If I offered you a McDonald’s franchise in the Indian state of Punjab with venture capital lined up, would you take it? It has 152 million residents which is a boat load of customers… There is only one problem. The people are mainly Hindus and they do not take kindly to slaughtering cows or eating meat. I mention this to illustrate the point that while a market may contain a gap, this does not necessarily mean that there is money in that gap.
Medical marijuana law in California is so disorganized a Huntington Beach pot party might have dreamed it up. I’ll summarize the basics in case you are new to the game. If not, you can skip past the bullets to the meaty stuff.
– Back in 1996, California passed Proposition 215 that allowed marijuana patients to grow their own, provided it was just for them and a doctor recommended it. That right extended to the person looking after them aka their primary caregiver. The system was as leaky as a colander.
– In 2004, California tried to patch things up by introducing a marijuana patient-registration system under Senate Bill 420. It also recognized the right of marijuana patients to form cooperatives and cultivate collectively. The law did not define these terms clearly. The Department of Justice picked up the task of explaining them in terms of general business principles
– In August 2008, the California attorney general issued a set of guidelines aimed at managing the distribution of medical marijuana by collectives and cooperatives. The most important aspects from a business point of view are:
- Both are closed systems and may not trade with third parties
- Both are allowed to recover costs, but are not allowed to make a profit
- Storefront dispensaries must register as businesses and pay taxes
- Sales to non-members are not protected under state law
- Under federal law, selling medical marijuana is a criminal offence
According to these guidelines cooperatives and collectives may supply medical marijuana through a storefront to their members. Prices may only cover costs, because they may not make a profit.
Did you spot my title is ‘how to earn money’ and not ‘how to make money’? Hidden in the guidelines is an injunction that cooperatives and collectives must organize themselves. This does not prevent a member from being a manager and drawing a salary. Therein is the gap where there is money you can earn.
I began this article with an ‘offer’ to get you going with a McDonald’s franchise in Punjab, India. If you still wanted to, you could import beef and serve it legally to anyone who wanted it. I do not recommend you try that. You will have the locals up in arms.
This brings me to my final point. No storefront collective or cooperative has a chance of succeeding unless the locals want it to. The gap in the market where you can earn money from medical marijuana is restricted to supportive communities. Go elsewhere and law enforcement will respond to complaints and make your life a misery, although that might be about to change quite soon.