Some MMJ Millionaires Are Turning To Philanthropy

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  Some MMJ Millionaires Are Turning To Philanthropy

Posted by CN Staff on January 01, 2010 at 05:59:05 PT
By Scott James 
Source: New York Times 

California -- The popularity of pot clubs in the Bay Area has led to a burgeoning crop of medical marijuana millionaires. Call them the ganja riche. Like many of their nouveaux predecessors, they are trying to figure out what to do with their cash.Some are giving to charity, but you will not see any fanfare or buildings named in their honor. Medicinal marijuana remains a legal gray area, and nothing — even philanthropy — is simple when it comes to the proceeds. Oakland’s medical marijuana headquarters, Oaksterdam University, could not even sponsor a local food bank.
“They refused our sponsorship because of other money they get from the federal government,” said Richard Lee, founder of Oaksterdam.While marijuana money and munchies might sound like the perfect fit, the food bank worried that such a partnership would have put the federal dollars it receives in jeopardy.“We appreciated the offer from Oaksterdam and gave it due consideration,” said Brian Higgins, the food bank’s spokesman. “In the end, it was not worth the risk.”The sense of legal uncertainty is created by the maze of laws surrounding medical marijuana. California voters approved it, but it remains a federal crime.Eric H. Holder Jr., the attorney general, has ended the Bush administration’s frequent raids on medical marijuana distributors, but dispensary operators know political winds can change. They avoid creating paper trails that might come back to haunt them.This has led to a delicate dance with financial matters, like filing taxes. Marijuana clubs and dispensaries have employees who receive W-2 forms. When it comes to filing tax forms identifying their business, it looks better if a shop is linked to a cafe or some other benign operation.Dennis Peron, co-author of the Proposition 215 referendum that legalized medical marijuana, said that those in the business know their activities are being monitored. “Giving away money to deserving people isn’t money laundering,” Mr. Peron said.But if the political pendulum in Washington swings to the right, a new Justice Department might not see it that way.Neither Mr. Lee nor Mr. Peron claims to be a millionaire. But according to insiders who asked not to be identified for fear of being singled out by the authorities, medical marijuana can be a remarkably lucrative business, especially in the San Francisco region, where zoning laws severely restrict the number of marijuana clubs. There are an estimated 1,000 in Los Angeles — more dispensaries than public schools, in fact — but only about 50 in the Bay Area. Less competition means that medicinal marijuana is, for some, an especially enriching shade of green.Those profiting from marijuana found a friend in Tim Patriarca, executive director of Maitri in San Francisco, the last hospice in California that cares solely for people dying from AIDS.Mr. Patriarca is a true believer in the power of cannabis, seeing first hand the comfort it gives to the terminally ill in their final days. He has also seen how those donating marijuana to the hospice for compassionate care were suddenly becoming rich.“It’s new wealth, quick wealth, and a great deal of it,” he said. “They were making money with no tradition of giving.”Many of the newly minted marijuana millionaires, he said, came from hardscrabble lives, with little understanding of philanthropy. So he did The Ask. The ganja riche gave, and the idea grew.It started small with $100 here and there. Then donations increased to $1,000 and $5,000. Now some clubs give as much as $20,000 in a year. The money is helping to offset the loss of more than $60,000 in state aid that Maitri received until it was eliminated during budget cuts last June.Mr. Patriarca sees a perfect circle in operation. After all, this marijuana is supposed to be for treating illness, and now some of those profits end up directly helping the sick.But the decision to accept the clubs’ donations was not made casually. “I knew it could be touchy,” Mr. Patriarca said. “I had to go to my board and ask, ‘Do we take this money?’ ”Now there is a push to put a referendum to legalize marijuana on the state ballot in 2010. . Even if that happens, however, federal laws are unlikely to change. The legal status of the medical marijuana millionaires and their cash will remain as gray and transitory as a cloud from a bong wafting down Haight Street.Scott James is an Emmy-winning television journalist and novelist who lives in San Francisco. A version of this article appeared in print on January 1, 2010, on page A23A of the New York edition.Source: New York Times (NY)Author: Scott JamesPublished: January 1, 2010Copyright: 2010 The New York Times CompanyContact: letters nytimes.comWebsite: Medical Marijuana Archives

