Pubdate: Sun, 11 Nov 2007
Source: Missoulian (MT)
Copyright: 2007 Missoulian
Note: Only prints letters from within its print circulation area
Author: Michael Jamison


WHITEFISH - For years, backpacks crammed with cash have slipped north 
into Canada, followed closely by hockey bags packed with premium 
marijuana skating south into Montana.

A favorable exchange rate (not long ago, one American dollar bought 
one and a half Canadian dollars) made the smuggling profitable, and 
thus popular.

But last month, for the first time in more than 30 years, the two 
currencies were at par, matched in value, and today a Canadian dollar 
buys $1.10 U.S.

The financial tables have turned, and global economics have done what 
U.S. law enforcement could not: Capitalism has stopped the smugglers 
in their tracks.

Call it Marijuanomics 101.

America borrows itself deep into the hole, ratchets up its trade 
deficits, buries itself beneath subprime mortgage debt, devalues its 
dollar with interest-rate cuts, and the currency plunges.

Meanwhile, Canada's economy booms on oil, foreign investors turn 
north for stability, and the "Loonie" - Canada's dollar, named for 
the bird on the coin - hits a 50-year high.

Suddenly, it's far more expensive to buy Canadian exports, legal or 
otherwise, and smuggling profits disappear.

"It's very simple," said Stephen Easton, professor of economics at 
Simon Fraser University in Vancouver, B.C. "Canadian marijuana 
production costs are met in Canadian dollars, and those are worth more now."

Previously, he said, pot growers could produce a pound of potent 
"B.C. bud" for about $2,000 Canadian and, with the exchange rate, 
smugglers buying with U.S. currency could sell it for a hefty profit 
south of the border. In those days, an American dollar in Canada was 
like a 50 percent discount card, and there's nothing like a wholesale 
discount to bolster retail profits.

Production costs remain in the range of $2,000 Canadian, Easton said. 
But with the currencies at par, the profit margin is completely gone, 
unless Montanans are willing to pay 50 percent more for the prime 
northern bud. A smuggler's risks and transport costs are no longer 
offset by profit.

"The upshot is that the Canadian marijuana is now less competitive 
against marijuana grown elsewhere," Easton said. "This is a 
cost-driven business. With exports no longer viable, the British 
Columbia marijuana industry has certainly taken a hit, so to speak."

As has green-bud availability for Big Sky pot smokers. Although 
Canadian pot only accounts for perhaps 3 percent of all marijuana in 
the American market, it commands a strong presence in border states 
such as Montana.

"Sure, I've known people who have brought it down and made a pretty 
good living," said Bradford Moore, who owns the Heads Up pipe shop 
north of Kalispell. "I won't deny it. They'd go up there, buy it on 
the Canadian dollar, bring it back and make a nice profit. Let's be 
honest - that Canadian border is wide open."

As in: 5,500 miles of border land, much of it rugged and remote, and 
perhaps 1,000 agents sharing patrol duties.

These days, though, hardly any Canadian-grown marijuana crosses the 
border, because it just doesn't pay.

And Easton predicts things will get worse before they get better for 
those on both sides of the illegal industry, because without exports, 
Canada's pot crop will swamp the domestic market and prices there 
will plummet. (One British Columbia grower predicts "a great glut of 
pot" due to the loss of export markets.)

That's a very big deal for a province that, unofficially at least, 
counts marijuana exports as a major economic contributor. Back in 
2000, Easton and his university colleagues published a study he says 
estimated the annual market value of British Columbia's pot at around 
$5 billion, with perhaps 90 percent of the crop shipped south into the U.S.

"It's huge," he said. "It's a very large player, right up there with 
our traditional industries."

Marijuana is illegal in Canada, but is widely tolerated and rarely 
prosecuted with the vigor American law enforcement musters. From 
Quebec to British Columbia, large operations and small have become 
known for producing premium pot, carefully cloned for the best 
genetics and then grown under powerful lights, fed carbon dioxide and 
watered with special nutrient blends in hydroponic gardens.

"This is not our parents' Mexican barnyard weed," said Alan 
Middlemiss. "This is pedigreed."

Middlemiss owns the Holy Smoke Culture Shop and Psyche-Deli in 
Nelson, B.C., and he knows a bit about quality marijuana. The fact 
is, he said, much has been made of the potent B.C. bud, "but it's a 
farce. It's no better than any bud that's been cured and finished properly."

