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Refracting Green

Policy and Practice from the Front Lines of Marijuana's Political Economy

Oregon’s Medical Marijuana Dispensaries–Part 3: Dispensaries as Wealth Extractors

December 9th, 2013

Dispensaries as Wealth Extractors

As the previous posts have alluded to, the majority of marijuana will be sold in the Portland metro area, while most marijuana is produced in rural Southern Oregon communities.  Critical scholars of economic development have long pointed out that rural communities are often maldeveloped by external economic forces emanating from large, neighboring cities; the rural areas become export centers for specialized raw natural resources or processing centers offering cheap labor, while losing their ability to produce the necessities of life and thus becoming reliant upon imports for survival.  The leads to a “race to the bottom” with other rural areas struggling for survival and pushes the price of their specialized exports lower (through larger economies of scale, environmental exploitation, lax labor laws, lower wages, etc); in the long term, the relative price of imported necessities increases, the purchasing power of rural residents declines, and the ecological capacity of the area is degraded.  These areas have also been shown to become increasingly unequal in terms of wealth/income distribution (another feature of distorted export markets).  Once the area has lost its (relative) self-sufficiency, it’s very difficult to restart those industries; this, in large part, explains why so many rural areas are reliant upon extractive industries (logging, mining, farming), become locked into cycles of poverty and experience increasing economic inequality.  A little known aspect of Oregon’s new dispensary law is likely to contribute to this phenomenon.

In basic terms, the Oregon Medical Marijuana Law (ORS 475.300 through 475.346) does not allow marijuana producers to sell the fruits of their labor.  There are explicit protections in place throughout the production stages (from the seedling stage to storing finished marijuana), but growers are left exposed when transferring their product to patients.  This has always been a sticky issue for marijuana growers, as no other sector of the economy is forced by law to operate at a loss or face legal prosecution for calling a “customer” a customer.  A grey area in the law does allow growers to recoup their expenses, but there hasn’t been a formal declaration of what qualifies as an “expense” (Dirt? Lights? Utilities? Rent?) or what the appropriate depreciation schedule for capital investments is.  The legal burden of proof is on the grower to demonstrate (after arrest) that his/her expenses were legitimate and appropriate–worse yet, criminal defense attorney fees are not tax-deductible!  It’s a precarious situation for those wanting to operate above board and, by law, sets the minimum wage for marijuana growers at $0 an hour/week/month/lifetime.

The latest draft rules for dispensaries provides some clarification on this grey area by directing dispensaries to explicitly account for “costs related to transferring, handling, securing, insuring, testing, packaging and processing useable marijuana and immature marijuana plants and the cost of supplies, utilities, and rent or mortgage”.   This formalization still, however, prohibits growers from receiving compensation for their labor. Dispensary owners, on the other hand, will be allowed to profit from the sale of marijuana and receive compensation for their labor.

What incentive does a Southern Oregon grower have to participate in the newly legitimized medical marijuana economy if they cannot receive compensation for their labor?  The black market does not force growers to work for free.

How does this process of economic formalization help the embattled Southern Oregon region recover from a generation of extractive resource dependence (timber)?   It doesn’t.  Instead, it sets the effective wage for growers at $0 and tells them:  “If you want to survive in this field of farming, you must do so dishonestly.  You must lie for your wages.”  Marijuana is simply (formally) replacing timber as the region’s primary export commodity.  If history is any predictor, we can expect to see further dislocation, maldevelopment, and rising levels of economic inequality with this formalization, particularly in light of the dispensary law’s directives:  dispensary owners have a legal obligation to only pay growers for their production costs.  The exploitation is codified.  Growers can rightly claim exploitation by Oregon’s urban core.


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One response to “Oregon’s Medical Marijuana Dispensaries–Part 3: Dispensaries as Wealth Extractors”

  1. MaryJane says:

    With the legalisation and reform of cannabis spreading across the world, many wonder exactly who it is that will be targeted by this flourishing industry. It may not be who most people would think.
    A well established argument in the repertoire of the old school prohibitionists is that cannabis poses a threat to the children. Legalisation, they argued, will get pre-teens hooked and lead to rampant childhood addiction. Well, nothing could be further from the truth: new research suggests that it is actually the older adults that are showing the most marked increase in heavy cannabis use.
    A demographical shift
    Recent research shows a large and quite sudden change in the demographical use of cannabis over the last year, shifting from 12-21 year olds, to the over 50’s. What’s more, over the last year, daily use of cannabis in Americans aged 18-21 has dropped from 26 percent to 21 percent, while use by those aged 22 and over rose from 63 percent to 72 percent. These are significant findings that show that the legalisation of cannabis doesn‘t increase youth use. (original article: http://www.zamnesia.com/blog-majority-of-us-cannabis-users-are-older-adults-n157)
    makes total sense. If you look at the Netherlands, where people have been able to legaly purchase pot, the general usage has been the lowest in Europe in the last 12 years.
    In the Netherlands about 5.5 percent of the population uses cannabis while in the UK 6.6 percent of the population smokes cannabis and in the USA this number is even higher with 14 percent of all Americans smoking cannabis.
    (More info on Stats Annex-consumption: http://www.unodc.org/documents/data-and-analysis/WDR2011/StatAnnex-consumption.pdf)

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