From the time members of the baby-boom generation were young and idealistic, marching in the streets to protest the Vietnam War with long hair and torn bell-bottom jeans, marijuana has been a part of mainstream American culture—albeit often in the background and unspoken.
Back in the late ’60s and early ’70s, when the Woodstock generation was coming of age, several common threads united the 77.3 million baby boomers—the largest demographic group in history. Opposition to the war in Vietnam was widespread among these young adults. Tie-dyed T-shirts and torn jeans became the uniform of choice, with the Grateful Dead providing the soundtrack.
And while Timothy Leary may have been the patron saint of the counterculture, marijuana became the recreational product of choice for the “Turn on, tune in, drop out” generation—particularly in college dorms.
How many boomers continued to smoke pot is a matter of conjecture. However, the fact that marijuana moved from the outer fringes of society into the American mainstream is no longer open to debate.
A recent CNN survey found that 55% of those polled supported legalization of marijuana. It has been legal for medicinal purposes since 1978, and 27 states now permit the sale of medicinal marijuana to help alleviate a wide variety of conditions, including chronic pain, insomnia, stress, post-traumatic stress disorder (PTSD), glaucoma, nausea and migraine headaches.
Evil Weed
Still, marijuana hasn’t always been thought of in such a positive light. Who can forget Hot Fingers Maloney, the bug-eyed piano player in the 1936 anti-drug propaganda movie “Reefer Madness,” which became a cult classic in the ’70s when the baby boom generation discovered it and watched it, while … smoking pot, of course? While Hot Fingers and the entire film devolved into archetypal caricatures, they were taken very seriously by a significant portion of the American population throughout the ’30s, ’40s and ’50s.
And while some may think societal condemnation of marijuana use ebbed in the 1960s, such wasn’t necessarily the case among the majority of Americans. Indeed, in 1970, Congress passed the Controlled Substances Act, listing marijuana as a Schedule I drug, along with many other substances, including LSD, mescaline, heroin and crack cocaine.
A key factor in landing a substance on the Schedule 1 list is that it cannot be considered legitimate, nor prescribed by a doctor or registered nurse for medical use.
In 2012, the U.S. cultural landscape shifted in seismic proportions when citizens in two states—Colorado and Washington—passed referendums allowing for legal recreational marijuana usage. Since then, Oregon and Alaska have followed suit, and a recent report published in Time magazine predicts recreational marijuana will be legal in 18 states within the next five years—even while officially prohibited federally.
Though the popular notion may be that aging hippies are the primary target market for newly legalized marijuana, in reality the consumer base goes far beyond that.
“Just as some people are smokers and some prefer to drink, [those who prefer marijuana] are already there,” says Lara Bowman, manager of University Market, a convenience store on the campus of Portland State University in downtown Portland, Ore. “We just don’t know [who they are] because we haven’t been advertising the product. It hasn’t been talked about openly.”
According to Bowman, it’s only a matter of time before corporations move in to take over the legal marijuana market. “I can’t believe that big business isn’t going to create big [marijuana] farms, and start mass-producing it” once tax issues are settled, she says.
“Look at alcohol,” she continues. “First craft beer came to market, then craft alcohol. We’ll bring craft marijuana products as well.”
Bowman anticipates heavy branding at that point. “We all know it’s about the brand.”
CONTINUED: Tight Reins
Tight Reins
Even as acceptance of legal marijuana grows in this country, venues allowed to sell the product remain tightly controlled by the states. Marijuana dispensaries—pot stores—have popped up in Colorado and Washington, attracting in-state customers and beyond.
“In Washington, dispensaries are the only place you can buy it,” says Tim Cote, vice president of marketing for Portland, Ore.-based Plaid Pantry, a 109-store convenience chain with sites throughout Oregon and Washington—the epicenter of the new, burgeoning legal pot industry. “In Oregon they’re still formulating the rules, and they have until June to figure out how pot’s going to be sold here. But today, no one really knows.”
