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Marijuana, Beer, Guns and Penny Stocks
MARIJUANA, BEER, GUNS and PENNY STOCKS by John Veit
As American states legalize marijuana for recreational, medical and industrial use, the cannabis sector is gaining ground on the American stock market. While growing faster than traditional industries, the multi-faceted cannabis economy is stultified by America’s insatiable appetite for regulation. Nineteen of America's fifty states and Washington D.C. practice varying forms of marijuana regulation as dozens more mull their options. Establishing state tax codes to an industry only recognized criminally by the federal government is absurd to most politicians and investors. Meanwhile, millionaires are born trading cannabis stocks at a steady clip. Marijuana business reporter John Veit meets two titans of America's quasi-legal cannabis industry taking wildly different paths to success in Nevada and Colorado.
I leave Los Angeles early Friday morning for Las Vegas. I had been there only once, a year and a half ago for a marijuana trade show held in a giant convention center. The show was fun – hundreds of vendors hawked pipes, bongs, vaporizers, grow lights, rolling papers and trimmers – although it was surprisingly hard to find marijuana there. The city was a pit then, I expected not much had changed since. Gaping tourist hordes throng to the desert city where mock-ups of international monuments compete with pirate ships and neon for drunken attention. For the 80% percent of Americans who don’t have a passport, a five-story version of the Eiffel Tower is enough. Las Vegas is neatly segregated into zones for rich tourists, poor tourists and people who live there. Since 1905 it has been a gateway to the Pacific, a welcoming place to warm up after a grueling, freezing climb over the epic mountains of Utah, Arizona and Colorado. A heavy infusion of New York mafia money in the mid-20th century cemented its place as America’s haven for gambling, binge drinking, prostitution and garish stage shows.
Nevada has a tumultuous relationship with marijuana. Current policy allows registered medical marijuana patients to grow only seven plants, limit providers to one patient and makes no provisions for selling marijuana to generate tax revenue. Several dispensaries opened in 2010 when possession under an ounce was decriminalized for patients who could afford a $500 registration card. State, local and federal officials raided several dispensaries and grow operations soon after as others closed voluntarily. Some arrested still face years in prison while similar cases have been dismissed. Nevada has no legislation pending to legalize hemp, a type of cannabis used globally for eons to make cloth, oil and plastics that is free of the psychoactive compound Tetrahydrocannabinol (THC). While hemp doesn’t “get you high,” it is rich in Cannabidiol (CBD), whose medicinal and nutritional benefits form the cornerstone of the industry.
Vegas is hot and bleak as I arrive with my friend Bob Calkin, President of Cannabis Career Institute (CCI). With 5 years in the marijuana consulting business and 30 more running illegal and legal delivery services, Bob is one of the most sought after consultants in the industry. Thousands of students have taken his courses who have opened dispensaries, grow operations and other marijuana businesses. He has a day-long seminar scheduled here for next week. A Las Vegas-based publicly traded company called Hemp Incorporated (HEMP) has expressed interest in buying CCI and investing in a campus, laboratory and publishing expansion. Bob is on the fence, seeing the volatility of the stock market and a lack of control as hindrances to his independence. “Basically, they buy a company with some value to show that their stock is worth something and use that to sell more stock.” We arrive early for a ten am interview at the local CBS news station.
Nevada legislation is likely to pass in 2013 legalizing marijuana for sale to anyone whether they have a medical need or not, a potential boon to Nevada’s waning tourism industry as they steadily lose visitors to states and Tribal Areas legalizing gambling and marijuana.
The reporter arrives confused from a hearing that morning where Nevada officials roundly debated how to structure their marijuana bureaucracy. Their primary concern was the Obama Administration’s ability to send in the Drug Enforcement Administration (DEA) at any time and shut things down. While Obama’s Justice Department has issued public memos allowing states to regulate marijuana as they see fit, their DEA continues to raid dispensaries and grow rooms. Often no charges are filed because local juries are loathe to find defendants guilty in states that regulate marijuana. Under the 1970 Racketeer Influenced and Corrupt Organizations Act (RICO), a zealous federal prosecutor theoretically has the authority to pursue anyone involved in a criminal conspiracy, including state and local tax collectors, even Governors and mayors who approve legislation that distributes marijuana profits. So far, no government officials have been arrested, but fear of such a fate impels most states to wait on medical marijuana until Obama makes a move.
During a lengthy pre-interview before the camera starts rolling the reporter asks, “I know this is going to sound like a crazy question, but is it legal to teach people how to make marijuana?” Bob answers patiently. “Yes, we feel it’s our duty to teach people how to do be compliant and do things legally so they don’t go out there making fools out of everyone trying to do it correctly.” He explains that no matter what state you live in, the first step in getting into the medical marijuana business is to get a recommendation from a doctor and get an ID card from an accredited state or county agency. “Once you become a patient you can grow for yourself, you can grow for others, or grow collectively.” He stresses that, “70% of the jobs in the marijuana industry have nothing to do with growing or selling marijuana, they are for accountants, carpenters, graphic artists, real estate agents, plumbers, consultants. It’s an emerging industry that needs all these people.”
