successive American presidents admitting to eating tomatoes, and talented American scientists working assiduously to improve tomato yield and sweetness, even while American helicopters were spraying and destroying tomato crops in competing markets.

Well, in this hypothetical world of legal and military barriers to the international trade in tomatoes, the World Trade Organisation would be up in arms. It would be a violation of every principle of free trade, and a particularly egregious violation, at that. To actually ban goods as illegal outside of your borders, but make those same goods legal and tradable within, would be the most nakedly aggressive form of protectionism ever conceived in the history of global trade.

But if you simply change the name of our imaginary crop from tomatoes to marijuana, what emerges are the contours of America’s Grand Ganja Hustle — one which will position the USA as the leading and dominant producer of marijuana for years to come.

How big is marijuana in the United States today? The answer to that question is mind-boggling.

An estimated 102 million Americans — one third of the population –have smoked marijuana at least once in their life. In 2012, California was estimated to have 70,000 – 75,000 acres of marijuana under legal and illicit cultivation. California was also estimated to be home to 75 per cent of America’s domestic ganja cultivation, at the time. That means that in 2012, the USA had roughly 100,000 acres of Ganja being farmed outdoors, to say nothing of the massive indoor marijuana cultivators that produce special blends and carefully controlled ganja strains.

To put that 100,000 acres of American weed in perspective, bear in mind that the entire acreage of Saint Vincent AND all of the Grenadines is roughly 96,000. In other words, if every square inch of SVG was one big marijuana farm, it still wouldn’t match the amount of weed grown in the USA today. Interestingly, of the three “drug crops” — marijuana, opium and coca — marijuana is the only one grown within the USA. That makes it a little more difficult to blame Colombians and Afghans for your drug problem. It also makes legalization of Ganja a little easier and more profitable to American politicians.

In fact, despite the hypocritical hand-wringing about Vincentian marijuana production, the United States is currently growing roughly 250 times more weed on outdoor farms than we are here in SVG. With the rapid expansion of access to legal Ganja in the USA, that disparity is likely to increase dramatically.

Let us also examine the quality of the American product. The chemical in marijuana that makes you high is called THC (short for Tetrahydrocannabinol). In the trippy, hippy days of the 1960s, when America enjoyed its first national flirtation with marijuana, the average THC content of Yankee weed was less than 1 per cent. By the 1990s, American weed had THC of under 5 per cent, making it far inferior to Caribbean offerings. Today, the average THC of American marijuana exceeds 10 per cent, and many specialty strains can reach 25 – 40per cent THC, inducing highs typically achieved with “hard” drugs like cocaine and heroin. The THC content in Caribbean and South American Ganja — while increasing — is not growing at nearly the same rate as Yankee weed, where chemists, botanists and tinkerers are contributing to a vibrant and uninhibited research community. While Jamaica has done a fair amount of pioneering and important research on the medicinal properties of marijuana, the United States has cornered the scientific market on improving the yield, variety and potency of Ganja through innovative farming and production techniques.

[Medicinal Ganja alert: THC is proven to increase appetite, decrease nausea, decrease pain perception, and decrease pressure inside the eye (useful in glaucoma treatment). Another, less-hyped compound in Ganja is called cannabidiol, or CBD. CBD doesn’t make you high, so it is less sexy to Ganja marketers. However, CBD is purported to contain antimicrobial, antioxidant, neuroprotective and anti-epileptic properties, as well as the ability to slow the metastasizing of certain types of cancers].

In true capitalist fashion, the amount of weed grown in the USA — and its potency — has rapidly increased in response to the overwhelming local demand for the product. Today, American law is catching up with the economics of supply and demand. Twenty of the USA’s 50 states (plus Washington, DC) have now relaxed regulations on marijuana, allowing for either medicinal or recreational use. While the American federal government protects their closed national market by declaring marijuana to be a restricted Schedule I substance, and thus illegal to grow or possess, Americans are walking into legal marijuana dispensaries in 20 states and walking out bags full of high grade Ganja.

