BC Marijuana Industry Approaching Critical Mass, DEA Not Happy 7/20/01

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That marijuana is rapidly becoming a major player in the economy of British Columbia has just been confirmed in a newly released report from the Canadian province's Organized Crime Agency (OCA). BC marijuana activists have for years touted marijuana as an economic stimulus for the province, but this latest report suggests that "BC bud" has become so entrenched, so economically potent and so culturally accepted that it may now be politically impossible to eradicate it. These facts on the ground, however, have not stopped US drug warriors from attempting to bring their hundred years' war to Vancouver. The DEA plans to open an office there by years' end.

Good luck, guys.

Here's what they are up against, according to the OCA: The province boasts 15,000 to 25,000 marijuana grow operations employing (at six persons per grow) between 90,000 and 150,000 people. The agency estimated the annual wholesale value of the pot crop at $4 billion. At $2,000 per pound, that is about two million pounds of BC bud each year, much of it headed south. The agency estimated that as much as 95% of the crop is exported to the ravenous US market.

"I'm not aware of anywhere in North America where a single [illegal] industry would be this important," Jim Brander, a professor of business economics at the University of BC, told the Vancouver Sun after studying the report.

How important is marijuana to the British Columbia economy? Counting only the people directly involved in grow operations (at six per grow) and taking the low end of the estimate, the marijuana sector's 100,000 workers make up 5% of the provincial workforce and number more than are employed in the province's massive logging, mining, and oil and gas industries (55,000 combined), the information and culture industries (99,000), provincial and local government (99,000), and business managers and administrators (79,000). Only the manufacturing sector, with 205,000 workers, is unarguably larger than the marijuana sector; the other two largest sectors -- construction and transportation -- both employ fewer than the high end figure from official BC employment statistics, cited by the OCA (http://www.bcstats.gov.bc.ca/data/dd/handout/naicsann.pdf).

Marijuana is also one of the province's leading exports, perhaps the largest in dollar terms if the OCA export figures are accurate. The top legal exports are wood ($3.2 billion US) and oil and gas ($1.5 billion US). According to the OCA, marijuana exports accounted for as much as $3.8 billion US.

And that is good for Canada. "Ideally, what any country wants to do is produce for export to other countries," said Lindsay Meredith, an economist at Simon Fraser University. "It creates a trade surplus and makes the currency stronger," he told the Vancouver Sun.

Accounting only for economic activity directly related to marijuana growing, the pot sector could represent as much as 5% of the provincial economy, OCA reported. But that estimate does not include the multiplier effect, the tool used by economists to measure an industry's impact on the larger economy. Because of the clandestine nature of the industry, the multiplier effect is impossible to calculate, said Meredith, but is still substantial.

The multiplier effect may be observed anecdotally in, for instance, Vancouver's 32 grow operation supply shops, twice the number of Burger King outlets in the city. (Washington-Baltimore, with a comparable population, boasts one grow shop.) Or in the town of Nelson, where harvest season is announced by a big bump in the restaurant and bar business. Or in the new businesses from Vancouver Island to the Kootenays financed, rumor has it, by marijuana profits.

Some people close to the scene say OCA's figures are too high. Vancouver cannabis seed entrepreneur Marc Emery told the Sun he estimated the industry's worth at $2.5 billion US, with some 60,000 people directly involved in the trade. Even so, marijuana production would remain one of British Columbia's leading industries. And that makes Emery happy. "Marijuana is the best industry any province can have," the BC Marijuana party head told the Sun.

Not everyone is as sanguine as Emery. Mark Wexler, a professor of business ethics at Simon Fraser University, pointed to a slew of problems associated with illegal industries. As marijuana "becomes a predominant part of the economy," local support for enforcing the drug laws could dry up, Wexler said, especially in smaller towns.

Drew Edwards, editor of the Nelson and author of a book on the local pot business, "West Coast Smoke," told the Sun that is already happening in his community. "In Nelson, the people growing marijuana are your neighbours and your friends," he said, and people are reluctant to turn them in.

Wexler also pointed to the potential for violence in illicit industries. "The more an economy is illegal, the more that economy has the potential for violence," Wexler said. "Legitimate businesses generally don't take the law into their own hands, but illegal businesses do not have third parties [the judicial system] to act as intermediaries."

But even Wexler recognized that the problems he identified were related less to marijuana in and of itself than to prohibition. "Can marijuana be made legal and most of [those problems] go away?" asked Wexler. "Yes."

This is something that the provincial and national government will have to confront, said Wexler. "If we were in a jurisdiction where marijuana was a much smaller contributor [to the economy], we wouldn't be asking these questions," he told the Sun. "But now we're at the point where this is big business. The public [needs] to decide the degree to which the commercialization of marijuana should be brought into the economy," Wexler said. "We need to figure out what our approach to this is."

The US Drug Enforcement Administration (DEA) knows what its approach is and it is sending in the cavalry. Earlier this month, the US Embassy in Ottawa announced that the agency will open a Vancouver office -- the first in Canada outside one in Ottawa, the capitol -- early next year to coordinate investigations with BC police into the marijuana business.

"It will be a substantial office, not just a liaison office with one person," embassy spokesman Buck Shinkman told reporters. "You place your staff where there's the most business to be done," he added.

The DEA has grown increasingly concerned about BC bud, issuing an intelligence brief in December warning that the BC marijuana business had become "a billion-dollar industry" and that "traffickers smuggle a significant portion of the Canadian harvest into the United States."

But the US government is equally upset with the blind eye the province turns to marijuana crimes. The Vancouver grow squad doesn't bother to arrest most growers whose operations they raid, and growers who are arrested typically face fines. Very few are sentenced to prison, and rarely for more than a few weeks. Throughout the province, only 17% of incidents where police find marijuana result in arrests.

The US State Department in its 2000 Narcotics Control Report had a suggestion for its northern neighbor: "Sentencing guidelines, together with stronger judicial and public support, would increase the impact of the GOC's [government of Canada's] law enforcement efforts and create a stronger deterrent to transnational crime," wrote Washington.

That isn't likely to fly in British Columbia, where according to recent polls, a majority favor legalization of marijuana. In a national poll this month, Leger Marketing found 52.4% of BC residents in favor, and 46.8% nationwide. But that BC majority does not yet hold for legal commercial production. According to a poll done last year in greater Vancouver, only one in five was ready to embrace the province's underground economic powerhouse.

But while the province grapples with its cannabis conundrum, thousands of growers are building a new reality on the ground.

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Issue #195, 7/20/01 Editorial: Robert Downey's Business | Prescription for Prosecution: Feds Go After Oxy Docs in Southwestern Virginia | BC Marijuana Industry Approaching Critical Mass, DEA Not Happy | Ditchweed Update: DEA Numbers | Narco News First Amendment Trial Begins, Electronic Frontier Foundation Files Amicus Brief | Media Scan: Columbia Journalism Review on Cincinnati, Arianna Huffington on Colombia | For Sale: Merchandise and Services to Benefit the Cause | HEA Campaign Gets Media: Student Victim Cases Still Needed | Urgent Action Alerts: Colombia, HEA, Mandatory Minimums, Medical Marijuana, John Walters | The Reformer's Calendar
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