Medical marijuana grower thinks Tom Massey regulatory bill will expand the black market in weed

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Yesterday's introduction of House Bill 1284, Representative Tom Massey's long--in-the-works attempt to regulate the medical marijuana industry, drew a sizable protest from frustrated advocates, not to mention so much public comment that a preliminary vote was pushed back.

That's fine by at least one local medical marijuana grower. He prefers to remain anonymous, not wanting to become a target for law enforcement along the lines of Chris Bartkowicz, a Highlands Ranch grower who was arrested after talking about his operation with 9News.

But from his point of view, the current bill needs to be amended, particularly when it comes to rules governing cultivation. If it's not, he fears attempts by the bill's authors to cut back on black market transactions will actually fuel more of them.

The grower isn't a big defender of Bartkowicz, who may be taking steps toward a guilty plea. But he feels his case is symbolic of a larger distrust between law enforcement and members of the medical marijuana community.

"What Chris did was clearly not only stupid but wrong," he says. "But the industry shouldn't feel like it's going to have vindictive law enforcement agents who are going to crack down on people who talk about this business. We need to have an intelligent conversation, and we can't do that if we have this looming threat over us.

"Most of us in this business want to move the industry into the light. But it's a little unfair when every law enforcement agent can speak their opinions -- people like [North Metro Task Force commander] Jerry Peters, who isn't very factual in a lot of his comments, and [Drug Enforcement Administration special agent] Jeff Sweetin. They can speak without fear of repercussion, but if we speak up, we have to worry that a Jerry Peters or a Jeff Sweetin is going to kick in our doors. And that's going to drive away people like me, who want to do this legitimately, and keep the people who don't care, and who may have been criminals in the past."

With these concerns in mind, the grower keeps public descriptions of his background purposefully vague.

"Not to be arrogant, but I think I'm relatively unique in this industry," he says. "I'm a vice president of a very large distribution company. I have a degree in finance, and I manage a very large group of people.

"My interest in the industry came from my strong personal belief that this is the right thing to do, and because the more I've read about this and observed it for the past year or year and a half, the more I've thought this industry needs to be legitimized and treated as a real industry -- professionalized."

Because of his background, he's not as unnerved by the prospect of regulation than many of his medical marijuana peers.

"I spent some years in the insurance industry," he notes. "People in the medical marijuana business are complaining about regulation, but insurance is the most heavily regulated industry there is, and insurance still turns a profit. So people who are really freaked out about regulation, they're not looking at the big picture -- that this will legitimize the industry and bring prices down."

Still, what the grower would like to see is an approach that "will treat this just like any other medical product, whether it's a prescription drug or anything else we need to maintain tighter control over. And that means we have to establish a supply chain -- and that's really what we're talking about when you think about it. Law enforcement's concerns and government's concerns are that they don't want medical marijuana products going to the black market, going out the back door of a warehouse, coming in from another state or from Mexico. And the solution is to control that in the ways other industries do, where you essentially track the product along the supply chain through inventory and bar coding, where you uniquely identify the product.

"Let me give you an example. If you were to buy a bottle of over-the-counter medicine, it has a bar code on it that uniquely identifies it. It also has a lot ID on it that will tell you what production facility it came from. The company that produced it could tell you what warehouse it went through and where it was produced. They probably even know what shift produced it and the people who worked on it along the production line. They know what warehouse it went to during the intermediate steps of the distribution process, they know what shipping truck it went on to get to the actual secondary distribution point, and they know from there how it got to the retailer. And the retailer can provide the manufacturing company with point-of-sale information, saying, 'We sold this product.'"

This same approach would work for medical marijuana, the grower believes.

"This is something we're writing software for," he notes. "But if you uniquely tag each plant with a bar code, then if someone was to perform an inspection, they'd be able to match your patient count with your plant count, and your plant count with your records, and know if you were complying or not. And you can track the plants all the way through processing. You've got a bar code on each plant, and then it gets aggregated to distributed quantities -- pounds or ounces. And you can re-identify them with a bar code, saying that this is now a one-pound bag that comes from this lot of production. And then you could sell it to a dispensary, and you'd have the transaction from that purchase tied into the product, giving you a record that goes all the way to the dispensary."

Right now, the bill requires dispensaries to grow 75 percent of their own product. According to the grower, "that creates an unnatural business model. There are no other industries that work that way. Imagine requiring a liquor store to produce their own liquor, or a tire store to make their own tires. That's not how industry works."

Authors of the bill believes this brand of integration makes it easier for authorities to ensure that the marijuana being sold came from authorized sources. The grower disagrees.

"I don't think it makes it any simpler at all," he says. "What it does is reward the large dispensaries that have already established grow operations. Somebody who's a full proprietor in a business working sixty hours a week doesn't have another twenty or thirty hours a week to handle a grow operation. And there's no requirement in the legislation to do any tracking of plants, nothing that says they can't move things right out the back door. So all they've really done is put a lot of pressure on the small mom and pops."

It would also force people like him, who'd prefer to stay on the wholesale end of things, to consider opening up a dispensary -- something that holds no interest for him. And that's not all.

"Here's what could happen if the law passes the way it is," he maintains. "All those vendors who were dispensing before are going to say, 'Prices have gone up, and I was in the black market before -- so I'm just going to go back to the black market again.' I already know that finding warehouse space in Denver is very difficult for a medical marijuana grow. and if all these dispensaries are tasked with finding ways to grow their own, and of finding space, a lot of them will say, 'This isn't worth it.' They'll close down. But the larger dispensaries will stay in business, and that will drive the prices up -- and that supports the black market. People who might have chosen to medicate through the medical marijuana industry are going to say, 'I'm not going to pay $500 an ounce through a dispensary if I can pay $300 an ounce on the black market.'"

The grower has made this argument to assorted legislators, and he says one in particular is working on an amendment to address the problem. Nonetheless, he believes that "this isn't the kind of thing that you can totally take care of with legislation. What you can legislate is a requirement that we're going to allow licensed grow centers, licensed cultivation centers, and these licensed cultivation centers will be subject to inspection just like a dispensary. They'll be required to keep records where each plant is uniquely identified, maintain a real-time inventory, maintain records of every dispensary they sold to -- and a dispensary can't buy from one of these unless they see the license. You also make the dispensary keep a record of who you bought from, creating a paper trail -- although you could do all of it electronically.

"And that would help make the industry safer. Right now, it's very much a cash business, which is obviously rife with opportunities for fraud. But if you set up structures like this, I as a cultivation center could set up accounts with dispensaries and do everything through electronic fund transfers. And that would be great. because I don't want to carry around $20,000 in cash, and I don't want my drivers to do that, either. It reduces the chance of them being targeted by people interested in criminal activities."

The grower sees now as the right time to put such systems in place. The bill as written calls for the clock to start ticking for people in the industry on July 1; they'll have a year from that date to get into compliance with the legislation. Hence, the grower says, "everybody is going to start scrambling for space and grows, and they'll be changing their business plans. And then, if something was changed, they'd have to do it again six or eight months down the line."

Of late, the grower sees more attention being paid to cultivation issues, "but I think it's coming too late. Everybody's been so focused on dispensaries that they haven't thought as much about where this comes from. They've been thinking so much about that big pot leaf sign on Alameda that they haven't focused on the source.

"I don't want Mexican cartels selling marijuana in Colorado or anywhere else. I don't want people trucking marijuana in from California. So the best thing you can do is emphasize regulation on the cultivation side -- to recognize that the bill is flawed, and try your best to fix it."

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