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Source: National Post (Canada)
Author: Chris Turner, National Post 
Published: Tuesday, August 5, 2003
Copyright: 2003 Southam Inc.
Contact [email protected]
Website: http://www.nationalpost.com/


It's bigger than wheat, dairy or the fishery -- and the boom has only begun. Inside the business of pot: who grows it, who sells it and how it gets to buyers. A journey through a $7-billion underground economy.

THE MARKET

It's early evening on a lovely spring day in Toronto, and one of Canada's million-plus cannabis users -- let's call him Dave -- makes a phone call. The guy at the other end of the line is Dave's Guy. The Guy. Dave's known him for more than a year now. The Guy used to be a friend of a friend, that's how Dave found him, and then the friend of a friend took Dave to meet The Guy, to vouch for Dave, and that was that. Dave calls The Guy directly now. The Guy's in, answers the phone. Dave says he needs half an ounce.

No problem. Come on by.

Dave walks a few blocks to a high-rise apartment building, buzzes The Guy's number, gets let in. Up at the apartment, they shoot the shit for a bit. Current events, movies they've seen recently. There's a bond here that needs minding, a comfort zone that needs maintaining. They need to trust each other: Dave trusts that he's getting good stuff; The Guy trusts that Dave won't spread the word too much. The Guy doesn't want to be known, you know? In fact, The Guy got robbed not long ago, and so there are several elaborate new locks on the door.

The Guy digs out his steel lockbox -- a generic thing, no bigger than your average tackle box. It's stuffed full of dense, resinous buds. Marijuana. They talk about the latest batch: about its potency, about the characteristics of the high it produces.

Half an ounce is measured out, piled into a Ziploc. A hundred and fifty bucks changes hands. A drop in a multi-billion-dollar bucket.

This buying ritual is about all Dave knows of the fast-growing industry born of his preferred recreational intoxicant. In this respect Dave is no different from the vast majority of Canada's regular pot users -- there are at least 1.5 million, according to the Canadian Medical Association Journal. Very few know where the pot they're smoking was grown or how it got from there to their dealers. Who grows it? In what quantities? How is it distributed? Partially because those with extensive knowledge of the industry don't want to go to jail -- and so don't want to speak to the likes of me -- and partially because law-enforcement officials base their understanding of the industry primarily on the tiny minority that happens to get caught, the definitive information that could yield answers to these questions is harder to find than a suburban grow room.

I've talked to Vancouver cops who'd rather not extrapolate from their local knowledge to any kind of national picture, and to federal law-enforcers who extrapolated from their limited picture a little too willingly -- seeming, to my mind, a bit quick to suggest that anyone involved with the pot industry is complicit in a violent and dangerous criminal enterprise. I've talked to growers who knew little more than the details of their own grow room and the two or three people to whom they sell their crop, and to activists who couldn't say much for certain about the full scope of the business but felt strongly that it didn't look like the version the cops were peddling. Still, by following the supply chain that links the fields and (more often) rooms full of marijuana plants to the countless informal markets like the one that exists between Dave and his Guy, a rough sketch of the industry does emerge.

And it's an industry that's as extensive and elaborate in this country as it is anywhere else in the world. Marijuana production has exploded in Canada in the past two decades. As recently as the early 1980s, the overwhelming majority of the cannabis consumed here was imported from traditional growing regions like Jamaica and Mexico, with domestic cultivation limited to self-interested hobby farmers and the odd cottage-industry operation. Since then, Canada has transformed itself into a major producer, providing a large majority of the pot consumed domestically and much more -- by one estimate, as much as 85% of Canadian-grown marijuana winds up in the U.S. market. Along the way, Canada has also earned a reputation globally as the producer of the world's highest-quality pot. This is widely acknowledged in -- and about -- British Columbia, where some of the world's most potent and most coveted marijuana is grown. This "B.C. Bud" -- an umbrella term for the many strains of Grade A marijuana grown in the province -- boasts a reputation among connoisseurs akin to the oenophile's reverence for Bordeaux reds. There are little more than best guesses as to the full size of the industry -- in B.C. and elsewhere. British Columbia's Organized Crime Agency, for example, values the province's pot harvest at $6 billion annually, while the province's self-proclaimed "Prince of Pot" claims it's more like $4.2 billion. Tally up the low-ball estimates nationwide, understand that none of these guesses includes ancillary industries -- from paraphernalia shops to growing-equipment manufacturing to the convenience store around the corner from my apartment that sells flavoured Blunt rolling papers -- and realize that we're looking at a national industry that's at least $7-billion strong, which is almost as big as Canada's cattle industry.