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Comment #26 posted by Hope on January 03, 2010 at 19:01:09 PT
The apparent glut in some places.
I hope it doesn't mold. That's not good.
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Comment #25 posted by Hope on January 03, 2010 at 18:57:34 PT
chain stores. 
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Comment #24 posted by keydet46 on January 03, 2010 at 18:45:44 PT:
Donate to Republicans. Then if the wind changes they will be biting themselves in the Ass.
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Comment #23 posted by FoM on January 03, 2010 at 05:35:54 PT
I am sure that many people want to make a lot of money growing and selling cannabis but it isn't something to depend on as an income. When the laws are finally changed the prices will crash. I believe that big business like tobacco companies will jump in with both feet and wipe out almost all profits. The people or companies that have lots of money will wipe out a small time grower. That's how business goes. 
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Comment #22 posted by EAH on January 02, 2010 at 23:47:11 PT:
"Why can't people who grow cannabis sell it instead of paying middle men?"THAT would be black market cannabis. At the moment, CA has a legal mess.
Cops and DAs claim all selling remains illegal. Patient coops that grow for themselves are legal. Dispensaries have been claiming to be either caregivers or collectives. Recent rulings have nixed the caregiver designation and most dispensaries don't operate anything like the rules are for coops. No individual can legally sell cannabis. Dispensaries get to "sell" but arguments rage about it. (see LA) It basically depends on the local politicians whether your dispensary can operate or not. Growers don't pay middlemen, they just sell to them.Most cannabis in dispensaries could have ended up on the street just as easily. CA and Oregon are now producing so much that there's more than
local markets can absorb, commercial volumes are moving out across the country. Growers I used to work with now have their grown up kids doing the 
business now. Overall enforcement is weak, lots of people want a piece of the 
action. There's lots of money to be made while prohibition continues.
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Comment #21 posted by runruff on January 02, 2010 at 18:44:49 PT
Buyers are always the problem.
Right now, here where I live, I could connect a thousand pounds at wholesale prices inside of one day!People are sitting on poundage waiting for it to move.Right now the best sales are to buyers from out of state.Local prices range from $1,600 lb. to $2,500 lb. depending on quality, indoor or outdoor.Another reason many are waiting is that the LEOs are feeding. They are trying to make up on the highways what they used to rob us for in our homes. The Leos got so used to the Xmas Bust Bonuses that it became a part of the precinct perks. Now, in our state the cops are pretty much restricted to profiling and robbing people of there hard earned product on the roads, then selling it for themselves. This crap has been going on for 25 years around here.
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Comment #20 posted by FoM on January 02, 2010 at 15:18:57 PT

Thank you. Why can't people who grow cannabis sell it instead of paying middle men? Profit gets tacked on and the medical cannabis consumer loses.
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Comment #19 posted by EAH on January 02, 2010 at 14:52:37 PT:

In '95 the wholesale cost of a top quality pound was about $5000. By 2005 that had dropped to to $3000. Reduced enforcement brought about by 215 had allowed supply to slowly grow, both indoor and outdoor. Yet as wholesale prices lowered, dispensary retail prices did not. Retail street prices did drop but that
made no difference to the dispensaries whose aboveground advantage allowed them to continue unaffected. Their margins simply increased. I never heard one dispensary owner discuss lowering prices. If the subject came up, the argument was, well then people will buy ours and resell it on the street. Why should we make it easy for them to do that? Why should we not make that money if we can?
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Comment #18 posted by EAH on January 02, 2010 at 14:36:45 PT:

How we got here
A short history. SF has been a center of recreational drug use since the 60s.
In the 70s, enterprising hippie businessmen created drug supermarkets in the city. One stop shops for all the "fun" stuff, cannabis, psychedelics, MDA etc These operated out of victorian houses in old central neighborhoods. They weren't sleazy or dangerous for the most part. People who were instrumental in the starting the dispensary model in SF, in the mid 90s, had also been associated with those supermarkets. The dispensary concept was to divert black market cannabis to the needful in a safe environment. For that reason, they were "forced" to operate at those black market prices. Local political authorities, knowing nothing about cannabis or the black market just accepted this as how it had to be done and offered protection by simply not closing the dispensaries. If the feds didn't close you, the locals wouldn't.Dispensaries used their above ground, protected status to their advantage.
They opened their doors to any and all growers to bring product for evaluation. At harvest, growers with duffel bags were lined up. Dispensary 
buyers then cherry picked what they accept from all that was offered, took it on consignment, specified a future date for payment, say 30 days, and drove hard bargains for low prices to the growers. They then took the product they hadn't paid for and sold it in small increments at the highest retail prices.
Some dispensaries grew their when they could. No larger one could possibly grow enough to meet their demand needs. You couldn't create a more profitable cannabis business model if you tried. Local and state authorities 
were just too ignorant and too fearful to create a fairer one. So operating in ways that maximized every competitive advantage, they leveraged growers money, used economies of scale to lower wholesale costs
and made the highest possible profits. These are the facts. The biggest and most successful dispensaries all did this. AFAIK only Valerie Coral and WAMM
did not engage in this. They are the only real true coop.As a prolific herb that grows like a weed, the true cost of top quality cannabis could be as low as dollars per oz. While there are a few differences,
cannabis flowers could sell at rates similar to the prices of cut dried ornamental flowers. Costs of legal production be very similar. The main difference would be taxes. The single reason for the extreme high cost of cannabis is prohibition. It has NOTHING to do with what it takes to grow and process. There are a lot of folks who would immediately leave this business if those low prices were what cannabis sold for.
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Comment #17 posted by Hope on January 02, 2010 at 14:29:56 PT

It would have helped everything
be farther along than it is if the dispensaries had been about dropping the bottom out of prohibition driven black market prices.But they didn't. 
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Comment #16 posted by FoM on January 02, 2010 at 14:27:11 PT

Sinsemilla Jones
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Comment #15 posted by Sinsemilla Jones on January 02, 2010 at 13:49:49 PT

Charity begins at home.
It would seem that dispensaries should be using excess profits to lower prices for their customers.
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Comment #14 posted by FoM on January 02, 2010 at 06:09:59 PT

I very seldom comment on articles like this because I have strong feelings about it all so I just keep my thoughts to myself. I never in my wildest dreams thought it would go in this direction. That's the way it is though.My dream is for medical cannabis to be sold along side of other medicinal herbs for a price similar to what people pay for quality medicinal herbs now. 
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Comment #13 posted by The GCW on January 01, 2010 at 22:30:37 PT

Thanks. That is so obvious but I think I've missed it.Dispensaries are operating more or less legally yet they are using black market prohibition prices.The question is, how do cannabis activists approach that issue? As an activist, I see that as a problem yet it needs to be handled with soft gloves so more states can start allowing citizens to use the plant. It is another reason to completely RE-legalize though.Here in Colorado, where citizens have quite a bit of protections in growing, selling and purchasing the plant, the prices should reflect that reality.
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Comment #12 posted by EAH on January 01, 2010 at 21:24:41 PT:

Re: MMJ Millionaires 
"Neither Mr. Lee nor Mr. Peron claims to be a millionaire. But according to insiders who asked not to be identified for fear of being singled out by the authorities, medical marijuana can be a remarkably lucrative business, especially in the San Francisco region, where zoning laws severely restrict the number of marijuana clubs."Of course they don't claim that. But they are. For YEARS now, dispensaries have SOLD marijuana at the top black market retail prices. I know this for a fact. Even taking into account operating overheads, to be able to sell openly, with permission from the local authorities, at those prices, no wonder these guys are rolling in it. I have no problem with selling cannabis for a profit, let's just not pretend 
that this was an accidental windfall that happened to altruistic souls. If they really cared about providing for the sick, they could have sold at the minimum prices needed to operate and earn a fair living. Black market prices 
are much higher than that. These charitable giveaways are tax deductions for 
people who wouldn't need them if the prices were what they should be.
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Comment #11 posted by observer on January 01, 2010 at 18:23:20 PT

