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Is this what you call price fixing?

shaggyballs

Active member
Veteran
This would be a good one for Jhhnn, to give us the boots on the ground story.:tiphat:

Colorado Marijuana Growers At Odds Over Revised Production Rules

Colorado’s pot regulators are trying to make sure the state’s marijuana growers aren’t producing more pot than they can legally sell — a hedge against Colorado-grown pot ending up in states where it’s not legal. But a new set of marijuana production standards up for public review Tuesday sparked a lively debate and highlighted growing divisions between deep-pocketed industry veterans and people trying to get started in the legal weed business.

The production rules are being revised because Colorado once limited pot-growers to the number of medical marijuana patients they served. When the market opened to all adults over 21 in January, those production caps stayed in place as regulators feared a market flooded with more pot than they could regulate. But the result has been a pot market so limited that marijuana can sell for nearly $500 an ounce, far more expensive than black-market prices. Those prices don’t include taxes that can exceed 30 percent in some jurisdictions.

Colorado’s marijuana market is opening to new growers in October, prompting a need for production caps that aren’t tied to a medical-marijuana patient count. The state won’t necessarily produce more pot. Instead, commercial growers will need to prove they’re selling 85 percent of their inventory before getting permission to add plants.

Production caps are needed to “limit the possibility of either overproduction or underproduction of marijuana,” said Lewis Koski, Colorado’s marijuana enforcement director. Industry lobbyists helped craft the proposed rules and supported them in the Tuesday hearing. “Colorado is responsible for making sure marijuana doesn’t go out of state. That’s a big responsibility,” said Mike Elliott, head of the Marijuana Industry Group, which represents about 30 marijuana businesses. But smaller pot growers lined up to complain that the rules amount to state-sanctioned protections for industry veterans.

A major chafing point is a proposal to allow indoor warehouses to grow twice as many plants as greenhouses, 3,600 versus 1,800. Colorado’s medical pot growers were required to use energy-intense closed warehouses using grow lights. Now the state allows greenhouses and even limited outdoor growing, depending on local zoning. Many argued the state should be encouraging marijuana production that uses less energy. Large marijuana warehouses sometimes have five-figure monthly power bills.

“This is a plant. We need to take it away from being inside under lights,” said Greg Duran, who owns a greenhouse-consulting firm. Smaller growers also complained that the lower caps for greenhouses are simply intended to help older warehouse growers. “The only person who is going to benefit is either the power companies, people who are renting warehouses or people who have built huge growing warehouses,” said Thomas Killeen, a would-be greenhouse pot grower from Colorado Springs.

No decision was made Tuesday on the new production caps, which were adopted on a provisional basis in June. The decision ultimately will be made by Barbara Brohl, head of the state Department of Revenue, which regulates marijuana production. Brohl has no deadline to set final rules. The agency also heard public comments on new rules to give edible marijuana consumers additional guidance to avoid eating too much. Other rule changes in the package include lower licensing fees for marijuana growers and sellers, a reduction of about 20 percent caused by what regulators called a maturing regulatory system
 

RonSmooth

Member
Veteran
If the state does the regulating and they arent in competition with growers, its not price fixing.

Limiting production drives costs up, increases illegal activity, reduces tax revenue. That would be a losing proposition for both parties.

Increasing production floods markets, drives costs down and creates an export economy. When it starts getting into other states and becomes a national story and gives the anti's ammunition. Makes the state politicians look bad and they hate that. Exporters will do well. That will bring in the professionals.
 

MJPassion

Observer
ICMag Donor
Veteran
As a side effect it does create an apparent artificial shortage which does indeed drive the prices up...

What's real ignorant, imo, is that med is sold for half of rec right over the same exact counters. (At least in Telluride)

What I see happening is out of state brokers coming to growers with more cash & no info given to the powers that be. No paperwork, other than green, means the world to a lot of folks.
 

shaggyballs

Active member
Veteran
Medical will soon go BYE BYE!
More money in taxing legal weed.
Medical will be pharmacy only!
No home growing..... it is too hard to tax!
Time will tell.
The writing is on the wall......can you read it???
shag
 

MJPassion

Observer
ICMag Donor
Veteran
The distinction between med & rec is beyond stupid, imo.