The Vegas Sun arranges to interview Bob while we drive to the new Hemp Incorporated headquarters to talk to its CEO, Bruce Perlowin, the most prolific convicted cannabis smuggler in United States history. Bruce has been a wheeler dealer since he was a boy shining shoes and selling costume jewelry door to door in Miami. His birth in 1951 landed him squarely in the throes of the hippie revolution when it took hold in 1965. His web bio recalls how he embraced the culture in every stereotypical fashion, immersing himself in “Eastern philosophy, reincarnation, karma, dharma, human auras, prana, vegetarianism, yoga and meditation” to name a few. A Haight Asbury stint, communes, Greatful Dead shows and incredible success smuggling marijuana from Colombia, Mexico, Jamaica and beyond inspired dreams of creating a new economic system.
His bio recalls the good old days. “I had a motor home with over a million dollars of sophisticated communications and surveillance equipment that tracked every Coast Guard boat in the Pacific Basin (800,000 square miles of Ocean) from South America to Alaska to the PAC Rim countries. By the time I was 30 I had made over $100 Million in profits and in 1980 I spent $500,000 every week that entire year.” He reflects on that time in his new office, “I was sitting in my mansion in Ukiah, California and all my friends were like, ‘What more do you want? You have everything!’ I didn’t know what I wanted then, but I knew I wanted to create a whole new system, something that would help everybody.”
After leaving a book detailing his smuggling operations in a Denny’s 24-hour restaurant, federal agents arrested Bruce in 1983 while en route to a Florida yoga retreat, sending him to prison until 1991. Confined to the coed Pleasanton Federal Prison near San Francisco, he closely befriended a female KGB spy, earned several degrees through correspondence courses, farmed an organic garden, got into great physical shape and taught computer and yoga courses to inmates. His greatest lament about his time inside was getting rejected by an “extremely pretty” woman named Candice when he asked her to the movies. Once free he dove into the phone card business with players he knew from his smuggling days who had gone legitimate in varying degrees. Still a new thing in 1991, phone cards soon exploded and Perlowin landed the national convenience store chain 7-Eleven as his biggest client. From there he expanded to a network marketing venture that currently features Eco-Harmony cards, “a loyalty program used by over 30,000 Catholic churches, thousands of banks, hundreds of thousands of stores, the Agape church…” The cards allow people to get discounts at participating stores while providing merchants and charities with kickbacks. A 2009 CNBC documentary dubbed him America’s “King of Pot.”
When California’s Compassionate Use Act passed in 1996 Perlowin began exploring how to legally reenter the industry, eventually starting Medical Marijuana Incorporated (MJNA), the first ever publicly-traded company in the marijuana business. Joining the NASDAQ's Over The Counter Pink Sheet stock market isn't difficult. A clever lawyer and accountant can turn any idea and a lump of cash into a public company in less than a year. Unlike "uplisted" penny stocks, pink sheet companies are not required to file professionally audited quarterly reports. Raids were more frequent in medical marijuana's early days and business was bumpy. Eventually Perlowin felt stifled by turbulent marijuana regulation and sold the company to a young entrepreneur named Tripp Keber and his group of investors. Using funds from the sale he started Hemp Incorporated (HEMP) concentrating exclusively on THC-free products made from hemp. Legal to grow in most countries except in the United States, hemp is rich in Cannabidiol (CBD), a molecule widely believed in the sector to be responsible for pain relief and other medical applications. Dozens of additional cannabinoids offer the opportunity to diversify medical research in the sector.
A storage room contains dozens of boxes of MMJ Lover pills ready for shipping to over 300 stores around the country. Retailing for nearly ten dollars for a pack of six, the pills contain hemp from Canadian fields, along with several herbal stimulants to “promote general health.” A scantily clad seductress on the face of the package implies sexual vigor. I find it strange that the “For Her” version uses another woman in a black camisole in lieu of a husky man. Hemp Inc. stands to benefit from recent United States Food and Drug Authority (FDA) raids targeting sexual enhancement pills containing synthetic, illegal ingredients, including crushed-up versions of the anti-impotence drugs Cialis and Viagara. Gustavo, their marketing guy, assures me, “These are all natural.” Other boxes contain diet pills and cereal made from hemp protein.
A chart pinned to the wall behind Perlowin’s desk shows the volume of shares traded and the dollar value generated for twenty-two publicly traded companies in the hemp and marijuana sectors. By his calculations, in the first six weeks of 2013 the sector traded 9.75 billion shares worth $405 million. If this kind of volume continues through the year, the cannabis sector will bring over $3 billion into the American stock market. Perlowin is currently designing a cannabis stock exchange and bank based on “total disclosure and openness.”
As his staff wait in a conference room for a closed meeting, Perlowin clarifies his business philosophy. “Everyone says this is a great, new, emerging industry. This is not an industry, it’s a movement. It was birthed through the (California) Compassionate Use Act of 1996. We have more compassion built into our industry than any other. There are some people in it for the money, but there are more in it to try to help people. More so than in the automotive industry, or the oil industry, or textiles.” I ask him how his former company MJNA is doing these days. “I love those guys, what they’re doing, where they’re going, how they do it, everything. They are awesome!” He still trades large blocks of their stock on occasion and uses the profits to buoy others in the sector making grow lights (PHOT), vaporizers (RFMK) and inventory software (MWIP), a strategy in keeping with his larger “quantum economics” theory. “Remember,” he implores “we are building a movement where everybody gets rewarded for doing what they do best.” I look forward to touring Medical Marijauna Inc.’s factory the next day in Denver.