In short, America has seen the future, and the future is weed. Everyone else (with the notable exception of Uruguay) is living in the past. Every year that other countries delay in matching the USA’s stance, they will lose competitive ground to American herb, and cede market dominance and millions of dollars to the USA’s weed trade. The 20th Century was the era of “Big Tobacco” as a powerful and profitable industry, with US$500 billion in global annual sales and $35 billion in profit. The United States now is betting that the remainder of the 21st Century will be the era of “Big Spliff”. No other country is as advanced in the mass production, dispensation and branding of marijuana as the United States. Their scientific research on potency, growing techniques, strains and seeds is also leaps and bounds beyond anything that is being conducted anywhere else in the world. By the time the rest of the world gets around to legalizing Ganja, the United States will not be importing weed, but exporting all sorts of exotic and high-potency strains to all corners of the globe. No other country will be able to compete.

A 21st Century Banana?

Any conversation about the legalization/decriminalization/medicinal use of marijuana eventually gets around to speculation about how much money could be made if the laws were relaxed. In the United States, some economists predict that a nationwide legal marijuana trade would immediately produce a US$40 billion market, while generating an additional $15 – $20 billion in taxes (assuming you’d tax Ganja the same way you tax cigarettes). The American state of Colorado is expected to earn a solid US$98 million this year in taxes on their recreational marijuana sales.

In 2012, authorities in the Eastern Caribbean seized 19.19 metric tonnes of marijuana, 1,526 spliffs, 3,526,305 Ganja plants, and 25,264 cannabis seedlings. By all accounts, the majority of that Eastern Caribbean weed originated in SVG. If you apply the rough rule of thumb that authorities only seize 10-20 per cent of the Ganja grown, you’re talking about 100 – 200 tonnes of Eastern Caribbean marijuana. If you accept that number, it becomes clear that SVG is exporting almost as many tonnes of marijuana as bananas. (We exported 180 tonnes of bananas in 2012).

Needless to say, a tonne of weed fetches a bit more than a tonne of bananas.

Reported U.S. street prices for Marijuana vary widely and wildly, ranging from $350 – $9,000 per pound. On the other hand, a tonne of bananas is currently trading at US$925. This means that a mere three pounds of low-quality weed fetches more money than 2,200 pounds of high-quality bananas in the USA. Yes, gentle readers: in the USA, at today’s prices, cheap Ganja is over 800 times more valuable than good bananas.

Those per-pound prices translate to rough street value of US$770,000 per tonne for the lower-quality strains of marijuana. At that lowest (bush weed) value, the Eastern Caribbean’s Ganja exports could have an American street value of US$75–$150 million. Depending on the potency, quality and marketing cachet of VincyGreen, that street value could be exponentially higher. Of course, VincyGreen is not exported to the USA, but rather to CARICOM and the European Union (Martinique and Guadeloupe). But the numbers are instructive, nonetheless.

These figures make even the most moralistic lawmaker salivate. At a time when Caribbean prime ministers and American mayors are barely paying their bills, the idea of multimillion dollar economic injections are undeniably tempting. If we accept the assertion of the US State Department that the overwhelming majority of Eastern Caribbean Ganja is Vincy-grown, then total sales of marijuana could’ve financed the construction of the Argyle International Airport — without a single loan, sale of land, or foreign grant — in under three years. Our GDP, currently hovering around EC$2 billion, could suddenly balloon 20 per cent to $2.4 billion — taking our per capita GDP from $19,000 to $24,000, and leapfrogging the average wealth of Dominicans, Grenadians and Saint Lucians.

There’s only one small problem with these gloriously rosy projections about the impact of legalized marijuana on our economy: they’re completely fictitious.

Undoubtedly, the national production, export and taxation of any cash crop will have an economic benefit. But the truth is that we have no mechanism to estimate with any degree of accuracy just how significant that benefit will be. There are very few economic models for transitioning from an illegal crop to a legal crop, and there are a number of fundamental questions that are simply unanswerable at this point in deciding how much money legal marijuana would contribute to SVG’s bottom line.

First, the current high price of marijuana is premised on its illegality, and the risks inherent in brining it from the farm to your eager lips. Were Ganja to become globally — or even regionally — legalized, it’s safe to say that the price would fall precipitously. Let us look, for example, at a snapshot at the average or approximate prices of a few cash crops, in US dollars per metric tonne:

chart2

As you can see, one of those prices is not like the others. Marijuana is 230 times more expensive than tobacco, the other “smoked leaf” on the list. That is not a sustainable price disparity, and clearly a product of the challenges involved in growing and distributing an illegal product. (To buttress this point, the price per tonne of Cocaine is at least US$7millon. Cocaine, of course is not a cash crop. It’s a processed product).