THE RAW MATERIALS

The seeds of the cannabis plant are peppercorn-sized, tear-shaped and smooth-skinned. Their colour ranges from light yellow to deep olive to wine-grade purple. They are odourless. They are also, for the majority of producers and users, useless. Most of the people involved in the growing of cannabis -- whether Québécois industrial growers affiliated with biker gangs or independent producers in need of work after their jobs in failing resource-based businesses dried up -- start their crops from clones, small seedlings snipped from full-grown plants.

The most prominent exception to this rule is Marc Emery, 45, the aforementioned Prince of Pot, whose primary business is Marc Emery Direct Seeds, a mail-order cannabis-seed business that grosses, by his estimate, $3 million per year. In his business acumen, as in many things, Emery is as far removed from the laconic longhairs stereotypically associated with the marijuana industry as you could possibly imagine. At a glance, you might mistake him for a reasonably hip middle-management type out on the weekend. His speech is not lightning-quick but fairly rapid nonetheless, and steady, and it carries multiple parallel topics at once, looping them in and out of one another like individual stalks of hemp in a thick rope.

Emery also appears to thrive on near-constant motion. Just now, for example, I am half-jogging to keep up as he paces rapidly around the top deck of the Queen of Surrey, a ferry bound from Horseshoe Bay in suburban Vancouver to Langdale on the southern tip of B.C.'s Sunshine Coast -- one of the province's prime pot-growing regions. It's dusk in mid-January and a strong wind cuts across the deck, but it slows Emery not at all. He circles and circles, making calls on his cell. Periodically, at the end of a call, he'll stop, and we'll lean against the ferry's railing, and he'll toss off another quick riff from his encyclopedic reserve of knowledge about marijuana. Before I have time even to make a note of it, Emery is off again, double-time, working his phone.

Whether or not those constant calls are related to duties stemming from his self-coronation, his claim to the title Prince of Pot is certainly legitimate: In addition to the seed business, Emery is president of The B.C. Marijuana Party and former proprietor of Vancouver's first full-service cannabis-culture shop (the now defunct Hemp BC), its first cannabis growers' shop (the now defunct Little Grow Shop) and its first Amsterdam-style pot café (the now defunct Cannabis Cafe). Emery divested himself of these three retail operations -- which were frequent targets of police raids -- so he could focus on his core ventures: selling seeds worldwide by mail and carving out an aboveboard space for the marijuana industry in the Canadian marketplace.

In pursuit of the first of these goals, Marc Emery Direct Seeds may well have assembled the world's most extensive marijuana seed catalogue, which fills 10 pages of every bimonthly issue of Cannabis Culture magazine (which Emery also founded) and lists more than 500 varieties -- everything from Afghan Dream to Y2K. It also carefully outlines the five ordering rules by which Emery avoids keeping information about his customers in any precise detail. "Don't order right to your grow house," goes point No. 4, which suggests instead a "non-growing friend's house or ... a post-office box." In the seed business -- as in every step in marijuana's supply chain -- information is a dangerous commodity. And so Emery has no warehouse, no neat rows of seed-filled jars. "I destroy all correspondence immediately after issuing your order," Emery further reassures his customers on his catalogue's ordering-information page. His seeds, dried, are around somewhere -- he makes vague references, for example, to trusted friends, and a sizeable chunk of his business consists of distributing seeds from "seed banks" in Amsterdam and from all over British Columbia -- and he sells them in batches of 10 for prices that start at $20 (for random mixes of common strains, his equivalent of table wine in a one-litre screw-top) and top off at $395 (for "Jack Herer," the 1995 champion at the Cannabis Cup, Amsterdam's annual global marijuana-growing competition and trade show).

