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  • Written by Ian Mulgrew
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On Sale: October 29, 2010
Pages: | ISBN: 978-0-307-36658-0
Published by : Vintage Canada RH Canadian Publishing
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Synopsis|Excerpt

Synopsis

According to Forbes magazine,* marijuana is “Canada’s most valuable agricultural product — bigger than wheat, cattle or timber.” Bud Inc. gives us an inside look at this thriving homegrown industry.

Although the cultivation and selling of marijuana remains illegal in Canada, it is already big business, especially in British Columbia. Law enforcement officials estimate that the annual wholesale value of B.C. marijuana is now $6 billion, about 5% of the province’s total economy. If these stats are correct, it is B.C.’s largest export. Ontario and Quebec are not far behind.

Vancouver journalist Ian Mulgrew has been following the rise of this underground economy for some time, and knows all the key players, political and entrepreneurial. Comparisons to the rum-runners of the Prohibition era are not unfounded. These so-called “pot barons” are all savvy businessmen who have built their empires using tried and true business models.

Cash-strapped governments, pharmaceutical companies and other big businesses are well aware of the potential profits, and Canada has been at the forefront of the global movement to legalize medical marijuana and decriminalize the recreational use of the drug. Estimates vary, but it’s thought that nearly a million people in Canada could benefit from medicinal marijuana, yet only about a thousand are currently legally authorized to use it. Many feel that marijuana should be grown, regulated and taxed like any other commodity.

Following the evolution of the marijuana trade from rich kids smuggling it in their luggage, to trans-oceanic operations involving tons of dope, to today’s thriving multi-billion-dollar domestic industry, Bud Inc. is a fascinating study of real-life supply-and-demand economics.

*November 2003


From the Hardcover edition.

Excerpt

Introduction

Stephen Easton sat in a small Spartan office behind a desktop cluttered with computer printouts detailing his latest calculations. A senior scholar at Canada’s conservative think-tank, the Fraser Institute, and an economics professor at Simon Fraser University, Easton was astonished by the numbers his formula spat out. If they were correct, marijuana was Canada’s most valuable agricultural product. Forget iconic wheat–golden shimmering symbol of the country’s farming heartland. Stinky, lime-green pot contributed more to the economy. Much, much more.

“Over the last three or four years, I think most people now would say my estimates are low,” he laughed. “Especially the police.”

By 2000, Easton figured, Canadian cannabis consumers annually spent at least $1.8 billion on bud. That’s almost as much as Canadians spent on tobacco – $2.3 billion. And it meant consumption in the previous decade had doubled. Easton also believed exports to the United States dwarfed those figures.

He projected the size of the B.C. export market alone at 1,433 metric tons worth $2 billion dollars in 2000 – almost 3 per cent of the provincial GDP. By way of comparison, that was nearly the size of the B.C. mining and oil-and-gas sectors combined. Easton added that the total intentionally understated the value of the industry because he used only wholesale prices. It didn’t reflect the final sale price, which included markups and the cut that goes to every middleman no matter what the commodity. If you looked at the true value of the crop in 2000, Easton thought, you could plausibly produce a figure between $5.6 billion and $7.1 billion.*

The latest figures are as staggering. Pot production in B.C., which grows the lion’s share of the country’s crop, has more than tripled during the past seven years – from an estimated 19,727 kilograms in 1997 to 79,817 kilograms in 2003. In Ontario and Quebec, the growth in hydroponic production has been exponential. Growing pot indoors has become uncomplicated and highly profitable – in just three months, a closet, a basement, a bedroom, a barn or a bathroom anywhere can produce a down payment on a house. In most cities, towns, villages and rural areas across the continent, someone is doing it. The same is true in Europe. Hydroponic sales in sunny Spain are skyrocketing – and the growers are not producing heirloom tomatoes.

Easton estimated that based on the most recently available 2003 figures, wholesale marijuana was worth about $2.2 billion to the B.C. economy – $7.7 billion retail if consumers paid top dollar. That’s larger than the province’s legitimate agricultural sector. Across the country, he estimated that the industry was worth $5.7 billion wholesale and $19.5 billion if high-end retail pricing is assumed. That’s about the size of the Canadian cattle industry ($5.2 billion).