I show him some exceptionally well-grown, hydroponic, indoor Bubba Kush from California that I bought from a friend for $2,500 per pound in Los Angeles. He presses it to his nose, squeezes and inhales deeply. “That’s awesome. Other than night-blooming jasmine and petunia, this is the best smell on the planet earth. I can’t believe people say it’s a bad smell, they’re nuts.” He estimates a pound of the Bubba would have fetched "$4,000 to $5,000 back in the 1980's, $7,000 or $8,000 back in New York." I give him the nugget and he vows to “crush it a little bit, put it in a paper towel and sleep with it under my pillow.” Wheels turn in his head. I imagine him mulling plans to start a marijuana aromatherapy company as he disappears into a room of patiently annoyed co-workers. I peek into the kitchen area and find a table covered with candles and gem stones, another venture reportedly making hundreds of thousands of dollars. The wicks are made of hemp. When the candle burns out a small gem from the a Brazilian mine can be found at the bottom. The miner, an old guy named Joe, inspects them.
Bob invites Bruce to speak at the Las Vegas CCI class next week. He agrees and puts his network marketing company to work calling every home and cell phone in Nevada to advertise it. As the week progresses 1,000,000 40 second robocalls describing the class are placed. The airtime costs Perlowin $5,000, an expenditure he deems, “a good way to make sure it’s all working.”
Erika shows me around Las Vegas that night. I roll with the goofy party vibe and lose the rest of the Bubba Kush at a cheesy nightclub, finishing the night glad I didn’t gamble, reeling from a dollop of marijuana tincture made by a CCI professor. It seems strange that a city built on decadence and fun doesn’t take advantage of tourists’ appetite for marijuana. The only way for them to get it now is to ask a taxi driver. I had done so the last time in town and was told it would be easy, but warned that costs might add up driving around and quality was uncertain. Perhaps the casino owners figure pot makes people gamble less or take longer deciding what to do at the tables. I look forward to Colorado, where a 12 year-old medical marijuana program netted $5.5 million in state taxes last year.
The entire Las Vegas Greyhound bus station stinks like the worst chemical toilet in the world. It was going to be a grueling, 16-hour trip packed primarily with obese casualties of the gaming tables. I slug beer and swallow more tincture. Security rushes up and tells me to get rid of the beer, apparently verboten in bus stations but okay to drink everywhere else in Vegas. A sad passenger suddenly puts both arms up in a Jesus Christ pose as an officer waves a metal detector under her arms. I’ve never seen security screening on an American bus! Another agent searches her check-in luggage. My large duffel bag is filled with eight ounces of double vacuum-packed Blue Dream that looks like a bomb and is a felony to bring over state lines. My medical marijuana card allowing me to carry six pounds in California is useless. Although unlikely for a first-time offender, I face up to four years in prison and thousands of dollars in fines if they find the stuff. Another three grams in my pocket suddenly reeks. I jump a cab and hole up in a hotel in the gamey Fremont district for the night.
The next morning I stash seven ounces with a friend and rent a car. An hour out of town I see signs for The Rocky Mountain Gun Show in a casino parking lot. I pay $5 and check out tables piled with rifles, shotguns, pistols, ammunition clips, bullets, sights and targets featuring Barack Obama and Osama Bin Laden. American firearm law is more confusing than marijuana’s. A woman selling handguns informs me I can purchase one after a background check, but will have to wait two weeks and return home to Los Angeles to collect it from a licensed gun dealer there. Across from her a private gun dealer offers a sleek collection of rifles, some of them over 100 years old. He tells me the rules for private sales are different and I can buy as many as I want. I don’t need ID, just the cash. Another booth offers 30 and 40 round ammo clips for semi-automatic rifles. A 2012 New York law allows only 10 round clips, but shooters are only permitted to load them with 7 bullets. An announcement comes over the loudspeaker warning against taking photographs without permission.
I drive all day and through the night across Utah, a state run by Mormons, a popular Christian sect who forbid followers from using caffeine, alcohol and short pants. I wonder how marijuana would be regulated had the Mormon billionaire Mitt Romney been elected president in 2012. A business man first, I imagine him legalizing it outright in an attempt to generate revenue and revive his sagging Republican party. Obama has the power legalize marijuana with an Executive Order at any time. The terrain gets more mountainous, rest stop signs describe panoramic views of natural wonders I can’t see in the pitch black. I set the rental in "cruise control" at the speed limit.
A few miles from the Colorado border I meet three hippies at a gas station, their Subaru wagon billowing steam from the engine. I advise them to get some coolant and ask about Colorado’s marijuana laws. They say it’s cheap ($35) and easy to get a medical marijuana ID but some places are letting people buy it with only a Colorado ID and no medical card. I ask them what they think of Marijuana Inc.’s Dixie Elixirs brand of THC and CBD-infused soda, candies, treats, salves and creams. While all three had tried Dixie products, only one remembered any specifically, saying she used to drink their sodas but found them too sweet, and now preferred a brand called Mary Jane. I tell them I’ll stop if I see them broken down on the side of the road, wondering if their Colorado license plates will attract the attention of law enforcement. Despite its reputation for “Rocky Mountain Highs,” hippie towns and a relaxed vibe, Colorado is indelibly associated with mass shootings, most recently in 2012 at a movie theater screening a Batman sequel and Columbine High School in 1999.