(Bud refers to the sticky flower bud on female marijuana plants, 
which contains high amounts of delta-9 tetrahydrocannabinol, or THC, 
the chemistry that makes stoners stoned.)

"Everybody grows it," he said. "But it's called B.C. bud, so up here 
in B.C., we get the baggage. We get the heat."

When DEA agents - Middlemiss calls them "ganja spies" - want to crack 
down somewhere, they often choose British Columbia, even though 
similar plants are grown throughout the United States.

The province's big-time growers, the ones with the big-time smuggling 
operations, "have been killing it for the rest of us mom-and-pop 
growers," he said.

That the spotlight is glaring on Middlemiss' neighborhood was proved 
back in 2000, when Time magazine announced the "world's best pot now 
comes from Vancouver."

That these latest economic changes also have caught international 
attention was proved last month, on Oct. 4, when the business-news 
portion of National Public Radio's "Morning Edition" broke the story 
that Canadian pot dealers were suffering from the loss of their 
export business.

"Our last word in business today is 'skunk bud,' " the reporter said 
in introducing the piece.

Middlemiss, for one, is glad to see the Canadian export business dry 
up. He hopes it will "take some of the greed out of the business," 
leaving smaller growers to water and tend and smoke without the hassles.

Because although Canada has not proved strong on prosecutions in 
recent years - Vancouver cafes offer smoking areas, and tourists can 
buy pot in paraphernalia shops - busts do occur.

Middlemiss lives in Nelson, B.C., a town that enjoys top ranking for 
pot tolerance at, a Web site billing itself as "a 
travelers' guide for getting high." They say pot in Nelson is 
"virtually legal," and note that "public smoking is more or less OK 
if you're not dumb about it."

And yet Middlemiss can tell you all about hassles with authorities, 
hassles he blames on the myth of B.C. bud and the infamy of large exporters.

"We have a motto around here, and it's called Canadian pot for 
Canadian lungs," Middlemiss said. "We don't need the DEA blowback. 
We've got DEA helicopters over our gardens, and all this DEA money 
out of Washington being spent up in Vancouver. It's nuts."

Also up in Vancouver is Marc Emery, the so-called "Prince of Pot," a 
Canadian who for years made his living selling mail-order pot seeds. 
He's also head of the political Marijuana Party, and runs Cannabis 
Culture magazine. To Canadian officials, he's a businessman. To U.S. 
law enforcement, he's a fugitive for selling seeds across the border.

Emery, unlike Easton and Middlemiss, believes Canada's booming oil 
fields have pumped enough dollars into enough pockets that the 
domestic demand can, for now, absorb the homegrown pot supply, 
thereby keeping prices high despite the lost export market.

"We have a very strong economy here," Emery said. "It's just like a 
bull running through a china shop - this economy is on the run."

But whether Canada has enough smokers to puff up this season's entire 
crop - it's harvest time in Nelson right now - all agree on one 
thing: Exports have ceased, Montana is dry, and with California 
growers located so far away, the stage is set for a homegrown bonanza 
under the Big Sky.

"At this point, you might as well grow it locally," said Moore, at 
Kalispell's Heads Up. "It's not worth the risk to smuggle it down 
anymore, so people will start their own operations. It's simple 
supply-and-demand economics."

During the last economic recession, local busts of grow operations 
went way up, he said, as people turned to pot to pay bills, meet 
mortgage payments and feed the family.

"What's a better way of doing that than plugging in a light?" Moore said.

"Even in the good times," he said, "people around here can't afford 
to buy a house. If the economy takes a dive, well, it's always easy 
to grow your own."

According to Middlemiss, there's a renaissance of sorts in new 
technology for small, compact, low-profile homegrown operations.

Emery likewise looks for the signs of economic fallout not on Wall 
Street but on Main Street, where the pot changes hands every day.

The signs, he said, are everywhere. Three years ago, at least one 
person was caught smuggling marijuana south into the U.S. almost 
every day, he said. Now, whole months go by without a substantial border bust.

But don't forget the struggling peso, which down on the U.S.-Mexico 
border may soon be helping to fill the B.C. bud gap - albeit without 
the pedigree.

"They're all about quantity down there," Middlemiss said. "We're 
about the quality."
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MAP posted-by: Keith Brilhart