The writing is indeed on the wall. It's there, for all that aren't too blinded by illusions of their own grandeur, to see.

I'm not so sure the med systems will disapper. Those greedy pricks, with med shops, that are opposing legalization know exactly what they're doing.

I honestly think that this "legalization" effort is nothing more than a grab for a more complete control of this plant. By legalizing, we now have all these stupid DUID laws to deal with. These laws only further the erosion of our supposedly inalienable Rights to Life, Liberty & the pursuit of Happiness.
 

shaggyballs

Active member
Veteran
The distinction between med & rec is beyond stupid, imo.

The writing is indeed on the wall. It's there, for all that aren't too blinded by illusions of their own grandeur, to see.

I'm not so sure the med systems will disapper. Those greedy pricks, with med shops, that are opposing legalization know exactly what they're doing.

I honestly think that this "legalization" effort is nothing more than a grab for a more complete control of this plant. By legalizing, we now have all these stupid DUID laws to deal with. These laws only further the erosion of our supposedly inalienable Rights to Life, Liberty & the pursuit of Happiness.

Some see it clear....some not so much?
:smoke out:
shag
 

Dankstang

Member
Medical will soon go BYE BYE!
More money in taxing legal weed.
Medical will be pharmacy only!
No home growing..... it is too hard to tax!
Time will tell.
The writing is on the wall......can you read it???
shag

I see that happening in Oregon real soon with the recrational bill passing this November

Like the great DHF says......adapt or perish:ying:
 

BigBozat

Member
If the state does the regulating and they arent in competition with growers, its not price fixing.

Limiting production drives costs up, increases illegal activity, reduces tax revenue. That would be a losing proposition for both parties.

Increasing production floods markets, drives costs down and creates an export economy. When it starts getting into other states and becomes a national story and gives the anti's ammunition. Makes the state politicians look bad and they hate that. Exporters will do well. That will bring in the professionals.

Limiting production to such an extent that price remains sufficiently high to encourage black market is ultimately self-defeating (but maybe that's what Big Brother's game is, and the existing producers who are conspiring with the state out of typical crony capitalist reflex are just too stupid/greedy to recognize it?)

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."
- Adam Smith, Wealth of Nations, Chapter X, Part II, p. 152.


Allowing unfettered production to the point of creating an export economy [also black market, as crossing state lines are one of the big nonos that'll bring feds down hard on the whole experiment] is also self-defeating...

The State has a delicate balancing act here... remind anyone of old Soviet-style central-planning?

I would think it would be much less of a headache to just open it up to competitive market forces to determine price & production level (fwiw, I'm no free market fundamentalist, but don't see how a bureaucrat [much less a Revenue agent] can realistically determine the right price/production level), and enforce prudentially via regs, bills of lading, audit trails, inspections, etc. -plus- diverting some of the tax revenue to stepped-up interdiction of cross-border trafficking.
 

MJPassion

Observer
ICMag Donor
Veteran
The State is The Problem!

There are to many uninterested parties creating a stake in the game where they should be completely un involved. Namely the tax collectors that would otherwise be unemployed without these bull shit laws in place.

If this plant were truly legalized, there would be zero money in the game other than possibly a few well known legit as tomato seed companies & botiques to serve those that choose to patronize them.
 

BigBozat

Member
The State is The Problem!

There are to many uninterested parties creating a stake in the game where they should be completely un involved. Namely the tax collectors that would otherwise be unemployed without these bull shit laws in place.

If this plant were truly legalized, there would be zero money in the game other than possibly a few well known legit as tomato seed companies & botiques to serve those that choose to patronize them.


Well, the State isn't the only problem...

Don't absolve the existing industry oligarchy who are acting as a cartel protecting what they [short-sightedly] perceive as their self-interest...