I stop at a convenience store near Grand Junction and buy a beer moments before the state-wide midnight cut-off time for take-away sales, suddenly remembering Colorado’s strange law forbidding the sale of beer containing more than 3.2% alcohol from stores. I wonder if recent Dutch attempts to limit THC content will take hold here. The cashier takes my California driver’s license and writes down all my information, explaining that a customer in another store in the chain bought beer and sold it to cops posing as underage kids in the parking lot. Since the bust every alcohol transaction has to be logged this way in all their stores. She complains that even if I came back in five minutes she would have to write it all down again. The delays are causing long lines and sending customers elsewhere. The scene reminds me of Colorado's punctilious medical marijuana tracking system that details the name and amount of every pot transaction in the state, information many marijuana users would prefer to keep private.
Dixie Elixirs shares a the 27,000 square foot plant they with a contractor for Whole Foods, America’s largest “health food” chain. The anonymous structure was previously home to Colorado’s morphine supply, kept in a bank-like vault now filled with marijuana products. Electronic doors, video cameras, cages and a surveillance system from “Cannasecurity” offer more layers of protection. I am graciously welcomed by Christie, who merged her herbal topical salves company with Dixie in 2010 and now develops products in between public relations duties. Despite a generous salary, stocks, health benefits and retirement package, her father was "not happy" when she broke the news of her career expansion. After trying a Dixie salve for his throbbing arthritis he changed his tune and started helping out at the factory. While he still worries the DEA will eventually take his daughter away in handcuffs, they find solace in Christie’s bold assumption that, “Governor Hickenlooper will go down with us if they come.” Finding professional people to take that risk is a serious impediment to the industry’s growth.
My hands are dry and cracked. Christie offers some hemp-based CBD cream. It’s a bit greasy at first but absorbs quickly and makes my skin feel great for the next couple days. She shows me a distressed area on her forehead that was “covered with pre-cancerous bumps” before she started using the cream in conjunction with orally ingested hemp oil "Dixie Dew Drops." We tour the former morphine vault, now stacked with plastic tubs of marijuana trim, massage oils, mints, pills and ointments. I am allowed no samples. A $120,000 CO2 extraction machine loudly separates THC and CBD oils from trim packed into a large metal canister in the middle. Large flasks sit on metal lab tables containing the translucent brown/green oil. The place is capable of shipping 175,000 cases of THC-infused soda per day. Dixie’s THC-infused line is available for sale in Colorado at 512 of its 535 dispensaries.
Dixie Elixirs’ CEO Tripp Keber is not a hippie. He wears a smart sport jacket, does his best to play by the rules and is supportive of proposed legislation that would regulate marijuana like alcohol. Featured on dozens of international network news programs, his media savvy veneer us unassailable as he speaks in perfect sound bites. “I’m not from the industry. I’m an entrepreneur. I chose to get into the business primarily to seek financial gain. I’m not embarrassed by that. Very quickly I realized there was incredible medicinal benefit to the plant. I personally don’t smoke marijuana, but don’t discourage it’s use.” He shrugs off my criticism that his products “don’t look like medicine” and their sweet flavors make them popular with kids. “Our products are carefully labeled. We need to make sure they stay in the hands of the people they were designed for. Patients have a responsibility. If you are prescribing Oxycontin and you have children in your home I would assume you would secure those medicines. If you have a 16 year-old you probably don’t leave your bottle of Jack Daniels’ on the kitchen table.”
MJNA stock peaked in February 2013 to an unprecedented .52 cents per share over one year, an increase of nearly 1,700%. He explains how. “Some of that was based on sensationalism. We were shorted by what I would describe as financial terrorists. A group called Seeking Alpha had been pumping the stock for in excess of 90 days and helped us get to that half a billion dollar market cap. On a Friday they released an ‘expose’ with mug shots of individuals that were not even associated with the company. They had to print corrections but they made misstatements and false accusations that cost us about $210 million in market cap. By us I mean our 13,500 investors. That’s one of the downsides of penny stocks.” I silently remember selling the 400 shares I bought in October at .08 cents for .30 when the article came out. Tripp estimates Seeking Alpha made "somewhere between $5 and $7 million" in the pump and dump scheme and is uncertain whether he will be able to recover the money.
I mention Medbox (MDBX), makers of a fancy vending machine that tracks the type and quantity of marijuana sold in dispensaries and the poster child of exponential growth in the cannabis sector. In late 2012 early 2013 Medbox stock spiked from $2 to over $220. Tripp attributes their meteoric success in part to "irrational exuberance,” a term coined by Federal Reserve Chairman Alan Greenspan when internet stocks crashed in the 1990’s. Dispensary customers do not use the machine, but hand a loyalty/debit card to the clerk after selecting a strain. The clerk presses a finger to a scanner, slides the card, waits for the machine to dispense the marijuana and hands it to the customer. Software can be integrated into a state’s monitoring program, if one exists. When their stock settled back down to $25 per share in 2013 they pledged to "uplist" and file a Form 10 with the Securities Exchange Commission, making them, according to CEO Bruce Bedrick, “a fully reporting company, subject to both the burdens and benefits thereof.” In a press release disseminated through the internet's penny stock underworld, Bedrick “welcomes the increased scrutiny and accountability that comes with our share registration." Tripp explains that MJNA plans to follow in Medbox’s footsteps and “uplist in the near future.” Like CCI, Medbox holds educational seminars in states considering medical marijuana, excellent venues for selling vending machines along with a $10,000 per month dispensary consulting and management service.
I drive the streets finding clusters of dispensaries, primarily in seedier parts of the city. The most famous, on the south side of the main drag Broadway, is dubbed Broadsterdam. Hip boutiques, coffee shops, bookstores and dispensaries line the thoroughfare. Two shared-bathroom $40 hotels are testament to the skullduggery the zone was once famous for. Wanting security for my cameras, cash and pot I opt for the nearby Ramada on Colfax Avenue for $90.
