Getting Rich Growing Pot Won’t Be Easy

“Make the most of the Indian Hemp Seed and sow it everywhere.”
~George Washington

“When I was a kid I inhaled frequently. That was the point.”
~Barack Obama

“Never was anything great achieved without danger.”
~ Niccolò Machiavelli

To date, eighteen states and Washington D.C. have created amendments to make the medical use of marijuana legal. During the November 2012 election, two states, Colorado and Washington, made amendments to regulate marijuana like alcohol, which excited many would-be entrepreneurs interested in making a pile of cash in the “Green Rush.” Still, as the situation now stands, earning a living as a marijuana grower won’t be an easy dream to actualize. Prospective large-scale growers need to enter the field with eyes wide open because they face a number of challenges, some of which are downright dangerous or financially ruinous. In all likelihood, only the shrewdest and most knowledgeable growers will survive.

The medicinal regulation of marijuana brought many gardeners out of the underground growing scene and into large-scale commercial operations to supply medical dispensaries. Some of these growers have been growing marijuana for several years illegally and can now grow legally under these state amendments, sort of. Federal law classifies marijuana as a Schedule 1 controlled substance and can land a grower in federal prison for five or more years. Most alert growers can recite a litany of unsavory tales describing how they or their friends and acquaintances now sport felony records because of Federal Government intrusion into their operations. Not fun.

Then there are the start-up costs. One Colorado man who has been growing marijuana illegally since 1996 finally decided to grow on a large scale to supply the dispensary he owned. He immediately ran into problems locating a warehouse to grow in that also included a retail storefront for the dispensary. Most property owners had little or no desire to rent to a marijuana grower regardless of the fact that it was legal by state law to grow medically. After four months of searching, he secured a location in the Denver Warehouse District. The building’s owner normally rented his unused property space for $6 a square foot, but when he learned of the grower’s intentions, he charged him $12 a square foot simply because he knew the grower had no other worthwhile options.

Obtaining a license to grow legally can prove equally nightmarish. The application process requires prospective growers to fill out 48 pages and undergo a deep background and financial history check. This takes at least several weeks, and sometimes even months, for state approval. After this, the applicant must pay fees of $10,000 associated with obtaining a grow permit from the state. This grow permit functions as a required and validating business license. Then, the grower must pay for a special tax license, which runs $2,500 per quarter, or $10,000 per year.

After having invested $20,000 in state licensing fees and substantial amounts on a location, the grower must realize that his expenses have only just begun. If he hasn’t already, he must also secure equipment, such as lights, nutrients, trays, fans, and so on. Depending on the size of the crop, these costs can range from $2,000 for a small grow, such as an individual setting up shop in a single room of his house, to $20,000 or more for a larger grow, like a warehouse to supply large amounts of patients. In one case, the grower’s location did not have sufficient electricity running to the warehouse to support the lights required. As a result, it took lots of time and money to get the warehouse up to code. Xcel Energy had to install a new transformer on the pole to supply enough power for all the added circuits. The new transformer installed tallied up to $25,000. Also, a Master Electrician was hired for all the internal work such as installing new electrical breaker boxes, new circuits, and wiring for new outlets for all the lights. The cost of installing the proper electrical equipment was in excess of $48,000. Even with a solid business plan, one can still encounter unforeseen and devastating costs.

Of course, no marijuana discussion would be complete without mentioning the industry’s inveterate enemies. The war-on-drugs campaign is one of the growers’ strongest adversaries. The campaign includes a budget of billions of dollars for the Safe and Drug-Free Communities program and an ongoing national media campaign. Many of us still remember the “This is your brain on drugs” commercials, for instance. The budget also delivers billions in funds for domestic law enforcement, much of which is used for all anti-drug programs, not just those focused on marijuana. Members and supporters of these programs, such as the alcohol industry, prisons, and pharmaceutical manufacturers, oppose marijuana legalization for diverse reasons, and as long as they receive continued financial support from the federal government, they will be a threat to growers everywhere.

The urine-testing industry represents another big problem for marijuana growers and users alike. Urine testing for drugs is big business, bringing in nearly $2 billion annually, and marijuana is the most commonly used illegal drug. Legalization would significantly reduce revenue for the industry by decreasing the justification for marijuana-related urine testing. For example, Comcast currently has a company policy that tests for marijuana. Now, what if Comcast suddenly decides to change its policy and stop monitoring marijuana use in the workplace? If this happens, much of the drug testing industry’s revenue will be flushed right down the toilet.

No doubt, the state amendments legalizing marijuana have created an opportunity for growers to arise from the underground and grow commercially and legally with a chance to earn a respectable living, but not without risk. The cost of obtaining permits from the state, securing a location and equipment, and facing marijuana opponents are only a few ongoing challenges, but it’s also true that some people are already getting very rich from capitalizing on the Green Rush. Everyone just needs to approach the issue with a sound understanding of what might go wrong.