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The Purpose
The Objectives
Methods
The players
Please notice there are no middlemen, the inspectors will perform the function of auctioning the product weekly. They will collect the payments, peel off the federal excise tax and credit the growers accounts. All transactions will be electronic, no cash to attract the criminal element. The market The market for cannabis is a best guess. The Office of National Drug Control Policy (ONDCP) will try and tell you the number of cannabis users in America is 14.4 million. Thet represents about 5% of the people. Interestingly enough, that would mean of the 150 million that have tried it, 90% tried it and simply said no thanks. The number from ONDCP is flawed in many ways. While I agree with the concept more people give it up after trying than continue. I estimate that 20% of America (60 million) would probably take a puff if offered. I base that on the Gallup poll that show support for legalization decades ago at 23-24%, pot smokers and a few of the enlightened. The support number stayed there until the late 90's. Support has been both increasing and opposition receding since then for two main reasons. Medical marijuana and the dying off of a highly prohibitionist generation. The core number of the 70's and 80's is probably the smokers and it coincides with the Dutch number of 17%. Cannabis appeals to many, but not to all. So what is the market in dollars? Depends on who you listen to. The feds estimate $35-40 billion. But you must realize that number starts with 14.4 million as a user base, so it can't be trusted. I call it $150 billion, which is about four times as much, which once again coincides with my estimate of 60 million consumers. It also coincides with Armianno's estimate for California, which he estimates at $15 billion. California is about 10% of the country, if $15 billion is !0% then $150 billion would be 100%. The number is actually very important, The Plan requires accurate data to license the correct number of growers and the number of grow houses. Since the retailers could open sooner than the growhouses would be ready, we should provide for this opportunity and at the same time, accumulate the data needed to put a real number on demand. Now, if you have a $150 billion market, how many grams is that? To make it very simple we are going to call it $10 a gram, which means 15 billion grams.The $10 number is $280 an ounce or $70 per quarter ounce. A fair price for exceptional quality. I have seen impossible models for the comsumption number, based on supply/demand curves and price elasticity. What a bunch of hogwash. Besides all that, my number is totally scalable. Everything is a function of grams. The 15 billion grams total yields 750,000 growers at 20,000 gram licenses. That also means 3,750 growhouses at 200 growers each. That means a growhouse for every 85,000. If the average retailer sold 100,000 grams, it would mean 150,000 retailers, or one for every 2000 people. Retailers would need maybe 10 employees each for a total of 1.65 million new retail jobs (150,000 owners and 1.5 million employees). These numbers are big, but not even half as big as alcohol numbers. Other than production of cannabis, which would have higher employment than alcohol. This is about the only product that is best served by having individuals do it. An individual alone can produce 400 grams weekly of fresh, inspected, cured cannabis ready for consumption, and make a decent living. This can not be accomplished in any other field of endeavor. Well maybe moonshine, but that remains illegal, so for everybody that thinks we will all just grow our own...we dont legally get to make our own distilled spirits, so precedent has been set. It was set because the government wants its excise tax and they have never been able to collect from the shiners and they wouldn't be able to collect from home growers scattered all over the place. If we are to properly take advantage of this opportunity we must insure compliance. We insure compliance by offering the consumer a superior product at a fair price, in a safe environment, a gram at a time. . It would be wise to maintain a price that is very competitive. The best defense against illegal product would be fairly priced superior product. At $10 per gram for exceptional weed, it would be hard to entice most consumers with $5 bootleg weed. Probably the same people that also have meth, crack or acid. And, at $10, it allows us to engineer the profit, the grower gets $4, the taxman gets $2, and the retailer sells it for $10-making a $4 gross profit for the retailer. Also, the price serves as a deterrant to those that smoke too much. Moderate, responsible use is the majority of consumption today, that should not change with a more informed base of users. The Facility-Growhouse Think of a bee hive, with 200 individual cells purpose built for indoor agriculture. Staff it with twenty federal inspectors, rent the spaces to the growers and sell the product direct to the retailers through weekly auctions. These facilities are...big. Probably 12-15 acres of urban/surburban blight erased for each one built.The presence of federal Inspectors will have a stabilizing effect on the neighborhood and it would be advisable to build 50% again as much space for mixed use office/retail/food service that would move in under the security blanket. The Inspectors would be the anchor tenent for the office space. These buildings will be built to spec for there intended use. As the cannabis trade is never expected to go away, the building should be built with some forethought as to its permanant nature. A national architectural competion should be held. The buildings should be of similar design and material to make them instantly recognizable and attractive. The neighbors will be looking at them for hundreds of years. Choose wisely? Would that be appropriate? The concept is not new, Andrew Carniege had his libraries built to a stock set of patterns, all quite similar except for size. The buildings will be privately owned and federally licensed. The cost should have a target of $100 per square foot. That yields a cost of $15 million each. If the market does turn out to be what I believe it to be, we would need 3,750 growhouses. That is $56 billion. Wall street...we need an investment of $56 billion. The rent will be guaranteed, the only way you dont get