That night I get a knock on my hotel room door at one in the morning. I had just extinguished a joint while hanging out the window to avoid a $250 smoking fine. A cop drove by and I thought they might have called the hotel to rat me out. I ignored the knocking for a minute or two. If the Ramada wanted to fine me I could argue at the desk in the morning. I crept to the door, careful to not occupy the light behind my head if the person outside was looking through the peephole with a shotgun. Peering through I see a large black guy in a sweatsuit. “Who is it?” I ask, inflecting masculine authority. The guy turns, “Hey, um, some people brought me up here.” I peer out, checking to see if he is pulling a gun, or badge or gearing up to smash the door in. “You have the wrong room.” “Yeah, um, they took my money, I was trying to get some bud.” I think for a moment. “I’m sorry to hear about that. That sucks. But you have the wrong room.” He leaves. The poor guy had been ripped off! All the pot stores in the neighborhood were closed. It would be easy for a scam artist to lose a customer in the hotel's vast hallways and slip away. I resist the urge to give him a bud from my stash. Perhaps he spotted me smoking in the window from the street and saw an easy mark.
The next day I find Tripp with a CBS news crew from Seattle, Washington. The reporter marvels at Colorado’s sophistication, “We don’t have anything like this yet, it's all up in the air.” Washington state decriminalized marijuana possession in 2012 but lags behind Colorado implementing a regulatory system. Tripp shows them around. I tag along and meet three lab workers, a pleasant bunch of real reefer people who cut their teeth in the business making bubble hash in the Colorado mountains. Like Christie, they are paid well, with full benefits, stocks and bonuses and were excited after entering a candy bar that day in a marijuana contest boasting 420 milligrams of THC. Combining mechanical engineering and chemistry degrees with their home-grown knowledge, they are the lynchpin of the operation. An apprentice keeps a healthy reservoir of THC oil inside the fingertips of his latex gloves. I imagine the healing oil soaking into his brain as he inspects several pounds of carefully labeled trim. Had he offered I would have taken the gloves home and smeared a dozen joints with their magical contents.
I drive to the largest grow operation I have ever seen that afternoon through snow and bone-chilling cold. Only a mile from Dixie, it’s owner is a smooth guy named Kayvan Kalatbari. The building bears no signs and has a labyrinth of secured hallways before an austere lobby. I sign in, take a day pass and examine a security system with a dozen screens showing the parking lot, hallways, and rooms filled with pot plants. Dozens of local Colorado Medical Marijuana Enforcement Division (MMED) officers and news crews have filed through to witness proper “seed to sale” surveillance. Originally the MMED oversaw a central monitoring station where they could observe every marijuana grow, infused products factory and dispensary in the state, a monumental task dwarfing the massive private/public system used in Nevada casinos.
Kayvan’s pot factory produces around 50 pounds of dried buds every 35 days that are sold through his four dispensaries. Excess trim goes to Dixie to recoup their investment in the grow. Collective members pay $245 an ounce for premium stock while regular Coloradans pay $295. Members also get first priority on new strains as he has a hard time keeping enough on the shelves, especially in summer when indoor grows are more prone to spider mites and harvests often go awry in the dry heat. Kayvan's small chain of pizza shops and comedy parties provide more income.
An April 2013 state sponsored audit decimated the group hired to monitor and police Colorado’s intensely complicated marijuana industry. The MMED’s proclivity towards leasing expensive cars and ignoring applications wasted hundreds of thousands of dollars and left millions more in uncollected taxes. More than half of the MMED agents were let go as their six-month contracts, without health or retirement benefits, expired. Their bloated fleet of vehicles has since been winnowed. The MMED were largely comprised of retired police officers, fish and game wardens, alcohol enforcement agents and other bureaucrats with little or no marijuana experience. Kayvan and Christie both spent hours on the phone and on site advising MMED agents how to do their jobs. One of the MMED’s remaining 15 inspectors recently visited Kayvan’s grow and ordered him to lock the security video hard drives in a metal box and log the time when garbage is taken out. He faces a fine if he fails to comply. Colorado's live surveillance program has been scrapped, leaving the responsibility of recording and storing the footage on the business owner.
We wander through five rooms housing hundreds of plants. The first vegetative room uses cool florescent lights. Mother plants used for genetic backups and tincture sit in large pots along the walls. Three trays of clustered clones grow in the middle of the room, each 35 days older than the next. Two flowering rooms each house 24 1000-watt high pressure sodium lights and trays holding around a dozen individual pots.
Each plant is assigned to a member of their collective. If a membership expires a computer sends an alert assigning the plant to a different patient in their network. A bar code system is in the works. The rooms are kept between 75 and 80 degrees fahrenheit at 45-55 percent humidity and 1250 to 1500 ppm CO2. Few grows in the state operate at this level of accountability or sophistication, although the grower on duty mistook my hydroponically-grown Blue Dream for outdoor. It seemed he hadn’t seen much marijuana outside of Colorado and firmly believed his product was superior to mine. Unlike the techs at Dixie, he was working on a freelance basis without health benefits, stocks or a retirement package. “All of that is in the works with the expansion,” Kayvan assures us. Due this summer, renovations will double his yield. “It still won’t be enough.” He laments. In the drying room he pulls out their top strains; a Blue Dream, Tahoe OG, Bio Diesel and a few others. They look great, but lack the sticky coverage of THC trichomes I am used to in California. It reminds me of pot in Amsterdam that looks exceptional but doesn't have the stimulatory stamina of AAA strains. I am legally and gratefully gifted a sample, but my suspicions about its lack of potency are confirmed at the Ramada.