If the price of legal Ganja falls to tobacco-like levels, then the potential economic benefits fall dramatically. At US$750,000 per tonne, the Eastern Caribbean’s U..S street value of our 2012 Ganja production was US$150 million. However, at $4,300 per ton, that $150 million plummets to a mere $860,000. If the per-tonne price of legal Ganja falls below that of tobacco, then we might as well devote our available cash-crop land to cocoa.

Second, we must recognise that SVG has a comparative advantage in the illegal Ganja trade. Those comparative advantages do not translate to a legal export market. What makes SVG such an attractive and dominant force in illegal Ganja cultivation and trade? Let us count the ways: Mountainous interior; difficult access; far from the road network; small, independently-run and non-mechanized farms; primary export via small pirogues and go-fast boats; unregulated growth and non-existent standards; and the list goes on.

Unfortunately those are the same characteristics that would make SVG unattractive and uncompetitive as a potential market leader in legal Ganja production. They are the same factors that have made our global competitiveness in bananas such a tricky proposition. Once you factor in the American head start in the race to produce and market lucrative strains of marijuana, the Vincentian comparative advantage all but evaporates. Historically, SVG has, at different times, embraced sugar, coffee, cocoa, cotton, arrowroot and bananas as our primary cash crop. Every time, farmers have had to confront the limitations that made those Vincy-grown products uncompetitive on the regional or global market. Could Ganja be different? How? Why?

Without a clear comparative/competitive advantage, what is the long-term future of legal marijuana in SVG? No one can confidently predict at this point, but there is certainly the very real possibility that Ganja will be SVG’s modern-day banana: extremely profitable initially, before tapering off when global competitiveness increases and preferential access decreases.

For weed to follow the economic trajectory of a profitable and sustainable cash crop, then the next 10 to 15 years would be essential to establishing lucrative legal Ganja exports and market share. Marijuana would still be illegal to produce in many countries, so we wouldn’t be competing widely. We could protect the Caribbean Ganja market from competing exports in the same way that the USA has cleverly protected its local market. And we could creatively market the exotic/forbidden nature of marijuana with various forms of branding and Ganja Tourism. (Tours of local, organic, cooperative Ganja farms? VincyGreen™? VolcanoWeed™? Or maybe “MountainTop Ganja™ – Organically grown in the clouds: We grow it high, to take you higher!”)

If SVG and the wider Caribbean are not among the early adopters of legalized/decriminalized Ganja, we will be left behind in exploiting its economic potential. If we belatedly reform our laws after waiting for the rest of the world to move on this issue, then Ganja will not even be our 21st century banana, but instead our 21st century mango: Something that everyone consumes locally, but is rarely exported, and seldom purchased in retail outlets. No one in SVG is getting wealthy selling mangoes.

Who’d Get Rich?

For all of the hundreds of millions of dollars that have likely been made from Vincentian marijuana, it has not made very many people wealthy. With a few notable exceptions, Vincentian Ganja farmers are still eking out a rather modest living from their illicit exploits. The vast difference between the wholesale price of Vincy weed and its retail price in Martinique, Saint Lucia and Barbados reflects the mark-up charged by shippers, middlemen and resellers, and often doesn’t translate to the man in the hills. Money is lost to law enforcement interdiction, dishonest middlemen, and foreign “bosses” for whom many farmers toil.

Vincentians are definitely making money from Ganja. Just not as much money as you might expect.

Let’s assume Ganja was 100 per cent legal to grow and sell. Who would profit from that growing and selling? Certainly the Government would make some money on taxes and licenses. Surely a few farmers with large landholdings currently lying fallow or dedicated to less profitable crops would get a few dollars. But what about the existing marijuana farmers in the hills? Could they compete with legitimate cultivators? Do they own land that they could farm once they were evicted from the hillside Crown Lands that they illegally occupy? Would large foreign conglomerates enter the Vincentian market to manage the growth, export and profit of weed, as Amajaro has done for cocoa? Once freed of the constraints of illegality, would the regional competition grow and stifle our local Ganja market? After all, we grow less cocoa than Grenada and export fewer bananas than Saint Lucia. Who’s to say we’d retain our market leadership in marijuana?

In addition to taxing and regulating Ganja, the Government would obviously save money on police interdictions, court actions, hospital visits and surveillance costs associated with law enforcement. The State would probably see an increase in Ganja tourists in the same way that the Netherlands does. Maybe our pejorative label as the weed capital of the Eastern Caribbean would be lifted, which, in and of itself, would have value.