If there's no State to guarantee to the Feds that cross-border black market activity is minimized (or at least the perception they're trying earnestly), there's no legal rec market at all... the price of civilization and all that...
 

Jhhnn

Active member
Veteran
It's an interesting problem, in no small part because of the upcoming changes. The fact that retailers won't be required to grow their own product at all changes everything, as does legal greenhouse growing.

If I were a commercial warehouse grower, greenhouse growers would scare the shit out of me- my power bill alone would bring that on. The only compensating factor would be the upfront costs of building greenhouses vs leasing existing warehouse space. Over a period of years, greenhouse growers have a huge advantage once they recoup upfront investment costs. As of yesterday, anybody who's legit can get city/county approval can get state licensing. The way I see it, if you don't have pockets deep enough to hold out in a storm, in an extremely competitive market for growers, you'll be going down.

The rules have been finalized in a victory for greenhouse growers-

http://www.thecannabist.co/2014/09/29/colorado-drops-greenhouse-plant-count-limit/20426/

And there's no federal bankruptcy protection for marijuana businesses, either-

http://www.denverpost.com/news/ci_2...ruptcy-protection-colorado-marijuana-business

I really don't see any issues with the 85% rule- If you can't sell what you grow, why the Hell would you want to grow more?

Anybody who wants to keep up with the CO pot scene probably wants to subscribe-

http://www.thecannabist.co/
 

BigBozat

Member
... If I were a commercial warehouse grower, greenhouse growers would scare the shit out of me- my power bill alone would bring that on... The way I see it, if you don't have pockets deep enough to hold out in a storm, in an extremely competitive market for growers, you'll be going down.

The rules have been finalized in a victory for greenhouse growers...

Ne'er truer words were e'er spoke...

Frankly, deep pockets won't be enough to allow them to hold on long-term if they cling to a purely indoor/under artif lighting operation...
 

Jhhnn

Active member
Veteran
Ne'er truer words were e'er spoke...

Frankly, deep pockets won't be enough to allow them to hold on long-term if they cling to a purely indoor/under artif lighting operation...

I was thinking in terms of deep pockets for any of them, indoor and greenhouse. I suspect that the market will get pretty rough & tumble once new growers come online. We haven't found it yet, but there's a limit to how much cannabis can be sold in our limited market. When we get there, only the strong will survive.

The retail side of pot in CO is structured very differently than the med side. That's by design. The fudge factors are a lot narrower, the controls on the growing end a lot tighter. Obviously, some will try to game the system, ship out of state in quantity to higher priced markets. There's been a large drama about that slowly unfolding here in CO-

https://www.icmag.com/ic/showthread.php?t=293949

I'm just watching from the sidelines, having no involvement in commercial cannabis whatsoever. It is fascinating, however.
 
All fascinating, sad & exciting at the same time. I worked essentially managing two largish grows, 4-500plants each, for a year in Colorado Springs.
As I was only the "grow guy", I was excluded by the rather sketchy " "pottapreuner" owners from the many ruthless & undoubtedly creative business practices in which they participated.
The many interesting & thought-provoking posts here reminded me of the rough & tumble of it all out Colorado way; endless work hours. Indoors. Loud, bright, potentially dangerous. None of this mattered.
As stated by others here, the veteran tough guys with deep pockets have dominated the "medical" large indoor grows since at least my time out there, from 2011-12.
Even then, I witnessed several good, honest and knowledgeable growers/dispensers fall under the wheels of the tough and moneyed in the local market.
The growers without the funds to meet the ever changing and expensive license/regulatory demands simply became exhausted & broke. It was sad to see noble souls fail where the canny & greedy thrived.
Indeed, the market still looks mighty competitive, and once greenhouse & outdoor takes off, the warehouse guys, no matter how tough and hard, will be beat. However, if I know my former leaders, THEY already have or are building both greenhouses and secluded outdoor prime spots.
The gentlemen who employed me were already searching far and wide for such opportunities in various parts of the state back in 2012.
And as a final thought, I agree with someone here who rightly observed that once cannabis is legal in the several states, Colorado product will be greatly reduced in stature and outside demand. Cannabis, especially fine crops of rarities,etc.will truly be "local".
People are growing top-shelf product in all the states as matters stand.
Let's all hope and work to benefit our people and local economies in these hard times.
I sincerely hope Colorado can strike a balance between those big guys, allow small businesses to develop reasonably, and just, well, calm down over this false gold fever. I know, hopeless...
 