At Kayvan’s dispensary on Broadsterdam a fancy showcase of glass bongs and pipes sits in a room behind a secured door. Beyond that four stalls form a counter where marijuana products are sold. Dozens of THC oil cartridges are labeled according to strain. The cartridges attach to vaporizer pens that heat up the oil and propylene glycol mix and release the active ingredients without burning, emitting a warm, odorless vapor instead of smoke. I’ve tried them, but they only make me want to smoke real pot. Portable vaporizers have been the most popular new product in the marijuana business since designer glassware gained steam in the 1990’s. The clerk reports sales of cartridges are neck and neck with dried buds. He pulls out a wooden display tray with waxes and hash selling for $50 per gram boasting between 40 and 60 percent THC. Some wax is flaky and yellow, other types are gooey.
Seven hours outside Denver I stop by my girlfriend Laura’s cabin in Paonia, a tiny town nestled high in the Colorado mountains famous for its hippies and locally-grown Purple Parylyzer. She is there making charcoal drawings for two months at an art colony. The next town over is Aspen, ski playground for the mega-rich and home to the most expensive real estate in America. Paonia prides itself on being more down-to-earth. A local named Willow tells me I should meet Chi, a legendary local grower. Laura and I head over a couple hours later and he lets us into his well-appointed house at the edge of town. After three days of factory grows, dispensaries and laboratories, I feel at home in a room full of crystal and glass sculptures, feathers, dreamcatchers, pyramids and poster-sized tarot card paintings. Chi is the painter, the glass work his son's creation. The two tend several grows around town for different clients and collectives and teach a soil mixing class at the local hardware store. Chi started growing in 1972 while running a Texas psychiatric institute. Specializing his efforts on drug rehabilitation, Chi was attracted to marijuana's healing properties and started growing from seed on some family land. He seems uncomfortable talking about the details so I ask him about the nuances of growing in Colorado's mountains.
“At 11,000 feet, the growing season only lasts from mid-May to early September. After that, that's it. It's gonna drop below freezing at night and kill everything." California growers have the advantage two more months of total growing time in a far more forgiving climate, allowing them to grow sativa and indica strains. Sativas, like the insanely popular Sour Diesel and Blue Dream, provide a cerebral, uplifting high and don't do well in Colorado mountains because they require more time to mature. Indicas, like Purple Paralyzer and Northern Lights, provide a heavier, stoned high and are well-suited to the shorter season and high altitude. Chi continues. “You have to account for the sun rising and setting in different places as the season goes on. Up here the sun is so close to the plants that they burn real easy." We compare our supply of Blue Dream and he admits mine packs more of a whallop, but we both prefer his because of its natural flavor. His sample is remarkably dense, rivaling the best outdoor Northern California versions I have been selling in Los Angeles at $2,000 per pound. We trade some buds and part ways, planning a visit in May so I can help move his plants outdoors. I contemplate a future there making art while growing pot with local hippies named Stream, Sun, Light and Rainbow. Asexual, elemental names are remarkably common in the area.
On the way back to Vegas a Utah convenience store clerk is livid about getting repeatedly stopped by cops on her way to work because her car is from Colorado. “They’re pulling anyone over with Colorado plates! They get the dogs out and search and all that! It’s stupid!” Signs advertise another gun show next week.
The Las Vegas Cannabis Career Institute class is sold out at the airport Hyatt. 35 students pay $249 each to hear Bob and his band of lawyers, accountants and growers walk them through the basics of Nevada’s proposed marijuana laws. The crowd is largely comprised of professionals over 40. While specific laws haven’t been ironed out, Nevada officials have made it clear that prospective dispensary owners will need to prove they have at least $150,000 to start the licensing process. Hemp Inc.’s robocalls worked for a local pot dealer out fishing when the call came through. He had been pondering how to use his years of experience selling marijuana illegally and drove straight to class.
Interview - Chi - Cannabis Farmer - Paonia, Colorado
Is there an office in here Paonia where you can register to get a medical marijuana card? Can you do it online?
Chi: you go see a Dr.. You make an appointment with a Dr. and you tell him your symptoms and if you have, like I have X-Rays and that sort of thing to show how bad my hip was something is, I have gotten surgery this last year so I am much better now but I am still experiencing pain. But you go to the Dr. and you explain your symptoms and they will judge whether you really qualify or not and then, if you do they will give you a prescription.
JV: It is a prescription or a recommendation?
Chi: No, it is a prescription that you send into the state and you send it in with your information on how much you can grow and what the Dr. recommends for you.
JV: So, the doctor recommends you need a certain amount then you work with a collective saying you need to grow for a certain amount of members?
Chi: No, the doctor just says for me I can grow 18 plants. That is what he determined that I needed for my symptoms.
JV: So, you send that into the state, how long does it take to get through this whole process?
Chi: Oh, I don't know, it depends. Anywhere between 10 days and a month.
JV: What does it cost?
Chi: $30.00, $35.00.
JV. Some people are talking about a $500 card? That is for distributors, I believe.
Chi. That might be a new law that I do not know about. I would want to find out about that one there. It sounds like something that someone made up because they have been talking about this for a few years, about getting distributors, but I have not heard it proposed, but I might not be keeping up with everything, you know. It could be happening.
