White Collar Reset: In the weeds, with any luck
Actually, it was my mother-in-law who came up with the idea. Last week she was talking to her daughter on the phone and, as she's wont to do, asked, "So, has your husband found a job yet?" When my wife emitted her usual "Noooo," her mother responded with uncharacteristic cheerfulness, "Then I've got the perfect job for him. And he can make $20 million a year."
"What is it, drug dealing?"
What 79-year-old Rose Marie Renda had astutely picked up on in her hawk-like watching of cable news was that New Jersey, where we reside, looks as if it could be the first major Northeastern state affected by the new more lenient medical marijuana policy announced by the Obama Justice Department last week. According to the National Organization for the Reform of Marijuana Laws, which has been monitoring the situation in Trenton for eight years, there is now at least a "50/50 chance" that a bill authorizing medical marijuana dispensaries will pass the current session of the legislature. If it does, Governor Jon Corzine has already said he'll sign it.
I'm aware I'm treading on treacherous psychological ground here. No matter how bad things have gotten over the past eight months, until now I haven't resorted to illegal, or recently illegal, activities. I watch Weeds. I know how slippery this slope is. One day you're opening a nice little state-sanctioned head shop in Montclair. Before you turn around, a Mexican drug lord is taking over your mortgage. But I also know this: Something's gotta give.
"You're the fifth person in New Jersey I've talked to in the past week," said NORML executive director Allen St. Pierre from his office in Washington, D.C. "There are people in Atlantic City and Asbury Park ready to sign leases. There's another guy, kind of a famous character who moved out to California a few years ago to open a dispensary and goes by the name 'New Jersey Weedman,' who has been very public in saying that as soon as Corzine signs the bill he's going home." (Darn, I need to come up with another name now.)
I quizzed St. Pierre's on my mother-in-law's projections. It seems she'd plucked the $20 mil figure from news reports about the Harborside Health Center in Oakland, California, the first state to authorize the sale of medical marijuana, way back in 1996. The facility, one of the subjects of a Fortune cover story last month, occupies the sizable former address of the Oakland Port Authority. "The building has the largest walk-in safe in the city," he explained. "You can go in the back and there'll be giants stacks and stacks of fives, tens and twenties. It looks like a scene in any large commercial bank. Or Scarface," he added with a laugh, "depending on your perspective."
Of the thousands of other dispensaries around the state (an estimated 1,200 of them in L.A. alone) most are more along the lines of the small storefront variety I had in mind, at least to start. I asked Pierre what one of those could bring in. "It depends on your work ethic. Some in L.A. don't open until noon and close at 3 P.M. But if you maintain anything close to normal business hours, you're probably talking $4,000 to $7,000 a day. Figure 65 percent for product, so a margin of 35 percent to cover your nut."
I crunched a few numbers in my head and ran a quick side-by-side with the paltry checks I've been chasing down of late. I actually began to feel high.
I kept Pierre on the phone figuring out next steps. Even once the bill passes, there will likely be a host of compliance issues to deal with. Tapping into the right network of physicians, for example. (In California, many doctors have begun almost specializing in medical marijuana referrals. "Chronic pain" is the most common diagnosis, followed closely by depression and anxiety. Well down the list are the traditional cancer patients undergoing chemo, etc.) Bookkeeping is another sticky wicket. New Jersey is modeling its bill on the California model, in which the dispensaries are technically "non-profit" and shareholders must limit themselves to "reasonable" salaries. "I strongly suggest you find a good lawyer," he said.
Frankly, though, I was less concerned with all that than what struck me as a far more fundamental prerequisite. See, I'm not really what you'd call a call "stoner." Sure, in high school, I was part of the cannabis clique, but that was a long time ago, and even then I was a sorry excuse for a burnout, too concerned with my grades to wake and bake or spend summers following The Grateful Dead (a lotta good that did me, huh?). Pierre acknowledged that, especially as the market heats up, strong product knowledge and affinity for the customer will be what separates the successful operations from the also-rans. But that's also where Oaksterdam University comes in, the trade school founded in Oakland two years ago to drill erstwhile dispensary operators in the ins and outs of the field.
"It's an unbelievable program," said Pierre, an Oaksterdam grad himself. "At the start, they have everyone take a test to determine their baseline knowledge. I've been doing this for 30 years, and, well, I'll put it this way -- I know a little bit about pot. And I scored a 72 percent, which they said was one of the highest they'd seen. Which tells you a couple of things. First, the test is probably too hard. Second, there's a lot about operating a medical marijuana store -- in terms of the medical issues, molds and spores, accounting and legal issues -- that even the most experienced marijuana people need to get up to speed on. So, you may not be as far behind the curve as you think."
It was an excellent point. I've been considering going back to school anyway. Why not in cannabusiness?
Before we hung up, Pierre assured me he's checking in with his sources in the New Jersey legislature on an almost daily basis. "Right now, the bill is caught up in a bunch of classic Northeast politics horse-trading nonsense. It's getting thrown in with all sorts of other issues that have nothing to do with marijuana, like Port Authority projects and off-track betting." One way or the other, he said, we should know by the end of November.