re: Reefer Madness
bionic man: The comedy that warped peoples judgement years ago "Reefer Madness"Here's a page I put together on that 1930's anti-marihuana movie. (link below)The movie dialog (so bad, yet amusing, and so juicy), I transcribed a few years back, because I could not find it on the net. In 2008, I used that as the backbone of a picture-book on the movie (Reefer Madness: Revisited) which illustrates the movie's (reconstructed) screenplay with clips, 1930's anti-marihuana comics, movie publicity stills, my commentary, and many other examples of anti-cannabis hysteria, then and now. The idea was to create an illustrated book that people want to leave on their coffee tables, was persuasive, yet easy to begin reading at any point - and easy to understand. But the screenplay itself, I put out there for free (html, pdf, etc.) Also, linked from there, is the daily Reefer Madness News Report podcast. That's an automated mp3 podcast put together each day from (what considers to be) the top breaking reefer madness and cannabis psychosis news. 
Reefer Madness - resources
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Comment #10 posted by FoM on January 01, 2010 at 10:40:28 PT

bionic man
Happy New Year!
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Comment #9 posted by bionic man on January 01, 2010 at 09:29:50 PT

reefer madness
I forgot that is 12:00 noon CST. 
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Comment #8 posted by bionic man on January 01, 2010 at 09:26:46 PT

OT  Reefer Madness
The comedy that warped peoples judgement years ago "Reefer Madness", comes on today on IFC at 12:00 noon on IFC. Its always good for some laughs. Happy New Year to everyone, and hope 2010 will bring even more progress.
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Comment #7 posted by FoM on January 01, 2010 at 08:34:54 PT

Rose Bowl Parade
I love the Rose Bowl Parade. I can imagine a day in the not too distant future when Cannabis could be a part of this great parade!
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Comment #6 posted by FoM on January 01, 2010 at 08:17:37 PT

That is wonderful news. The best of luck to you with your interview! Happy New Year!
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Comment #5 posted by Hope on January 01, 2010 at 08:16:42 PT

New Year wishes...
I wish that and hope that more people will wake up and more eyes open to the fact that cannabis and most cannabis users are not a danger to society and that everyone understands that the prohibition is far more deadly, dangerous, destructive, and wasteful of life and resources than the plant and it's use could ever be.I wish for enlightenment for all and lots of it.
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Comment #4 posted by Hope on January 01, 2010 at 07:59:33 PT

May you be blessed in every word you say.God be with you!
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Comment #3 posted by Hope on January 01, 2010 at 07:57:53 PT

My wish... Peace and more happiness for all.
Beginning this year... no more killings, no more raids, no more cages, no more arrests, no more lives and families hurt or destroyed, no more seizures, no more fear, no more persecution, no more hurting, no more attacks over this plant, or any plant!
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Comment #2 posted by The GCW on January 01, 2010 at 07:55:03 PT

LIVE broadcast in Stoney Brook, N.Y.
Good morning. I believe I'll be doing a live interview with Marc Greene on WUSB radio in Stoney Brook, New York at 10:05 Colorado time. That's 12:05 Long Island time.CNews'ers can listen in at Then click on the upper right corner where it says "Tune in"It is the Lunch Time Show, Fridays 11-1pm.Marc indicated this will be available for a week after the live presentation using a recording.-0-Marc Greene was just in the Colorado high country for the holidays and noticed how much things have changed in the last 6 months or so and asked about talking about the issue on His radio show. I agreed, and We just spoke on the phone and it is set to go.So that's in a little over an hour.
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Comment #1 posted by FoM on January 01, 2010 at 07:21:31 PT

AlterNet: The Year In Pot
January 1, 2010URL:
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