“The dollar figures would be much higher had there not been economic factors during this period such as a low U.S. dollar and the fall of the wholesale marijuana price in the face of a glut market,” Easton said. “But here’s the kicker – looking at the most recent numbers, the police are clearly changing their behaviour in that they are not responding to as many calls as they did before. The police have obviously reached an accommodation in their own mind. And they have prioritized in a way that is very unfair.”

Last year, more than 25,000 growing operations across British Columbia came to the attention of police, but they investigated fewer than 17,000 and only about half of those were prosecuted. More than half of the grow operations police raided over the past seven years resulted in seizures but no charges. Police are charging people in fewer and fewer cases and seem to be increasingly reluctant to act at all. The same is true elsewhere in Canada.

Prosecutors and the judiciary also look like they are throwing up their hands. Large numbers of marijuana cases are dealt with via stays of proceedings and conditional sentence- or probation-based plea bargains. Nearly half end in conditional sentences, up from roughly one in ten people receiving such a penalty in 1997. Only one in ten of the 3,364 convicted in 2003 were imprisoned and on average they were jailed for less than five months. That’s about half the ratio of those jailed in 1997. British Columbia is Canada’s most lenient jurisdiction, but across the country the judiciary is vexed about the question of sentencing in marijuana cases.

Nationally, 225 offenders were imprisoned for cultivation at the end of 2000 – and on average such inmates spent less than a year in custody, or eighteen months if they were convicted for importing. Traffickers on average spend only two years inside.

“One can see how you could easily slouch into legalization,” Easton said. “You just slump into it in some sense. That may ultimately be the most graceful way it could happen.”

Consider that half of those convicted in British Columbia alone would have been jailed for five years or more under U.S. sentencing guidelines. Fully 77 per cent of those convicted would have served at least three months if caught in the United States.

But even in jurisdictions where tough sentences are meted out, marijuana cultivation is a fact of life. The law is no longer a risk to growers, it is an operating cost. Jail penalties be damned: consumers want to have good dope, and in most places the only way to do that is to grow your own – which has the benefit of allowing you to sell the excess to your friends and pocket the profit.

It’s time to admit the cannabis prohibition is a failure. More and more, it is revealed as a public policy disaster, a crisis for our communities and local politicians, and a legal quagmire for police and judges. The damage prohibition causes is exacerbated by the violence endemic to the pernicious black market it spawns, eroding confidence in law enforcement and respect for the courts. Taxpayers must deal with the problems of the illicit pot industry but receive no benefit, and as long as it’s underground, we have no ability to regulate it or control the commerce.

Decriminalization, which is Ottawa’s strategy, is a halfway house that makes users feel more relaxed but does nothing to eliminate the underground market and its attendant horrors. Stiffer sentences and more jail time are not a realistic answer, though justice and public safety ministers from Ottawa, Washington and European capitals continue to insist on them. There are far too many people involved. We cannot build enough prisons and we cannot deal with the social fallout.

* All dollar amounts are Canadian, unless otherwise noted.


From the Hardcover edition.
Ian Mulgrew

About Ian Mulgrew

Ian Mulgrew - Bud Inc.

Photo © Ian Lindsay, The Vancouver Sun

Award-winning journalist Ian Mulgrew has worked for newspapers and magazines, authored three books and co-authored another. He has also produced and hosted numerous broadcast programs. He is currently the legal affairs columnist for the Vancouver Sun.
Praise | Awards

Praise

Finalist for the 2005 national business book award

“An eye-opening account of the nation’s most valuable agricultural product … and a convincing argument for its legalization.”
Maclean’s

Bud Inc. virtually overflows with interesting players: growers, activists, smugglers, dealers and a few demons, as well…. A fascinating read … [Mulgrew] makes arguments that need to be heard and acted upon.”
Winnipeg Free Press

Awards

NOMINEE 2006 National Business Book Award

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