July 30, 2009 – Stratford, Ontario, Canada – Private-sector funding for establishing hemp-processing factories may be a hard sell at the moment, but Gordon Scheifele is undaunted in his passion for developing the enormous potential for hemp.

Earlier this week on a farm just east of Tavistock, Mr. Scheifele was showing a group of 16 mostly student workers how to distinguish male and female buds on hemp plants within a 10-acre seed crop.

Plants showing yellowish male buds, he explained, were to be pulled — a task known as roguing. The plants with female buds, which will develop into seeds that can be certified for resale, were to be left alone to grow to maturity.

Mr. Scheifele spared few details in explaining to the young workers — area students ranging from Grade 9 level to first-year university — the potential that industrial hemp holds for the future of farming and manufacturing.

The list includes building and insulation materials for houses, material for garment and bags, a substitute for plastic in the automotive industry, an antiseptic and absorbent bedding for horses or other livestock.

That’s apart from the edible seeds that are rich in essential fatty acids and the seed oil that can be used in the making of non-dairy cheese and yogurt.

The immediate task at the farm — which is one of several in the Stratford-Tavistock-New Hamburg area with a total footprint of about 85 acres — is to produce “certified seeds” that farmers can plant to develop their own crops for industrial use.

The crop is monitored by the Canadian Food Inspection Agency and must meet a high standard of purity. Industrial hemp approved for cultivation contains only small quantities of the psychoactive drug delta-9 tetrahydrocannabinol (THC) that is contained in marijuana. Approved hemp contains less than 0.3 per cent THC compared to 10 to 30 per cent in marijuana.

A hemp researcher and the secretary-treasurer of the Ontario Hemp Alliance, Mr. Scheifele has been extolling the value of hemp for more than a dozen years.

Still, he acknowledges that even 11 years after the Canadian government removed it from a prohibited list (because of its genetic association with marijuana) development of a hemp industry remains a challenge.

“It’s globally revolutionary but it doesn’t happen overnight,” he said. Ontario processing plants — one in Delaware and one in Stirling — that were funded by the provincial and federal governments more than a year ago are apparently still trying to line up private sector funding.

Ontario production that was up to 2,000 acres in 1998-99, when the crop became legal, is currently down to 300-400 acres, said Mr. Scheifele.

Despite the reduction, Mr. Scheifele is optimistic.

“It’s been very difficult but it’s coming,” he said, referring to efforts to produce enough product to meet industrial demand while at the same time developing processing plants that will provide a market for Ontario-grown hemp.

Stonehedge Bio-Resources Inc., based in Stirling Ontario, planned to open its Hempcrete plant this year to produce a building material similar to concrete that incorporates hemp fibre.

The company expected to produce some $17 million annually in hemp fibre, wood-like chips, pellets, matting and seed products.

Stemergy in Delaware, formerly Hempline Inc., operates a large research-and-development facility at Delaware Ontario and since 1998 has created technology and expertise for extracting and refining the fibres in stem fibre plants.

Company officials could not be reached for comment.

The Ontario Hemp Alliance is holding its third annual hemp maze and field day Aug. 15 and is promising demonstrations, vendors and food. By DONAL O’CONNOR. Source.

July 30, 2009 – California voters may soon get a chance to weigh in on whether marijuana should be legalized and taxed by the state. If enacted, this may help the state’s budget by providing revenue from a brand new source, while also freeing up money that previously went to enforcement efforts against marijuana growing. Of course, marijuana would still be illegal under federal law, but this may be a turning point in the legalization movement — the point where politicians desperate for tax revenues see dollar signs instead of prison bars when looking at the cannabis plant.

And make no mistake — this is not medical marijuana we are talking about. From the wire service report:

A proposed ballot measure filed with the California attorney general’s office would allow adults 21 and over to possess up to an ounce of pot. Homeowners could grow marijuana for personal use on garden plots up to 25 square feet.

Now, 25 square feet sounds like a lot, but it’s really only a plot five feet by five feet. Assumably, this was written into the ballot measure so marijuana (at least initially) wouldn’t be sown by agribusinesses in 1,000-acre fields. But even with the land-use restriction, the initiative is remarkable for the lack of other restrictions. No mention is made of “medical” or “medicine” or any of that — just “adults.”

There are even two ballot measures to choose from. The second one is even less restrictive:

The Tax, Regulate and Control Cannabis Act of 2010 would set no specific limits on the amount of pot adults could possess or grow for personal use. The measure would repeal all local and state marijuana laws and clear the criminal record of anyone convicted of a pot-related offense.

Bet that would save a few dollars on prisons. And even if these ballot measures fail, state legislators are introducing bills to do exactly the same thing. So, while it should not in any way be seen as inevitable, it now appears possible that California may soon legalize and tax marijuana, used for recreational purposes.

