Saturday, January 11, 2014

Colorado Marijuana Out Of Stash, Out Of Cash

       It probably came as no surprise that the demand for now, at least in the eyes of state laws in Colorado, legal recreational marijuana took off like a rocket. Very quickly the demand outstripped inventory and the supply capacity to replenish inventory was overwhelmed with prices on a rapid increase. While the images of customer lined up out into the street must be warming the hearts of the Colorado revenue authorities, it probably is making for some very unhappy Cartel members. A legal market for a drug has to be a challenge of unprecedented proportions.
       The Cartels, at least in Mexico, have a signature method of handling threats to their drug empires---they kill anyone, police, army, judges, legislators,  prosecutors, rival Cartel members and any civilian bystanders caught in the crossfire, without remorse, without pity. It may be only a question of time before the Cartels declare war on the recreational marijuana retail shops and growers, with the owners and workers therein becoming at great risk. Or like most organized crime with more cash than they know what to do with, the Cartels will seek to buy such retail shops and growers, which when faced with the choice of being killed or taking a huge amount of cash to sell out, on can easily visualize the choice an owner would make.
       What the Cartels may not realize is that as long as marijuana is illegal at the federal level and as long as the DEA is hypersensitive to the threat of money laundering, banks and mainstream credit facilities will not finance retail outlets or growers and may not process credit or debit card transactions. A two edge sword--not enough credit to expand and at the consumer level, cash only.  A cash only business could prove a magnet for employee theft and armed either event not pleasant.
        Too early to predict how this will play out, but the deadliest consumer product on the market, faces no shortage of capital--cigarettes. Also capital often is scrubbed of personal beliefs and the private equity market may flock into this market. Not being able to use a debit card in the long term will still cause retail outlets to be holding huge amounts of cash and remain a target. One would hope that by background checks much like one must undergo in California to obtain a permit to sell retail alcoholic beverages, will allay the money laundering concern. C
        Colorado represents a large first step in breaking the back of the Cartels, decreasing our prison and jail population, and creating a much more stable source of tax revenue than lotteries and scratch cards which really do prey on the lower economic strata of our population. Let's make sure the DEA does not crimp the legitimate flow of cash, so Colorado consumers will be able to buy the stash.

Retail Stash Wars
Ironic that today, January 11, 2014 is the 50th Anniversary of Luther Terry's report
As Surgeon General he advised that smoking tobacco lives will be cut short
News item is that the Cartels will be Colorado bound
Too much drug sales to lose, will not take this lying down
Since the feds and banking system have turned a very nonresponsive ear
A recreational weed store should now have a lot of safety fears
If you can't use a card to buy, it has to be cash
Loads of money for the picking for those gun in hand to crash
Banks are terrified to lend to stores or to process customers  cards
For fear the Feds on bogus laundering charges will come down hard
How many shop owners will have to be robbed or killed
Before Feds allow users of pot in Colorado to use a card to pay the bill?
While daily over 1,000 Americans die from smoking products with a card most likely paid
When it comes to sanity and banks and weed policy,   the DEA gets a failing grade.
© January 10, 2014 Michael P. Ridley aka the Alaskanpoet

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