The operative assumption is that once recreational marijuana becomes fully legal, it will become available at venues where traditional tobacco products are sold—convenience and tobacco shops being the primary retail channels. But Cote doesn’t see marijuana becoming available at the local convenience store anytime soon.
“The reality is, we’re not going to get to sell it,” he says. “The way the law was written in Oregon, I don’t believe the legislature will ever allow it to be sold outside of designated facilities.” And those “designated facilities” are tightly controlled. Perhaps tobacco shops, being age-restricted outposts, could benefit.
“The [marijuana dispensaries] in Washington are significantly age-restricted,” says Cote. “My guess is that in Oregon it will be run just like a liquor store. That means if you’re not 21 years old, you don’t go in. Plain and simple.”
Cote compares the sale of legal marijuana to liquor sales in state-controlled states, where hard liquor is not sold in grocery or convenience stores—only state-licensed liquor stores. “And I can’t imagine that they’re going to have less control over marijuana than they do with hard alcohol,” he says.
Bowman also doubts legal weed will be available in her store anytime soon.
“Medical marijuana is currently sold in dispensaries only,” she says. “As for legal recreational marijuana, they’re working on the rules, which I think will be in place by June or July. Because the state of Washington has been ahead of us, our laws and regulations will likely mirror theirs. The OLCC (Oregon Liquor Control Commission) had an open forum on the Internet where they answered questions and provided information, and now they’re doing town halls all over the state. They’re going to consider it a sin.”
Sticker Shock
Bowman’s allusion, of course, is that marijuana products will carry a “sin tax” on top of their regular market value, which could easily double the cost of the non-taxed product available on the street. And those exorbitant taxes might kill the high in selling weed. According to The Huffington Post, an eighth of an ounce of pot in Colorado will run you $35 to $70, with an average price about $65. A single joint costs around $15.
“There was definitely sticker shock when these [dispensaries] first opened,” says one operator with some stores in Washington.
The retailer, speaking on condition of anonymity, continues, “I think some people were happy that they could walk in and it was legal. But when you’re buying it down on the corner from a guy in a trench coat, you’re not paying as much, because now the state is getting a cut in it.”
The bottom line is that people were looking at it to be a gold mine, but that’s not happening—at least not yet.
“We have no idea how taxation will work,” says Cote, “but in Washington, you’re talking in the $20 to $21 range. Per gram.”
Such outrageous taxes have steered many consumers back into the illegal (untaxed) market for their pot.
“Yes, the black market is alive and well,” acknowledges Bowman. One gentleman in her neighborhood was cleared to grow legal pot for medicinal purposes, she says, but he then sold product to others—for a lot less than what is being charged in legal state-run dispensaries. “Washington is re-evaluating things now,” she says. “I’m hopeful that Oregon will look at that and not tax the heck out of it.”
Once the tax issues are resolved, it seems just a matter of time before legal marijuana becomes more readily available, right?
“I think eventually it will grow into supermarkets and other places,” says Bowman. “Currently, you can’t sell liquor in a grocery store in Oregon, so I’m guessing the liquor store will have a ‘pot section.’ Our liquor store does free shots—you get a free shot on Friday night. Does that mean [once marijuana is legal and widespread] that you’ll get a ‘free toke,’ too?”
CONTINUED: A Different Smoke
A Different Smoke
One thing is for sure: Baby boomers who haven’t gone one toke over the line since the ’70s are in for a big surprise.
“The pot that’s available today is five times stronger than the stuff that was used in the late ’60s and early ’70s,” says Harry Smith, who hosted “Marijuana Country, the Cannabis Boom,” a one-hour special that aired earlier this year on MSNBC.
Cote has a daughter in college studying to be a pharmacist. “They talk about the wide variations in product potency in class,” he says. That includes taste and potency. “They had a conversation that amounted to, ‘This isn’t your father’s pot.’ I’m not sure if that’s good or not, but it’s out there.”
What it does mean is that there’s something for everyone in the marketplace, much like the various proofs found among hard liquors.
