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Riding the Marijuana Money Machine

If there’s one caveat in business, it’s that selling people what they want is a quick route to financial success. The situation with marijuana legalization is no different. All the money that was going in the pockets of drug dealers for marijuana sales is up for grabs when the drug is legal. And entrepreneurs are chomping at the bit to get their slice of the pie.

What’s interesting is how big the pie really is. With illegal drugs, the money flow is easy to spot: addict to dealer, to dealer higher on the chain with a cut to whomever is making/growing the drugs and some for bribes and smuggling costs. Economically, that’s a nice tidy closed system. But with legalization, a bunch of new add-ons come into play that aren’t seen with illegal sales.

For example, the Boston Globe reported on Anne Holland, a businesswoman who published the Medical Marijuana Business Daily, not the kind of business you’d get with strictly illegal weed.

The news she publishes comes from all over the country and covers businesspeople linked to the newly accepted legal marijuana industry as well as associated enterprises. For every doctor and dispensary, there are spin-off jobs in accounting, legal services, marketing and many others. Hydroponic stores are booming, as some states require patients to grow their own cannabis, but along with these are ganga-preneurs selling special nutrients for the plants, organic pesticides and book after book with advice.

Holland, who employs seven people herself, is a small part of the estimated marijuana marketplace, and she gives a figure of $3 billion by 2014. Tapping into the cash has gained the attention of some serious players. Some of whom are currently looking to expand in Massachusetts after our law comes fully online.

Every clinic that issues marijuana recommendations will need a building, as will every dispensary and “head shop.” Every one will need staff, pay taxes and buy electricity. That’s a major change from a dealer selling weed out of his van.

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