JV. Well, detail wise on your mountain grow, what do you do for water? How do you protect against animals, theft, things like that?
Chi. Well, number one, I grow in raised beds, OK? I prepare all of my own soil, put everything in it — the minerals, trace minerals. I get the soil to be like ground coffee. And then, sort of like a little greenhouse, I’ll put a frame up with greenhouse plastic around it. That keeps the deer away, you can't see it. And I grow in my backyard here. We probably had 24 plants here last year. My son grows. I was thinking you probably need to talk to my son. He's probably, actually a more proficient grower then I am. His name is Eben. He is very skilled at genetics. One of the strains that I do now is Blue Dream, which he brought from California.
JV. I brought some with me. But, please, go on.
Chi. It is one of the best yields out of any around.
I show him some of my indoor Blue Dream.
JV. Yours is really dense for outside. This is a really nice place.
Chi. Yeah, I am constantly working on it.
JV. It is kind of hard to see in the dark.
Chi. Well, I have a grow room in there.
JV. Oh, so you are dark now.
Chi. Yeah, so, I am fooling around in the dark here. I apologize.(He laughs)
JV. Oh, no, I thought maybe you're blind.
Chi. Well, that, too. I can hardly see anything. And so, here is my indoor.
JV. Mmmm hmmm, it's got a real punch to it. Wow.
Chi. This is my best friend;s indoor there.
JV. And that is all from the California clones?
Chi. It was cloned. Maui Wowie, this is my partner’s indoor. You might want to talk to them.
JV. Yeah, it seems like I should really go on a tour but I have to drive to Las Vegas tonight.
Chi. You can have that outdoor. These are both outdoor there.
Chi. Maui Wowie. You should be able to tell the difference there.
JV. Oh, yeah.
Chi. Are you into smoking something?
JV. I am kind of smoked out, actually. Do you want to? Are you?
Chi. You know, I smoke all the time. Oh, by the way do you see that lamp over there? Do you see this light fixture up here? Do see all these bongs up there?
JV. These are nice.
Chi. Do you see these pipes here?
JV. These are nice pipes.
Chi. My son does all that.He is quite the glass blower. Anyway, my whole healing system is based on the working of this sound and color frequencies in the Hebrew alphabet. Each letter represents a different organ in the human body. So I do atonements every day for Shakra and the Oracle energy field, spiritual bodies, emotional bodies, I clean those out every day. It is just part of the work. It is very American Indian. I grew up in the Choctaw Indian Nation.
JV. Where are the Choctaw from?
Chi. Well, we are originally from Alabama and Tennessee, but I grew up in Oklahoma. Our reservation is in Southeastern Oklahoma. You see, Oklahoma is nothing but reservation. Or what originally were reservations. Originally they made Oklahoma an Indian Territory. So there are all these reservations there. Some of them were very quiet. You can't even tell you are on a reservation. But the ones that are like true reservations are like third world countries. Total poverty.
JV. From what I’m hearing your secret soil mix is something valuable.
Chi. It is my son's formula. You can actually get it here in town at the Paonia Soil Company. He shared his formula here with a man who developed a company around it.
JV. There are companies who are buying up soil companies. They find a smaller company that has some value so it seems like the bigger company has more value. Then they run into everything into the ground or make it prosper, one or the other.
Chi. He is selling everything he can put together right now. I don't know if you are familiar with Foxfarm. It's very much like that only better than anything they have. I use their Ocean Forest and Happy Frog. Ocean Forest is very good, but his has more. You would have to talk to my son about the bacteria and microorganisms and that sort of thing, but you won't find it in any other soil.
JV. What minerals are you putting in there?
Chi. Well, he has everything in his soil. Zinc, magnesium, manganese, iron, copper, you name it. But that is just the basic stuff. His soil has some microbes and all sorts of things that ignite the nutrients. You do get that some in the Ocean Forest. Ocean Forest is one of the better ones. Now this is yours, right here.
We exchange buds, Los Angels Blue Dream indoor for Colorado outdoor.
Chi. Oh, thank you. I wanted to hit this. But let me get a pipe. Maybe I will get one of my son's.
JV. I'm so glad to meet you, this is great.
Chi. In terms of the Tarot I'm kind of an artist. These are the Hebrew letters. This is the color frequency. These symbols tell stories and a symbol will ignite something in your subconscious mind that will reflect what is going on. That is the way the Tarot works. You look at a card and it starts igniting certain patterns from the symbols, like the sword, you know, and the sun, the eagle, the lion — all of it has references to certain information that you can not get through words. Words can take you so far, but if you really want to go up there and raise the frequencies you have to use the symbols.
JV. So, how does this work with the Choctaw beliefs?
Chi. They kind of dissolved our religion. We didn't have one. They had the Presbyterian church. The Hopi and Navajo they maintained their spiritual way, we did not. We kind of lost ours. The only thing that I heard myself, when I went around asking, was that we got our wisdom from the little people in the trees. And my mother, who was Indian, married an Irish person, so I am like, you know, some kind of DNA connection. It has to do with the little people. So, that is all I knew about the Choctaws. So, how did I get into in this? I have a PhD in psychology, and I am a psychotherapist, sort of thing, and after I worked for many years getting my PhD I said, 'you know, I need something that is beyond the PhD. I don't know where to get it.’ And I knew this lady for years and years and she was studying this and she said, ‘You need to try this.’
JV. When was that?