While the concept of taxing marijuana is a new one for most people to consider, it actually has a long history. The very first federal law dealing with (pun intended) marijuana was the Marihuana Tax Act of 1937. Earlier laws outlawing “narcotics” had left out marijuana (or, in the spelling more common at the time, “marihuana”), so this was a more specific law dealing only with cannabis (and hemp). It ostensibly levied a tax on marijuana, which was widely used in medical products of the day. The tax was pretty low (the base rate for a doctor was one dollar for a tax stamp, per year), but the penalties for not paying the tax were the real purpose of the law. The law did not make marijuana illegal, so what the feds would clap you in prison for was not ponying up the tax. This had to be softened during World War II, when hemp was necessary for military supplies (hemp ropes, before nylon became widespread) and the planting of hemp was actually encouraged by the federal government (as in the “Hemp for Victory” movie put out by the feds in 1942).

Later, in the 1950s, marijuana was flat-out made illegal at the federal level. And then, at the beginning of the 1970s, the Controlled Substances Act codified all illegal drugs, and superceded the 1937 Marihuana Tax Act.

But taxing illegal drugs, including marijuana, didn’t end there. The next iteration of taxing marijuana came as a result of individual states being annoyed at the federal government. I believe the first of these was Arizona, which (in the late 1970s and early 1980s) had to watch as the feds made a lot of money off the drug traffickers moving through their (border) state. In the 1980s, the big weapon used in the Drug War was property confiscation. So the federal Drug Enforcement Agency (DEA) would catch a semi truck full of bales of weed on an Arizona highway, and they would impound the truck. Later, they’d sell the truck in a government auction, and the DEA got to keep the money. Arizona was annoyed at being cut out of the profits, so they instituted a state tax on marijuana and other illegal drugs. This way, when the semi was auctioned, they could claim “unpaid taxes” on the cargo, and get their cut of the money raised. Many other states followed suit, and passed their own drug taxes for the same purpose — forcing the feds to share the spoils. They all sold (and some still sell) drug tax stamps for this purpose (Nebraska’s stamp unquestionably has the most creative design).

So, once again, the purpose of the tax was disingenuous. The states had no interest in making drugs legal, they just wanted a cut from any busts the feds made in their state. But now, for the first time, California seems to be seriously considering both legalization and taxation simultaneously — in other words, they are interested in the tax revenues themselves, rather than a back-door method of gaining windfall taxes from federal busts.

But I would caution the state lawmakers — and the people advocating for the new laws — to be conservative in estimating the revenue gained from these taxes. This is a by-product of the 100-year history of the Drug War itself. When you read in a newspaper that “$6 million worth of drugs captured” this dollar amount is often vastly overstated. And, even taking such estimates seriously, there’s a factor that most people don’t even take into consideration, which shouldn’t be ignored.

Say you want to estimate how much money California would make off a new marijuana tax. You come up with an estimate of how much pot is sold in the state (let’s call it $100 million, just for argument’s sake — since I have no idea what the actual figure is). You then estimate how much the market will grow, due to it now being legal. But then you’ve got to subtract anyone who grows their own at home, since they won’t be selling it to anyone (the tax is usually levied on point of sale, but I guess if it was a production tax they’d theoretically tax peoples’ back gardens as well). Finally, you come up with a figure.

But the big factor most people will miss is that the price of something which was previously illegal will go down if it is made legal. The price of moonshine during Prohibition was about ten times what hard alcohol sold for afterwards. Meaning, overnight, that “$100 million” market becomes “$10 million.” When something is illegal, most of the price is for the risk involved in producing it and getting it to the customer. Remove the risk, the price always drops. Always. Especially if a law passes without a “25 square foot” restriction, because then farmers out in California’s Central Valley will start growing massive amounts of marijuana (and as every economist knows, when the supply goes up, the price goes down).

So California should be careful when estimating what effect a (legal) marijuana tax would have on the state’s coffers. An easy way to avoid some of this problem would be to design the tax on “weight” rather than as a sales tax (percent of purchase price, in other words). Then the projections for anticipated revenue might be a little easier to make, because the price per ounce to the customer wouldn’t really matter, as the state would be guaranteed a certain dollar amount no matter how low it went.

A recent poll showed that 56% of California voters already approve of the concept of legalizing and taxing marijuana for personal, recreational use. Meaning that a ballot initiative has a fairly good chance of passing. I would just caution everyone to be realistic when making estimates as to how much tax revenue would be raised by doing so. California has such massive budget problems right now that a marijuana tax certainly couldn’t hurt the state’s cash flow. And, with the voters apparently ready to approve such a scheme, it looks entirely possible that it could happen. But overestimating the revenues expected could actually undermine the case for doing so. The advocates for legalization and taxation should be careful when drawing up their estimates, and keep their promises of tax revenue realistic, to better convince voters of the practicality of the idea. By Chris Weigant. Source.