But if the primary economic value of legal Ganja would be simply to shift the majority of its earnings from local, rural farmers with limited options to the coffers of the State and already-established farmers, is it worth it? You could argue that, once legal, marijuana would be cultivated more widely, leading to a much larger pie to be divided among more people. But is that true? We have 300 – 400 acres of marijuana under illegal cultivation. We have about the same amount of land currently legally cultivated with bananas, and less than that for arrowroot and other root crops. Who’s to say that Ganja will get any bigger than it already is?

I don’t have the answers to these questions. Hopefully CARICOM will help. The recently-concluded CARICOM meeting in SVG decided to establish a Regional Commission “to address issues identified in relation to marijuana use.” Hopefully those “issues” extend beyond medical, legal and social impact studies; and also make a clear-eyed assessment of the expected economic impact of marijuana at various stages of deregulation.

The Regional Commission is expected to report its findings to the CARICOM Heads of State and Government in less than four months. Maybe by then we’ll know whether marijuana is an economic panacea or a pipe (chalice?) dream.

(See Part 1: The Environmental Apocalypse)

(Third and final part coming next week)

Camillo Gonsalves

(Republished from “Firm Meditation”)

IWN Conversations

7 thoughts on “This is NOT a Marijuana Blog (Part 2 – Show Me The Money)

  1. Watching Hard says:

    This article is well researched. Clearly though, it doesn’t look like we should be pinning any hopes on turning around our economies through marijuana commerce. So we may get a ten year window at best to make some decent money from it, based on how fast the legalisation train is moving and how quickly the trade is becoming competitive. I’m not sure we should be putting our energies into something that may only benefit us for two election terms or so.

    I say decriminalise the weed. Its always been foolish policy to prohibit the use of something less dangerous than tobacco. Maybe Caricom could devote some research and development money (if it can find some) into developing affordable medications from marijuana for the Caribbean. Apart from that we don’t need to pour our precious resources into marijuana. Our greatest asset are our people. We need to be pouring tons of money into making our people as educated they can be in order to prepare them for the information technology economy. That’s what its all about in this early 21st century. And I dare say such an economy would be far more sustainable than marijuana. As the Minister responsible for ICT Mr. Gonsalves, the ball is squarely in your court.

  2. Peter Binose says:

    Camillo your blog is 100% about Marijuana, its about nothing else but Marijuana, and seeing as you have introduced your father into the fray, its most obvious to be one of the promises that you and the ULP will be fighting an election on. Its not just a Marijuana blog, it’s also an election blog. It’s coming time to stuff the Rasta’s again.

    Your blog may also be judged as some to be criminally immoral because it doesn’t list any of the dangers and destructive qualities on health.

    2009, Scotland, there has always been an assertion that cannabis use increases the probability of trying “harder” drugs. In a study in Scotland almost two-thirds of the hard drug users in the “2009/10 Scottish Crime and Justice Survey” used cannabis, and had started off using cannabis.

    2010, A review found resting blood flow to be lower globally and in prefrontal areas of the brain in cannabis users, when compared to non-users. It was also shown that giving THC or cannabis correlated with increased bloodflow in these areas, and facilitated activation of the anterior cingulate cortex and frontal cortex when participants were presented with assignments demanding use of cognitive capacity. There is a correlation between cannabis use and brain degeneration.

    2013, A review comparing different structural and functional imaging studies showed morphological brain alterations in long-term cannabis users which were found to possibly correlate to cannabis exposure.
    Ref: Batalla, Albert et. al (2013). “Structural and Functional Imaging Studies in Chronic Cannabis Users: A Systematic Review of Adolescent and Adult Findings”. PLoS One.
    doi:10. 1371/journal. pone. 005521. PMID 233900554.

    What is more Camillo, a father of a friend of mine smoked Marijuana all his adult life, he never ever smoked tobacco, but died prematurely of lung cancer.

    Our mental home is full of people that started off on cannabis and ended up on crack, I didn’t just guess that, I know it to be fact.

    HERE IS MY QUESTION TO CAMILLO. HAVE YOU EVER SMOKED MARIJUANA? DO YOU SMOKE MARIJUANA? HOW OFTEN DO YOU SMOKE MARIJUANA? WHEN DID YOU LAST SMOKE MARIJUANA? DID YOU SMOKE MARIJUANA IN THE USA? DID YOU SMOKE MARIJUANA IN JAMAICA? DID YOU SMOKE MARIJUANA IN SVG?