Chi. I was about 35. That was when I was working in Austin, Texas as part of the psychology group there. So this is advanced psychology.
JV. Tell me more about these marijuana experiments you were doing back in Texas in the sixties.
Chi. Well, you need to understand that I was hooked up with some professors at Baylor University, so no one knew this was going on in Waco Texas. And there was a group of individuals, and this was many years ago, who were experimenting with such things as lysergic acid and mushrooms and other assorted hallucinogens. And these were doctors, professors, and that sort of thing that we're interested in altered states and how they affected. So that is how it all kind of happened. I mean, marijuana was considered as an elixir for sort of spiritual evolution.
JV. By whom? The clinicians, government?
Chi. Alistair Crowley. Alistair was one of the advanced teachers in the Tarot with the Order of the Golden Dawn. They called him the beast. We shouldn't get into this because he is way out there. But, his search his entire life was for the Tree of Life, which is Biblical, has to do with immortality. And he came up with the idea, he searched, he did many drugs and that sort of thing, and he came up with that it had to do with a natural tree. If you've ever seen in a marijuana tree there is bulbs just like the tree of life. He said that the tree of life was cannabis indica, which we grow here. I'm not saying that that is the truth. I'm just saying that is part of the research of what they're trying to discover in all this.
JV. So, you grow indica up here. Is there much sativa?
Chi. Sativa is a sea level weed. We grow it up here. It's really good, in fact. But the best, like this Blue Dream is half sativa-half indica. So it is the perfect blend. It is one of the most popular strains on the market.
JV. It has a little Sour Diesel in it.
Chi. Well, that explains a lot because it has that gourmet look and smell to it and that is what Sour Diesel is, is gourmet.
JV. It is long and stringy though. Would you have luck growing a Sour Diesel up here?
Chi. I don't know of any one that grows Sour Diesel up here. I don't think it would do that well. I grow Diesel, but that is different.
JV. It is good to be here after all of those marijuana factories in Denver. What do you think of all that stuff?
Chi. Well, I don't know. I am open to exploring everything that could potentially help us. But I don't know about all that stuff anyway. I have some reluctance there. I did put a little Blue Dream hash on top. My son makes that. I have been ripped off a few times, that is trouble. But, I have a lot of plants growing in different places.
JV. You just had plants that were taken that were growing outside?
JV. That’s how that happens.
Chi. The worst was when the DEA took 39 of my plants about 10 years ago.
JV. They just came and took them, they did not know who's they were?
Chi. Marijuana eradication was the name of it. They even found some people on some of the plots that they let go the next day. They did not even want to arrest them, they just wanted the plants.
JV. Did they do a big public to burn of those plants?
Chi. No one knows.
JV. A friend of mine scoped out a big public burn in Mendocino and had a high-powered lens and a saw that there were no buds on the plants.
Chi. If I was a police officer I wouldn't be burning any buds either. But, we had a saying in the Choctaw Indian nation, ‘You have to pay the thieves.’ And they were not talking about what we think of as thieves, we are talking about the IRS, DEA, CIA. Because they come in and they take whatever they want to. Yes, there are real thieves, but…
JV. They just wear different clothes.
Chi. Do you want another hit?
JV. It is really sweet, that.
Chi. I really like Blue Dream, it’s one of the smoothest. I like Sour Diesel, it has been a while since I've had any. I don't know if you have noticed that there are some really good outdoor grows here. Wait till you meet my partners.
JV. What are the problems specific to growing in this altitude in this climate?
Chi. The time span is not very long. You have to go with the indica. Some of the indicas they will be finished by September 1. They will go in probably around the first of next month, but I am going to get them as big as you can by then. But I have something that by next month it will be twice that big.
JV. You started inside, how many do you have ready to go out?
Chi. I have about 18. But you see, half of those could be males. You just have to keep an eye on them.
JV. Your son is producing the seeds?
Chi. No, my son uses clones. Most people are into clones.
JV. You don't try the feminized seeds?
Chi. I have. It was different times. My friend got 10 of them and three of them came up. I have got them before and all of them came up. But, I have a friend who got 15 feminized seeds and half of them were male. I don't know how that happened, but they're supposed to be guaranteed. I think they replaced them, so it is kind of inconsistent if you want to know the truth. But that is kind of the art of growing, things are not consistent. You can count on some strains, like blue dream will give you a 4 to 5 pound plant easily. They are little more than 12 feet across. That is my son's doing, by the way. He probably got some 7 pound plants when he was out in California. It is a longer growing season out there so you can start earlier.
JV. You can double up out there.
Chi. If you grow right you can grow a 10 pound plant. Like, if you live in Florida. You can grow a 10 pound plant there.
JV. Why is that?
Chi. Well, you just have a growing season that is all year round, really. You could start your plants in February there, have them out in March. Let's say you are doing sativas. You wouldn't have to harvest until late November. We have to harvest here in October. The second week in October, if they're not ready you have to take them because it is about to freeze and it will kill them. I mean freeze good. They can handle down to about 28, but in mid-November here it can get down to zero.
JV. What kind of problems do you have with bugs and mold here?
Chi. Bugs indoor — spider mites, they’re all over. I'm looking for them right now in my indoor and I have not seen them yet.
JV. What do you do against them?
Chi. Try to keep the room cool number one. If you can keep your room 75 or below that will definitely help. But, once they hit you have to come up with a good solution.
JV. In L.A. everyone gets powder mildew.
Chi. Not really, it is too dry. It is really dry here.