Emery is a seed of a sort himself: His business was one of the first tiny sprouts to emerge from the rich soil of a fast-growing underground industry. But while the pot business employs an estimated 150,000 people in B.C. alone, according to government officials, Emery is one of a microscopic minority that have gone public about their profession. And if it were up to him, he'd be the rule, not the exception: pot would be fully legal to grow, sell and possess in Canada, and trendy neighbourhoods nationwide would be dotted with tastefully decorated marijuana shops in which experts like himself would guide buyers through their purchases in the wine-snobbish language of his catalogue. That Nebula there? "Fruity flavour and scent. Transcendental buzz." As for the Bushman, well, it's got an "amazingly deep smell and flavour, sweet and earthy." And a knowledgeable independent retailer like Dave's Guy would move out of his multi-locked Toronto apartment, dispensing his wisdom and tallying up his sales at a boutique's cash register instead of a lockbox.

For now, though, the overwhelming majority of the business avoids direct sunlight, which is why Emery and I are on this B.C. ferry in the dark, bound for an illicit grow operation on B.C.'s pot-rich Sunshine Coast. Emery sets off on another lap, and I dutifully follow. As we reach the stern, the shadowy deck is thrown into full darkness by the ship's towering rear cabin. I hear Emery calling back to me in the darkness, "See? The kids all know this is the place to come to smoke pot." A moment later, I find myself slaloming through a knot of teenagers who are huddled against the back railing, passing a joint. It's as if they were planted there, a smoky cloud of testimony to the pervasiveness of the industry.

THE GROWERS

British Columbia's Sunshine Coast is a down-at-the-heels resource-extraction region, a place of closed pulp mills and fishing moratoria -- a place that would be an economic disaster area without its marijuana industry, if you buy the arguments of those involved in the business. Like many of B.C.'s traditional pot-growing regions -- which include Vancouver Island, small islands in the Strait of Georgia and the mountainous interior of southern B.C. -- the Sunshine Coast traces its pot industry to the arrival of American draft dodgers in the early 1970s, many of whom brought seeds with them. There are far greater numbers of marijuana grow operations (a.k.a. "grow ops," "grows" or "grow shows") in Canada's three largest urban centres -- a 2001 report by B.C.'s Organized Crime Agency estimated that there were as many as 15,000 separate commercial grow operations in the province's Lower Mainland alone, more than the total population of the Sunshine Coast - but the per-capita champions of marijuana production may well be the long-standing hippie enclaves on this stretch of coastline.

After a short, fast drive up a darkened highway leading north from the ferry dock in Langdale, Emery steers his T-bird into the driveway of one of the area's production facilities: a small bungalow on a quiet country road. The man who greets us -- let's call him Mike -- is, in Emery's estimation, a fairly typical Sunshine Coast pot grower. Mike greets us in sweats and a baseball cap advertising something called "Advanced Nutrients." He's 30-ish, married, and he's been growing pot for five years. Like many growers, he rents his house and moves frequently out of fear that he'll be discovered -- either by police or by thieves -- if he sits too long in one spot. And like many growers, his work forces him to be anti-social. (Growers with active social lives become known growers, and that can very easily lead to stolen plants and equipment.) Beyond that, though, there's nothing particularly "underground" about Mike's looks or his life. He wouldn't turn your head if you saw him buying flower pots at the local Canadian Tire -- especially not in this part of B.C., where a large but unspecified number of his neighbours are involved in the same cottage industry.

The hallway leading to the bedrooms in Mike's house is closed off by a thick rubber sheet, and he ushers Emery and me behind it. As soon as the rubber sheet is pulled back, the sweet aroma of marijuana fills our nostrils. The larger of the two bedrooms at the end of the short hallway, itself sealed off by a thick rubber sheet, is the grow room: an eight-by-12-foot space lit to a concert-stage level of brightness and filled almost entirely by densely packed rows of marijuana plants. There are about 120 plants in all, so lush that the floor beneath them is entirely obscured, as if a metre-thick carpet of cannabis covered the room. Overhead are nine 1,000-watt metal-halide lamps, sheathed in silver hoods and linked together by thick ducts, which funnel cooler air from outside through the lamps to keep them from overheating. The modern indoor pot industry, Emery told me, began with the metal-halide light bulb's invention in the early 1980s. Before that, inefficient fluorescent tubes yielded plants far inferior to those grown outdoors. The intense, focussed light of the metal-halides, though, produces big, resinous buds like Mike's -- these dense, conical spires of flowers are the female plant's reproductive organs, and they are rich in tetrahydrocannabinol (THC), the psychoactive ingredient that makes these plants worth up to $3,000 per pound wholesale. It's warm and humid in Mike's grow room; a monitor notes that the temperature is 26 C even as three large household fans whir away.