    Now Camillo before you answer these questions, if you answer these questions, please unlike your father try and be truthful. If you say nothing, no reply then we the citizenship reserve the right to make assumptions.

    I am not sure if Kenton or anyone else is brave enough to publish such photo/s. But in any case I have been saving them for your election run.

    So as this cannot be construed as blackmail, I want nothing from you and I will publish the photo regardless. I am making no threats on you at all, all I am doing is blowing the whistle.

    Remember Camillo you are now not completely self owned, as a Senator we all now have an interest in you, also how you behave and what you say and do.

    I for one am sure you could not have written this article without the approval of your daddy.

    Camillo I am rapidly beginning to believe your even several more times as silly as your father.

    You have just given licence for every young person to go out and smoke Weed.

    Millo in writing on this matter you have become an overnight liability to all Vincentians.

    Kenton I have a message for you also but have sent it in an email.

  3. Zhao Gou says:

    I dunno about weed, but whatever Peter Binose is taking should be outlawed forever. LOL

  4. Peter Binose says:

    WATCHING HARD, you are another person who repeats a message put out there by the people who are lobbying for marijuana freedom “something less dangerous than tobacco”.

    That just is not true, how many people are in our mental home through smoking tobacco. Tobacco will cause cancer, so will marijuana. Any thing you fill your lungs with will cause cancer, even people who are at locations where the ULP government burn tyres will stand an above average chance of getting lung cancer.

    This is not about what’s good for the people its what’s good for this ailing government to try and get ignorant ill informed people to vote for them. Also to try and get some revenue for the treasury, they don’t mind doing that if all it takes is one or two more mental homes to be built. Go and look at how those people are treated, that in its self is a crime against humanity.

    This should of been a debate about medical use of Marijuana, this articles has made it something else and Camillo should never of acted so irresponsibly as he has in writing such an article. To me it shows the immaturity of his mind and that something has in some way affected it.

    He should be removed from our government and any responsible job within the government.

    There may well be a reason to use it medically, especially those who are dieing and whatever they take really doesn’t matter. But there should be a good medical reason for doing so. After all they would not give morphine to a well person.

    We must be very careful because we could create a whole population of Michael Jackson types.

  5. pvpalmer says:

    I am seeing what marijuana can do here in SVG. Hence I am reluctant to endorse legalizing or decriminalizing it. I can’t imagine what will and can happen if we follow Camillo thinking. He’s not given much information on what happens to people hook on marijuana. He’s looking at the money side of the issue and clearly ignores the health and environmental portion of marijuana use. Trying to make a quick buck from marijuana and ignoring the effect on the population is suicidal. This rush to get a piece of the marijuana pie could also increase the crime rate, much more than it is now. Right now we can’t even protect the farmers’ animals and food crops. Can you imagine what can and will happen with this open house on marijuana?
    By the way is this all that Camillo has to offer SVG? His effort shows he’s a brilliant crack head, moving us from the educational revolution to a marijuana revolution. Thanks Camillo, but NO THANKS! What we desperately need is a revolution on jobs. There are graduates who need jobs. Don’t tell me we can send them to the fields to plant and harvest marijuana. That’s not the answer.

  6. Kimoni Bain says:

    What more research do we need into marijuana? The USA has already leading the train as to decriminalizing this natural resource of our land. I am not sure if its realized nation wide as yet , but SVG has no real resources. Marijuana brings puts food on most of our nation table, I live on the states and trust me from the outside looking in SVG is just running on fumes right about now. Marijuana is the one and only export that’s actually making some sort of profits to help the people of our land. It’s diffinietly putting revenue in the US. Why can’t our farmer cultivate it legally, why can’t SVG capitalize from the cultivation of Marijuana?And for those people who cry about the health effects. Alcohol kills more people than marijuana do every year.

  7. Michael says:

    Interesting that Camillo quotes statistics which indicate that marijuana production in SVG is on par with, and contributes as much as bananas do to the economy, and yet his father once said the following “There are some who say to me, ganja contributes significantly to the economy of St. Vincent and the Grenadines. To that, I say rubbish,” .
    Evidently the marijuana plant has greatly increased its economic importance during his tenure……. Hmmmm……

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