“When you go into the [pot] stores, they have a wide selection of different varieties,” says Cote. And the buyer is fully aware of what he or she is purchasing because THC (tetrahydrocannabinol, the psychoactive constituent of cannabis) content is clearly marked on each package.
“It’s like beer, where you have ABV [alcohol by volume] and IBUs [international bittering units],” Cote says. “It’s an intriguing market, and it’s all brand new. But initially, at least, it’s going to be very controlled.”
And as far as an upside for c-stores?
“Maybe down the road,” he says. “Or maybe in different states. But you would think if anyone was going to make it mainstream, Oregon was probably one of the leading candidates, because this is a ‘live and let live’ state when it comes to that type of stuff.”
Cash and Carry
One of the biggest obstacles in being able to grow the market is that so long as marijuana maintains its Schedule 1 status, banks are unwilling to touch money generated by the category, considering it dirty “drug money.”
Indeed, while former U.S. Attorney General Eric Holder issued an assurance that federal agents would not descend on states that have legalized marijuana, no one knows how future administrations will deal with such a gray legal area.
As a result, today legal marijuana is strictly a cash business. And that can create problems. Payroll, rent, utilities, even taxes must be done in cash.
“Under federal law, it’s still illegal,” says Cote. “And one of the things they could do is seize your assets, including cash. And since it’s a cash business, that makes [those involved in the marijuana business] a prime target for hold-ups.”
Still, there are alternatives. “You can use money orders to pay your bills,” suggests Cote. That, however, is not only impractical, but it also does nothing to alleviate a potential robbery situation. Published reports indicate that armored-car services have become a direct beneficiary of the cash marijuana crop in Colorado.
So the possibilities and profit potential for marijuana may be unlimited. Today, all eyes are on Washington, Oregon and Colorado. And if it’s done correctly, and taxed reasonably, the sale of legal marijuana could become as common as the sale of tobacco.
Time will tell, dude.
CONTINUED: Edibles and Beverages
Imagine the Possibilities
We’ve seen how coconut and pomegranate have entered into the stream of edibles and beverages. What about weed?
“We’re laughing about it,” says Lara Bowman, manager of University Market, a convenience store based on the campus of Portland State University. “It’s like, ‘Here’s my traditional full-of-gluten cookie; here’s my gluten-free cookie; here’s my vegan cookie. And oh, here’s my gluten-free, vegan, marijuana cookie.’ ” Which costs 20 times more.
“Of course,” she continues. “That’s what’s so funny. It’s like, what will that look like? Will things like cookies be considered a sin? The only thing I can think about is, you know at Christmas how Costco sells those chocolate liqueurs shaped like little bottles—and there’s not enough liquor in them for the OLCC to say anything? I’m wondering if that will be in our future. We’re all wondering that.”
Then there is marijuana as a baking additive.
“Perhaps they’ll have the essential oil over in the oil section so you can add it to your cookies and brownies,” says Bowman. “I have no doubt it will eventually become that mainstream.”
But there are risks involved with pot-spiked edibles. There’s the risk of an accidental overdose. And it could be the worst nightmare for responsible parents.
“A [pot] brownie looks like a [regular] brownie,” says Tim Cote, vice president of marketing for Plaid Pantry, Portland, Ore. “And if you’re 7 years old, a brownie still looks like a brownie. But that’s more of a personal thing—what you do with it once you get it home.”
There are also marijuana-infused beverages coming to market where legal.
“Another risk,” Cote says. “As a beverage, I’m sure it tastes better cold than warm. You stick it in your refrigerator, and there’s another risk for your kid—whether it looks like water or something else.”
Another huge segment with seemingly unlimited potential is vapor: e-cigarettes fused with marijuana oil—perhaps flavored. Inhaling pot … sans smoke!
“We’ve found that people are putting marijuana juice into e-cigarette pens instead of nicotine juice,” Cote says. “It’s just another way to use the product.”
One could also logically see legal marijuana blending in with hookah products. That gives a whole new meaning to hookah parties.
“Doesn’t it, though?” Bowman quips.
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