Contrary to popular belief, not all or even most indoor grow ops are hydroponic. Mike's plants sit in standard-issue plastic pots filled with a soilless "growing medium" that consists of an incredibly elaborate blend of the marijuana plant's favourite foods. Mike's signature mix includes a peat-moss product called "Sunshine Mix 4" -- bat guano, mushroom manure, worm castings, rock phosphate, perlite and an assortment of sulphates, among other ingredients. There is also a carbon-dioxide generator to further encourage maximum growth. Mike waters his crop by hand.

Until we entered the grow room, Mike had been quiet, limiting his answers to my questions to curt monosyllables. But as he and Emery inspect his crop, Mike instantly transforms into an excited botany professor, peppering his speech with terminology I can't follow. I gather that there are five varieties of pot growing in the room, prized strains with names like Train Wreck and Chronic. I gather also that Mike takes enormous care -- and pride -- in his work. Emery's own interest is equally passionate and equally professional -- though Mike's crop could yield six pounds of highly smokable weed, it's destined instead to produce seeds for Emery's direct-mail business. Shortly before harvest, Mike will place two male plants in the centre of the room, and they will quickly pollinate all the females, whose buds will become covered in seeds.

The rest of Mike's grow op is in the smaller bedroom across the hall. In the room's closet, a few dozen tiny seedlings -- clones -- sit under a single fluorescent lamp, which Mike leaves on 24 hours a day to keep the plants from flowering until they're ready to be cycled into the grow room. The wall that this room shares with the grow room is a maze of wires, fuses and switches -- the customized electrical system that feeds the juice to Mike's lights. As well, there are two electric blowers, responsible for keeping cool air moving through the lighting system. All told, Mike's grow op cost him around $9,000 to set up, and it will generate $100,000 per year in revenue if he can manage four full crops -- sold, unlike his current batch, as smokable buds, not seeds -- without a hitch. Through contacts he has in the industry, Mike would be put in touch with an interested buyer when his crop was ready -- perhaps a Vancouver-area equivalent of Dave's Guy, or the guy Dave's Guy buys from. The sale of each batch would occur far from Mike's grow op, and each sale might be to a different buyer. The supply chain in the pot business is loose and associations are often brief -- it's a constantly changing process more akin to an old-time switchboard with its hundreds of interchangeable plugs and holes than to the rigid, reliable order of an assembly line.

Mike's set-up is typical of the industry's production facilities: Though large-scale outdoor growing still goes on nationwide -- B.C.'s rugged and sparsely populated interior, for example, remains prime territory for clandestine outdoor crops -- most of Canada's marijuana is grown indoors. Some of these operations are much larger than Mike's -- the average size of the grow ops busted in a recent batch of police raids in southern Ontario was 300 to 500 plants. Industrial parks are another prime location for extra-large grow ops; according to Emery, growers will often set up an electricity-hogging front business (say, auto repair or arc welding) and then use most of the space (and power) for marijuana cultivation. Emery's favourite story is of an enormous grow op on the Sunshine Coast, a custom-built, brick-walled facility buried under almost a metre of earth. The grow had 120 lights and its own generator, and it was churning out 150 pounds of pot every month. So what, Emery asked me bemusedly as he told the tale, was the biggest logistical problem it faced? Answer: Obtaining fuel for the generator. "Ten thousand litres of fuel oil," Emery explained. "How do you buy that without anybody knowing? That's a truck, every month." He pauses for effect. "So they bought a gas station." Two of the six people involved in the grow ran the station; the others tended to the crop. It seems pot growers, like entrepreneurs in many a nascent industry, need to be nimble, on-the-fly problem solvers.

