S04.E20: Marijuana Millions

[Amarsir]

Quote

As more states legalize pot, The Profit’s Marcus Lemonis goes inside California's booming marijuana industry for a fascinating look at this controversial and increasingly sophisticated multi-billion dollar business.

Episode 420. Someone at CNBC no doubt enjoyed themself with that one.

[cooksdelight]

I fell asleep, I'll have to rewatch. I was really surprised at all the negativity on Facebook, with people saying how disappointed they were in Marcus. I need to watch to find out why.

[clod]

have not seen it.

 

surely he didn't invest in it.      ?

[Thrifty]

No investment.  It was like his earlier special about Cuba.  He didn't invest, and several times reiterated that he had no interest in investing.  He was analyzing marijuana dealers at various points in the supply chain, from a business perspective.  He looked at large growers, a successful chain of dispensaries, a delivery service, and a small two person home based operation selling marijuana laced tarts.  He also met with an anonymous guy (given the pseudonym "Zak") who was running a black market illegal marijuana business.

 

I wouldn't have voted for legalization of recreational marijuana use if I lived in California, or if it were a ballot initiative in my state (although I don't think that either my current state of Indiana or my home state of Delaware ever engage in that kind of direct democracy).  I am glad that California finally dropped the pretense of recreational marijuana being illegal.  Recreational marijuana has been legal there for years, thinly veiled as "medicinal marijuana".

 

I have a lot of disdain in particular for marijuana dealers who act like they're somehow morally superior to manufacturers of tobacco, alcohol, or opioid based pharmaceuticals (e.g. pain killers).

[Amarsir]

I couldn't help but notice that Marcus committed the sin that is so consistently criticized on (all versions of) Shark Tank. He said "This market is so big. If you could just get 1% of that, it's $2.6 million dollars."  You can't justify a business venture just by observing that a market exists.

I enjoyed watching Marcus learn. He was surprised for example that it's not a commodity business. I've never tried myself, but I certainly know that different strains exist.

[Thrifty]

I would have liked to see them get more into the legal aspects of it.  As was noted, marijuana is still illegal at the federal level, and in most states.  Ostensibly, the marijuana based businesses avoid running afoul of the law by growing, buying, and selling exclusively within the state borders.  But I heard once that banks are federally legislated, so that when you deposit money in a bank, it becomes a federal matter.  That's why the FBI is always the one to handle bank robberies.  I dunno how much truth there is to this and would have liked to hear more on the topic. 

 

Also, what about the investors?  Are they all coming from within California?  Surely an out of state investor would be interstate commerce, thus a matter of federal jurisdiction.  Even if the out of state investor is from another state with liberal marijuana laws, such as Colorado, it'd still be illegal.

[clod]

I watched a show a while back about the marijuana business in Colorado.    the federal law problem made it into a cash-only business.

need a building remodeled?   you need a contractor that takes cash.   buy equipment?  cash.    one clip had an owner taking $25,000 in cash to city hall to pay some taxes.   an owner of one of the bigger operations said he had one employee devoted to turning cash into money orders.

 

as a result, the armed security business was booming.

[LennieBriscoe]

I'm  betting  that Marcus invested in Med Men; he's just not telling us. ?

[Thrifty]

10 hours ago, clod said:

I watched a show a while back about the marijuana business in Colorado.    the federal law problem made it into a cash-only business.

need a building remodeled?   you need a contractor that takes cash.   buy equipment?  cash.    one clip had an owner taking $25,000 in cash to city hall to pay some taxes.   an owner of one of the bigger operations said he had one employee devoted to turning cash into money orders.

I remember one of the guys running the big warehouse sized marijuana growery was saying that he was getting investments in the millions.  One guy said he was putting something like 13 million total into building up his operation.  And that's all coming in physical paper money?  Insane.  They must be moving cash around on forklifts at this point.

 

Where does that leave all the non-marijuana businesses taking this cash?  I guess since they're only supporting a federally illegal business but not actively participating in it, they can take their bundles of greenbacks into banks?  I presume they're engaging the services of an armored truck company.  They would of course have to be reporting these contributions to the IRS, and be stating that they are getting the money from people engaged in federally illegal activity.  Does that leave the proceeds vulnerable to seizure?

Edited August 11, 2017 by Thrifty

[Amarsir]

7 hours ago, Thrifty said:

Where does that leave all the non-marijuana businesses taking this cash?  I guess since they're only supporting a federally illegal business but not actively participating in it, they can take their bundles of greenbacks into banks?  I presume they're engaging the services of an armored truck company.  They would of course have to be reporting these contributions to the IRS, and be stating that they are getting the money from people engaged in federally illegal activity.  Does that leave the proceeds vulnerable to seizure?

The fear is a charge of "money laundering". Since a bank takes money and gives it back, they are at risk. Any contracted service is probably OK provided what the marijuana business is buying isn't considered a cash equivalent type of thing.

There are some regulatory standards from the Treasury Department about how to handle the money without accusations, and some interest in Congress about clearing it up properly. But for the most part you're right - banks don't want to touch it.

[LennieBriscoe]

So they take the suitcases to their financial advisor/broker, and he deals with the cash.  

Multi-millionaires aren't going to reveal their secrets to the rest of us.

[seacliffsal]

Like most shows that are examining the marijuana business, Marcus focused on the increased tax revenue going to Desert Palm (probably the wrong name of the city, but oh well) but not the increased costs associated with the business.  

Most municipalities only look at increased revenues when granting business or construction permits, but not the increased expenditures that always accompany the growth.  Even in terms of city infrastructure, there will be a huge investment cost (roads, utilities [especially water], etc. to the new areas being developed).

Also interesting to me is that Marcus did not question the two women about producing baked goods for consumer consumption in a regular kitchen.  There are so many health codes, etc. that demand industrial kitchens that are subject to inspection.  I think Marcus missed a few key points in this episode.  Perhaps he was so out of his "box" on this (since he complimented many of his interviewees for thinking 'outside the box'), that he didn't touch on any potential negatives other than federal law.

[Cristhanbur]

Marijuana has always been a business. But it seems to me much better if this business is legal and deducts taxes to the state budget. In addition, the legalization of marijuana allows you to control its quality and sales. This is important for any product. For me , marijuana is a stress treatment . She helps me relax after a hard day's work. I usually order chewing bears at tillmanstranquils.com and on Friday evening I allow myself to relax a little with them. Thus, I abstract from difficulties and fully relax without unnecessary thoughts. It's really cool!

Edited January 21, 2022 by Cristhanbur