FunkBomb

Power Armor rules
Veteran
As long as seeds and clones continue to change hands, consider this just entertainment. People getting worked up over the taxation and regulation need to stop being imbeciles.

Greed is one thing that will never change, just like the fact that cannabis has been continually cultivated for thousands of years.

If I was a venture capitalist my money would be on greenhouses.

-Funk
 

monsoon

Active member
A buncha folks are gonna fall flat on their faces. Too much weed, no room to move on price.

This is from another board. Wasn't aware the State had fixed the wholesale prices but if they have it shoots jhnnn's argument all to Hell that the more weed there is the cheaper it will get n the stores/etc.

"The problem with the price war argument is that the state has already set the minimum wholesale price at $1875.00 per pound..so unless you are willing to pay the exsise tax for the difference between what you sell it for below $1875/lb its all going to stay the same..the state doesn't want cheap weed out there because it screws up their tax scheme..so if giant indoor or outdoor production gets your wholesale unit cost down to $750-$1000 a pound, the state won't let you sell it for that anyways, thier going to get their 15% of $1875 minimum, no matter what."
 

BigBozat

Member
A buncha folks are gonna fall flat on their faces. Too much weed, no room to move on price.

This is from another board. Wasn't aware the State had fixed the wholesale prices but if they have it shoots jhnnn's argument all to Hell that the more weed there is the cheaper it will get n the stores/etc.

"The problem with the price war argument is that the state has already set the minimum wholesale price at $1875.00 per pound..so unless you are willing to pay the exsise tax for the difference between what you sell it for below $1875/lb its all going to stay the same..the state doesn't want cheap weed out there because it screws up their tax scheme..so if giant indoor or outdoor production gets your wholesale unit cost down to $750-$1000 a pound, the state won't let you sell it for that anyways, thier going to get their 15% of $1875 minimum, no matter what."

I'll have to dig up the specifics of CO's canna tax legislation/regs, but...

The State setting a minimum wholesale tax rate per pound is a different thing than setting an actual wholesale price floor... "if" is the key word in re: whether the State has really 'fixed' the wholesale price or is just setting a floor on the per pound tax...

If you think setting a min tax floor is the same thing as fixing the wholesale price and/or otherwise is sufficient to prevent prices from compressing - dramatically (eventually) - in a competitive market (even an imperfectly competitive/oligarchic one), then you need to revisit some basic micro econ theory (which, fwiw, has all sorts of holes in it, but is relevant enough to be applicable in this case)...
 

Jhhnn

Active member
Veteran
A buncha folks are gonna fall flat on their faces. Too much weed, no room to move on price.

This is from another board. Wasn't aware the State had fixed the wholesale prices but if they have it shoots jhnnn's argument all to Hell that the more weed there is the cheaper it will get n the stores/etc.

"The problem with the price war argument is that the state has already set the minimum wholesale price at $1875.00 per pound..so unless you are willing to pay the exsise tax for the difference between what you sell it for below $1875/lb its all going to stay the same..the state doesn't want cheap weed out there because it screws up their tax scheme..so if giant indoor or outdoor production gets your wholesale unit cost down to $750-$1000 a pound, the state won't let you sell it for that anyways, thier going to get their 15% of $1875 minimum, no matter what."

That figure was set to prevailing prices at the time, arrived at through grower questionnaires. If the average wholesale price moves down, they've said they'll adjust it accordingly.
 

BigBozat

Member
Thanks!

Thanks!

That figure was set to prevailing prices at the time, arrived at through grower questionnaires. If the average wholesale price moves down, they've said they'll adjust it accordingly.

Just the kind of thing I wanted to know... ty!
 

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