There's a key difference, of course: A business involved in, say, developing wireless Internet applications is perfectly legal. Marijuana cultivation is not. And neither are many of the other business practices common in the industry. Unlike Mike's legal hydro connection, about 20% of B.C.'s grow ops and most of Ontario's feature an illegal hydro connection, according to police. Furthermore (also according to police) as many as 85% of those involved in growing marijuana are, unlike Mike, members of organized-crime syndicates. In crime studies, the two groups usually cited as the industry's major players are "outlaw motorcycle gangs" (OMGs) and "Asian-based organized-crime groups" (AOCs). There's next to no authoritative information on the size or numbers of these syndicates, or even any clear sense of just how "organized" these groups are. (By most definitions, the group of guys with the gas station and underground bunker mentioned earlier constituted an organized-crime syndicate.) Anecdotally, it's known that many recent Asian immigrants -- especially those from Vietnam -- are set up through contacts in their communities in suburban houses to tend grow ops, handing over the crop to the person or persons who have set them up and making a living wage for their work. It's known, as well, that OMGs sometime operate numerous grow ops in the same neighbourhoods. I was even told by Emery and some of his colleagues in the Vancouver-area industry that there's a newly emergent, independent "management" class of former growers who have moved on to overseeing multiple grows instead of tending only one. As for guys like Mike, they tend to learn as little as possible about the people to whom they sell their crop, meeting buyers far away from their homes and asking no unnecessary questions.

THE DISTRIBUTORS

In the end, whether we are talking about Mike's plants on the Sunshine Coast or the ones growing in a Markham, Ont., split-level; whether we are talking about a guy making a living in a bleak economy or a member of an OMG grow-op syndicate -- the pot business comes down to the buds. The buds: those dense knots of THC-laden female flowers that get clipped off, dried, sold, moved across borders, sold again, ground, rolled, lit, smoked. Cross-breeding strains again and again to maximize yield and THC content, using metal-halide lights for an optimum crop, experimenting with fertilizers and adding bat guano to the growth medium -- this is how B.C. Bud became to marijuana as Bordeaux is to wine. Moving and selling these buds is where the serious money is made in this industry. And it is by far the most obscure sector of the business.

Here, roughly, is what is known: A grower will find a broker, either because that grower is directly affiliated or sponsored or otherwise set up by an organized-crime syndicate, or because, as Emery puts it, "if you're growing pot at all, you already know people who are also growing pot." And, it follows, you know or can easily find people who are also buying it in bulk. You might, for example, know someone like "Jack," an acquaintance of Emery's who spent seven years moving smallish batches of top-of-the-line marijuana from grower to dealer (and, just as often, to heavy users) before moving on to less risky work. Most of the time Jack worked in quantities ranging from one to 10 pounds, and his client list grew to 300 people at its peak. The tough part was finding the primo weed. Once you had that, he says, customers would find you. Current wholesale prices, more or less standard nationwide, range from $2,300 to $3,000 per pound, depending on quality and other market factors. Jack added a markup of around $200 to $400 per pound for his work, depending on the quality of his weed and the quantity he was moving. (As in many businesses, distributors like Jack give bulk discounts.) He says his average income was about $75,000 per year when he was at it full-time. Jack is neither typical of nor unique in his business -- there's an unknown number of middlemen involved, some no doubt moving much larger quantities and some moving smaller batches of pot. Some are sure to move marijuana between growers and dealers who are members of the same biker gang. Others, like Jack, barely ever come in contact with such people.

The people who buy from guys like Jack may be guys like Dave's Guy, or they may be guys who buy in larger batches and then sell it in chunks to several guys like Dave's Guy. There is also a large number of others who are buying the weed (often in larger quantities than someone like Jack) to move it to the United States. If it stays in Canada, it will eventually retail for $75 to $90 per quarter-ounce (or about $4,800 to $5,700 per pound), with the profit divided among however many hands the pot passes through, which in Canada is an increasingly short supply chain. The dealers to whom the brokers sell the pot will break it up into retail-sized pieces: full ounces, eighth- or quarter-ounces (the most common quantities), smaller packages like the infamous (but increasingly rare) one-gram "dime bags." "The fewer middlemen there are, the cheaper it is to get it out to the people," Jack says. "But that guy who's middling off of me, I don't really care what he's up to, man. All I care about is that he's all right, that I'm not going to get dicked around. I'm not going to have any problems."

