August 14, 2014

Marijuana Crisis - Quality, Cost, Supply

August 14, 2014. Denver. (ONN) When Colorado became the first state in the nation to legalize marijuana, many pot smokers wondered what that would do to prices, availability and the quality of their weed, both there and across the nation. With Washington becoming the second state to begin selling it last month, the results are becoming apparent. Marijuana shortages are reported from coast to coast, the illegal underground black market still thrives, and prices and quality are fluctuating drastically.

Ever seen marijuana like this? It’s only the beginning. Image courtesy of Pot-Tube.com.

We at Whiteout Press happily predicted that the legalization of marijuana would usher in an economic boom in the United States. Even when it was illegal, pot was always America’s number one cash crop, surpassing even corn and soybeans. Now, even in its infancy with weed legal in only 2 states - or 4% of the country - new start-up businesses are popping up by the thousands. Tax revenues in Colorado are jumping by the millions. And investors the world over are pouring money into the newborn industry. Like we keep saying, it’s like the automobile or the internet was just invented.

Washington and Colorado

The two states with legalized marijuana illustrate drastically different experiences. Some say Colorado did everything right, opening dispensaries on day one, with millions of dollars of tax revenue streaming in immediately. Traffic accident fatalities didn’t increase like opponents of legalization predicted, and they didn’t decrease like supporters predicted. They held completely steady. What has changed is the price, quality and availability of the wildly popular plant.

The consensus opinion is that Colorado created very lax, liberal regulations around its marijuana laws, allowing shops to open on day one, growers to freely plant and harvest, and all types of marijuana products to be introduced such as edible THC-infused candy, cookies and other goodies. Washington on the other hand, overregulated its law, with not a single marijuana dispensary able to open in the state for the first six months it was legal to do so. Even today, the few handful of pot dispensaries able to maneuver the mine field of government regulation are greeting tourists and hopeful customers with empty shelves.











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Regs, Mids, and Kush

America is in the middle of a marijuana transformation right now that began with the US invasion of Afghanistan after the September 11, 2001 attacks. Within a year, major American cities began reporting the appearance of new strains of marijuana. They called it ‘Kush’. It was hard to find because only small amounts were being imported, probably stashed away on supposedly empty US military transports, the same way cocaine used to be brought into the US from the War on Drugs in Colombia, and possibly still is.

They called it ‘Kush’ because it was a highly potent variety of marijuana found around the Hindu-Kush mountains in Afghanistan. It’s since been replanted around the US, cross-breeding with other domestic varieties like Maui Wowie, Northern Lights, Skunk and even nasty old Red Bud Sensimilla. But the slang name for all the new strains stuck - Kush. And on the streets, it’s the term used for any of the new, higher quality, higher priced marijuana.

Slowly, the world is changing for pot smokers across America. No longer is there one mass product, all pretty much the same quality with only slight variations. Now, there are suddenly three levels. ‘Kush’ is the highest potency marijuana. ‘Mids’ are in the middle, typically failed attempts to grow the powerful plant locally. And ‘Regs’ are the regular old, low-potency pot that your parents and grandparents remember from the 60’s and 70’s. By comparison, Mids are the equivalent of the pot kids smoked in the 80’s and 90’s. And Kush is 21st century weed from a whole new world.

Commercial versus black market

A recent report from The Washington Post looked at Colorado’s marijuana industry, and not just the one everyone now sees on their TV. Instead, reporters talked to old time pot smokers, asking them how legalization changed their weed smoking habits. Surprisingly, even with legal marijuana dispensaries outnumbering Starbucks in the state, all the pot smokers the publication talked to still use their old underground, black market weed dealers.



“I don’t know who is buying for recreational use at dispensaries unless it’s white, middle class people and out-of-towners,” one longtime smoker reported, “Everyone I know still has the guy on the street that they hook up with.” The main reason pot smokers are avoiding the legal dispensaries is because of the price. The price of the same marijuana is roughly 50 percent higher in the shops than from the black market dealers. The extra costs cover the 30% sales tax, the overhead for a building and the expenses related to permits, employees, insurance and various government regulations.

