By

Neal Smith

 

The numbers are coming in from the states which currently allow Cannabis as medicine, and they’re enough to raise a smile from the most die hard American capitalist. Research has gone on for many years showing the efficacy of Cannabis as an economic boon. Indiana could be in the forefront of that.

Just in March of 2011, MSNBC News reported sales of Marijuana nearing the $2 Billion mark in states that have relegalized for medicine. That’s 16 states and the District of Columbia; less than a third of the nation. That’s medical Marijuana alone and doesn’t take into account revenue generated from taxed and regulated personal use Marijuana and industrial Hemp. In the article: ”If another 20 states pass medical marijuana laws — as the study projects is possible — the market could grow to $8.9 billion in 2016.” (http://www.msnbc.msn.com/id/42237531/ns/business-small_business/)

First, someone has to grow the Marijuana. Most programs allow individuals to grow their own medicine, and that’s a good thing, but a lot of people are either unable or unwilling to grow. Indiana Chapter of the National Organization for the Reform of Marijuana Laws (INORML) Vice Chair and veteran of the Oregon Medical Marijuana program Derek Cloar, has calculated the amount of Marijuana needed. “The average patient will consume about two ounces per month. On a conservative estimate, Indiana would have 100,000 patients whom Marijuana would successfully treat. That’s $12,500 pounds per month. At a low price of $1,000 per pound, that’s $1.25 Million dollars per month. “ That’s just for producing the medicine.

That’s a lot of Marijuana. And that doesn’t count the amount that would be smoked to simply enjoy life. The federal government estimates that 500,000 Hoosiers smoke Marijuana regularly, Assuming on the low side, those smokers will consume one ounce per month.  Considering a low price of $1,000 per pound for top quality, That’s 31,250 pounds of Marijuana per month.  That’s 31 Million, 250 thousand dollars per month,  or $375 Million per year, just on the price of the product itself, just in Indiana. The current, black market price of top quality Marijuana is more like $5,000+ per pound, and the government doesn’t even get a whiff of it.

Industrial Hemp is the non-psychoactive variety of Cannabis. Fuel, paper, fiber, food and building materials can be obtained from Hemp.

Canada has had Hemp legal for several years now. Estimates from their experience show farmers make a pretty good return.  Several Canadian Hemp organizations have made these calculations:

Hemp cultivation exceeds 50,000 acres in Canada, compared to 24,000 acres in 2005, 4,000 acres in 2002. Europe hemp cultivation is now estimated at 40,000 acres.

Canadian Farmers Reporting Net Profits Of $200 – $250 Per Acre

Saskatchewan Hemp Association holds that the hemp market is vulnerable to price fluctuations dependent in part on supply. Successful hemp farmers in Saskatchewan have emphasized quality, and created enduring relationships with buyers. In 2005 production was contracted at $0.45/ib for conventional, and $0.85/lb for certified organic hemp seed. A good yield is about 800-900 lbs an acre, but average yields of 500-600 lbs. are more common.
.85 x 900 = $765/acre is the top end.
.45 x 500 = $225/acre as the low end.

According to Shaun Crew of Hemp Oil Canada and Mike Fata of Manitoba Harvest, in 2004 the average yield was 750-900 ibs of seed per acre.
45 lbs of seed are needed to produce 1 gallon of oil.
750 lb = 16.6 gallons. 900 ib = 20 gallons.
The average price of hemp oil was $40/gallon in 2004.
16.6 x $40 = $664/acre.
20 x $40 = $800/acre.
The production costs per acre were estimated at $200 per acre. Thus profits would average between $434-600/acre. Add to this whatever a producer can get for the hemp stalks.

Yield Expectations
Hemp grain yields over the years have been variable. Yields in Canada have been reported from 100 to 1,100 pounds per acre. New growers should expect 300-400 lbs/acre grain yield (clean, dry basis), while the experienced farmer using the best of current varieties could be in excess of 600 lbs/acre (clean, dry basis). Check out mmpp.com for yearly yield data from Canada (source Health Canada).

That’s a lot of agriculture produce, between what is needed for Cannabis (Medical Marijuana), Marijuana and Hemp. Here are some job estimates for the Hemp crop alone. A California firm, Fuel & Fiber, came up with these figures for Hemp employment in California:

Employment for hemp production, calculated at one worker per 40 acres farmed, results in a total of 1,700 to 4,275 new jobs, if 10% of California’s cropland is put into production of cannabis hemp. These jobs are created across all traditional agricultural employment sectors, upon full development of the system.

The processing plants will also create new jobs in these areas:

• Administrative & Sales – 15 to 25 per facility
• Research & Development – 25 to 50 statewide
• Engineering & Technical – 75 to 100 statewide
• Construction & Maintenance – 150 to 300 statewide
• Transportation & Material Handling – 10 to 20 per facility
• General Labor – 25 to 50 per facility

The Indiana Cannabis Action Network (ICAN) developed a list of jobs that will be needed upon relegalization of Cannabis/Hemp/Marijuana:

Production

Grower

Tender

Harvester

Trimmer

Packager

Transporter

Warehouse

Quality Control – Lab

Strain specialists

Processers of fiber, hurds, seeds

Oil extractors

Paper processers

Equipment Providers

 

Tractors & Implements

Harvesters

Lighting

CO2 producers

Irrigation Systems

Fans

Greenhouses

Security Systems

 

 

Retail

Property Sellers/Purchasers

Sales people/consultants

Managers

On-site Warehousing/truck unloaders

Marketing/Merchandising

Direct Marketing

Smoking/Vaporizing implements

Cooking utensils

Specialized equipment

Cooler Production/installation

Delivery drivers

Doctors

Nurses

Lawyers

Paralegals

Security

Accountants

Administrative Assistants

Secretaries

Teachers

Greeters

Bud Tenders

 

Simple, basic economics dictates that the more good paying jobs there are, the more people spend. This causes a ripple effect. More consumer demand causes more production of consumer goods. Which creates more jobs.

How serious are we, as a nation, in repairing our economic crisis? When it comes to government spending, Hoosiers could see savings of at least $150 Million per year by just not locking up pot smokers. But by taxing and regulating Cannabis/Hemp/Marijuana, a new tax base of millions, maybe billions, of dollars per year could be realized.