paid is if Americans stop using cannabis after legalization. The cash flow is cast in stone, the rent would be withheld from the growers proceeds if that what it takes to get Wall Street to understand this simple business. We are not talking credit default swaps. Build a building, collect rents and make money. Nothing fancy. Where we choose to build these facilities is an opportunity to accomplish so much more than just artisan grown weed. The cash flow passing through a growhouse is about $17 million in Inspectors wages and growers receipts. That money would stay in the neighborhood because of the unique committment the cultivation of indoor artisan grown weed demands. Show up in the morning when the lights come on and the blinds are opened, and be there again when the shades are drawn and the lights turned off. These people would not commute twice a day, they would buy a place close to the growhouse. They would become urban pioneers if you like. The additional space for retail and office space at the hive would make it possible to live, work and shop within walking distance. This would take more than 800,000 off the commute. Better for the atmosphere and the dependance on oil. The Growers All growers will need to pass a licensing exam. Growers that have passed the exam and been selected for a license will rent space in the growhouses. How the grower subdivides their space, and how they grow will be governed by a growers committee not the federal Inspectors. Certain growing practices might be detrimental to the whole. For instance, an incidence of uncontrolled humidity and stagnant air can breed fungus or mold. These complications are easily avoided and awareness would be maintained by Inspectors and growers. Growers and Inspectors will be bonded by a common purpose. It will take certain types to pursue this as a lifelong career. However, I don't forsee any difficulty in recruiting growers. Most likely growers will also be consumers. This gives them the advantage of knowing the quality of their work. Many would come from the ranks of home growers, perhaps tens of thousands that could help train the rest of us. Earth mother organic hippie types would also be a good choice. We want people that care about what they produce for others to consume. Others would come from various fields, and some from the unemployed and others from the mobility impaired. The opportunity to create careers for 750,000 growers and 80,000 inspectors should not go by without considering who get these spots, If 800,000 pass the exam but we only need 750,000 the other 50,000 are just going to have to wait. To insure that there would be turnover in the industry, providing fresh opportunity, the original cast of participants should be stratified by age. This way some later in life growers/Inspectors would retire in the not to distant future, opening spots for new young growers/inspectors. The original cast should also be culturally balanced. I don't believe the hogwash that people of different cultures can't live, work and raise kids side by side. Give them a common purpose and an equal opportunity and we will be competitive, but we will all pull together for the success of the whole. The Inspectors This would be a really cool job for people of the right demeanor. The Inspectors will control access to the facility. Since the growers are rent paying tenants, they will have 24/7 access to their space. The Inspectors will need a staff sufficient to cover that need. I would expect Inspectors to move into the neighborhood as well. The would walk to work, be a part of the community, participate in the grand experiment. It would not be for everybody, but once again, I foresee no shortage of qualified applicants. The growhouse would have a contingent of twenty Inspectors to cover three shifts and provide a myriad of other functions. The opportunity to build this team is once again a golden one. Of the twenty, there would be a need for security, inspection of the facilities and the product, collection of the excise tax and conduct of the auctions. You would recruit from law enforcement for security, tradesmen for inspection of the facility, chemists/biologists for product inspection, maybe some IRS or State Department of Revenue types for auction and collections. You would also love to recruit EMT's and nurses, bureaucrats and social workers. Retailers All retail establishments will be licensed and located within the boundries of Cannabis Trade Zones (CTZ's). The cities/towns will designate the CTZ's. These trade zones should adhere to the principal of convenient but discrete. There are many retail districts around the states right now that could use a boost from 150,000 new rent paying tenants. All retailers will be linked by point of sale recorders (POS). These POS devices along with a cannabis users ID card will make it impossible for someone to go from store accumulating product for illegal sales outside the system (i.e. the under aged). Consumers All consumers will be required to produce a cannabis users ID card. They will be allowed to purchase 5 grams per day. This is an amount sufficient for a weekly or every two week trip to the convenient but discrete store of your choosing. You won't have to worry about traveling from one state to the next, it will be available where ever you go. You don't ahve to buy an ounce, which for many is a 3 month supply.You can come back and buy/try more tomorrow. People will carry a joint or two, not a bag of weed. Consumption will be limited to the CTZ's and private property. Which, when you think about it, is where 90% of cannabis must be smoked now, otherwise we would smell it frequently. I don't. I have much more of the plan to explain, whys, whos, how and how many etc. But the thing is this, Oakland is considering an ordinance to allow 100,000 square foot mega farms. According to my calculation these would produce about $85 million in gross receipts annually.Not bad for a $211,000 license. I wonder who gets to choose who gets the license. The price eliminates 99% of us. Not knowning a lot of somebodies eliminates the rest. The $85 million pie could be carved into 1062 good paying jobs if you follow the beehive concept. Four licensees making a net before tax of $80 million each, or 4,248 committed growers that grow the best. Is there really a choice? Why? Why on earth let the fat rats pass out the goodies to the fat cats that paid them. | ||