The American market -- where B.C. Bud and, to a lesser extent, Canadian indoor pot generally are considered the very finest products on the market -- is far more lucrative. And so the vast majority of Canadian marijuana -- police estimates claim as much as 85% of B.C.'s crop -- crosses the border. It crosses hidden in transport trucks and the frames of Winnebagos. It crosses in speedboats and large yachts and even kayaks. It crosses in hockey bags, hand- carried by couriers through the wilderness of southern British Columbia, sometimes left in the wild with a Global Positioning System receiver inside to help those on the American side find it and get it to market. "It's like you would distribute any other product that you produce," says Kash Heed, commanding officer of the Vancouver Police Department's Vice and Drug Section. "Through the transportation routes, through the seaports and through the airports." Transportation costs vary from $200 to $500 per pound. Once it reaches U.S. soil, the product's value grows faster than a marijuana plant under a 1,000-watt metal-halide. In border states, it may sell for US$3,000 to US$4,000 (a mere 80% to 160% markup). In Los Angeles, B.C. Bud sells for US$6,000 -- roughly triple the wholesale price in Canada. Still, this vigorous export trade accounts for only a tiny percentage of the total amount of cannabis sold in the United States, where large-scale growing has long occurred in places ranging from northern California to eastern Kentucky.

"People try to complicate the drug issue," says Heed, "but it's not complicated because it's simple supply-and-demand economics." In this case, there are two immutable economic laws at work. First: where demand exceeds supply, supply will increase. This is the case throughout both Canada and the United States, where decades of prohibition and zealous law enforcement have prevented the marijuana market from finding its natural equilibrium. And second: barring artificial constraints (and, in this case, in spite of them), suppliers will take their products to those locations where they fetch the best price.

THE DEALERS

I once frequented a place in Toronto's west end, just over the border into Etobicoke. It was a tidy bungalow on a busy suburban street. Sometimes, say on a Friday afternoon, there would be lineups on the front stoop as customers waited to be ushered in. Inside, a stout, greying biker type filled your order. There may have been other products for sale there, but the only merchandise I ever saw change hands was marijuana. This "store" was eventually closed -- forcibly, I'd wager, though I wasn't there for the going-out-of-business sale.

I've heard tell of an audacious entrepreneurial crew of pot sellers in Montreal who took to giving out fridge magnets with a delivery number printed on them. I've come across mid-sized dealers in Toronto who sent delivery guys as well. There's a particular bar in Vancouver, I'm told, where dropping a loonie in the jukebox is an overture to the purchase of a dime bag. People buy from friends who move large quantities, and from friends who grow just a few plants, mostly for personal use. People get their friends to buy from their guys -- guys like Dave's Guy -- and then they pick the buds up from their friends and maybe throw in a few bucks for the effort. All these guys -- maybe it's all they do, or maybe it's a side business. Maybe it's pounds a week, pounds a day, or maybe it's the odd quarter-ounce from time to time. I don't know how many of them are out there, how much they make, how much they would contribute to the national GDP. But there are, rest assured, a lot of them.

WHAT IT'S WORTH

Marijuana $7 billion

Cattle $7.8 billion

Fishing $5.5 billion

Dairy $4.1 billion

Hogs $3.9 billion

Wheat $2.5 billion

Canola $1.7 billion

Hens& Chickens $1.5 billion

Potatoes $730 million

Eggs $565 million

Soybeans $534 million

Tobacco $262 million

Christmas trees $76 million

Thus, in a thousand different ways, do more than a million Canadians buy their marijuana. It's a business, though not yet one like any other.

Pot growing in Canada has exploded in the past two decades. Today, this country is known globally as a major producer. And a major exporter: 85% of what we grow goes to the U.S.

Smokin'! How pot production compares to Canada's other growing industries

Statistical data on the size of Canada's marijuana-growing industry are sketchy at best. National Post Business arrived at a figure of $7 billion by tallying up a patchwork ledger of conservative estimates from police and media sources, plus a little educated guesswork. Estimates of British Columbia's annual marijuana harvest range from $4.2 billion to $6 billion; in Ontario, the range is $1 billion to $4 billion. In addition, it's widely assumed that Quebec is as big a pot producer as Ontario -- another $1 billion at least, then. And grow ops are known to exist in considerable numbers in every other Canadian province as well -- Manitoba, for example, is rumoured to be a serious producer for its size. So assume, conservatively, another $800 million. The sum of the low end of all these estimates: $7 billion -- considerably more than most of this country's other agricultural and resource industries, as the chart  indicates.


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