On the upside, at least dispensary customers, both in Colorado and now Washington, know what they are getting. Most reputable shops inspect their product for mold, worms and other problems. And they test their marijuana, labeling both the type and the THC level. That’s something street buyers are desperately in need of. Too often, black market weed dealers claim they are selling the high quality, high priced Kush, only to disappoint their customers by giving them Mids or Regs. Why? Marijuana shortages.

Marijuana shortages

When the highly potent marijuana variety known as Kush began sweeping America a little over a decade ago, it was in short supply and only spread to one city at a time at a slow pace. Even today, many rural American towns have no idea what Kush is. They still smoke the old Regs. There just isn’t nearly enough of the high quality weed to go around.

First, the powerful Kush variety of marijuana was brought in from Afghanistan after the US invasion in 2001. Next, entrepreneurial Americans began growing it here. But even with dozens of new growers sprouting up every day, it’s not enough to fill the country’s demand for the new powerful strain. With Colorado and Washington dispensaries able to buy in bulk and at any cost, and with the ability to verify the high quality of the product, all of America’s Kush seems to be diverting to those two states to keep the legal businesses open and with product on their shelves.

It’s caused shortages of quality marijuana throughout the rest of America that are even worse than they were before. Now, roughly half of all the Kush being sold outside of Colorado and Washington is actually lower-grade Mids or Regs. Unfortunately, dealers don’t reveal that fact and still charge Kush prices for the lower quality product. As an example, in one major American city, pot smokers can buy an eighth of an ounce of Kush for $55. An eighth of Mids costs $30 and an eighth of Regs is $20.

According to experts, all that will quickly change over the coming months and years. The Washington Post reports, ‘This black market boom, the state argues, is a temporary situation. As more legal recreational dispensaries and growers enter the market, the market will do what it does with greater competition: adjust. Prices will fall. The illegal market will shrink accordingly.’



The future of marijuana

The marijuana industry is changing rapidly, even the unseen underground black market. And it’s fairly apparent where everything is going. If one compares the current and coming pot boom to the introduction of shelf-stable beer, automobiles or even electricity, there are some predictable similarities. The two most obvious are quality and consistency.

There’s a reason General Electric was called ‘general’ and Standard Oil was named ‘standard’ - consumers need consistent quality in the products they buy, especially the ones that can do them harm. If there is one factor that will drive pot smokers from the black market to the higher priced legal dispensaries, its consistent quality. Nobody likes to pay premium prices for a substandard product, and that’s a problem reaching epidemic proportion around America today.

Quality brings us to the second major issue the marijuana industry, and casual pot smokers alike, will have to soon confront. Marijuana smokers like highly potent weed. Why take ten puffs when you can get the same high from only three. The problem is, the rush to create ever more potent marijuana has created some strains that produce effects similar to heroin. If one hit of some of these new strains can put a lifelong pot smoker on his back, almost completely incapacitated, imagine what it’s doing to the tens of millions of new, first-time pot smokers.

That problem is going to lead to caps on the amount of THC in legal marijuana, as well as strict testing to insure they are adhered to. But that won’t happen in the black market. One of the reasons the underground weed industry won’t disappear is the desire by some people to obtain marijuana so potent, it’s still illegal.

What will tomorrow’s marijuana scene look like? With states slowly joining Colorado and Washington, nothing will change quickly. The coming 20 years will see repeats of the same cycle we’re currently in now. As additional states legalize pot, it will create national shortages, prices will rise, and quality will fall on the black market. As more and more growers come online to fill the demand, prices will drop and quality Kush will drive out the old, unloved Mids and Regs. That process will repeat each time new states legalize marijuana. And watch out when California legalizes pot. With an economic consumption larger than most countries, it could cause a marijuana drought of Biblical proportions.

For the entrepreneurs, these truly are the boom times. Growing instructors, bakers, chemists, truck drivers, packaging manufacturers, accountants, cashiers, writers, and a host of other professions have exploded in the marijuana industry. Just like the invention of the internet, even the dumbest ideas and weed-related business ventures are receiving millions in start-up capital and investment. There’s gold in them there hills, and it’s green.

 

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