An unregulated cannabis dispensary is already open for business in New York City, even though the state is still deciding what legal weed sales will look like. Here’s what it’s like inside.

Inside the Empire Cannabis Club on 8th Avenue in Manhattan, New York City, the first recreational cannabis dispensary in NYC.
The first recreational use cannabis dispensary in New York City, Empire Cannabis Clubs.

  • In September, a recreational cannabis “club” quietly opened in Manhattan.
  • The store appears to be operating in a legal gray area, as dispensary regulation has yet to be written.
  • New York’s office of cannabis management said, “those attempting to sell illegally must stop immediately.”

On a beautiful fall afternoon in New York City, one of Empire Cannabis Clubs’ owners stood out front on 8th Avenue and told anyone walking by the good news: “Recreational cannabis inside, folks! 18 and up! No medical card required!”

It was a somewhat brazen act for an already brazen business.

Even though recreational cannabis use was legalized on March 31 in New York State, there’s no fully legal way to purchase cannabis.

That isn’t stopping Empire Cannabis Clubs, which opened its doors in September as an unregulated recreational cannabis shop operating in the Big Apple.

Empire is “a full recreational shop with 30 different delta-9 THC strains of flower, distillate cartridges, and delta-9 THC edibles,” co-owner Jonathan Elfand told Insider.

A recent visit to the shop confirmed exactly that:

A photo of cannabis strains for sale at Empire Cannabis Clubs, in the shadow of a living cannabis plant.
Some of the many cannabis strains available at the Empire Cannabis Clubs storefront on 8th Avenue in Manhattan.

When I first entered the store, a host checked me in near the front door and scanned my driver’s license.

After that, I was ushered past the checkout area into a brief tour of the space.

A display case full of various edibles was first up, with everything from cannabis chocolate bars to THC-infused corn chips available for purchase in a variety of prices. A display case on the opposite wall showcased various vaping options: disposable half-gram cartridges and full-gram refill cartridges with varying prices and packaging.

Finally, we reached the big star of the show: two long display cases filled with little cubes containing a few buds each of what’s known in the dispensary world as “flower,” or more commonly called “weed.”

Cannabis buds in a magnification cube at Empire Cannabis Clubs on 8th Avenue in Manhattan, New York City.

The gentleman behind the counter was happy to talk through various strains, and even offered to open the containers so I could get a closer sniff.

A card accompanying each strain offered even more details, from how the cannabis was grown to what type of high to expect. I was able to talk through several strains with the employee and ask about pricing.

Customers could get quarter ounces of strains like Gorilla Glue and London Russian Cream for just shy of $100, with a $15 “membership fee” for the day (a $25 monthly pass is also offered).

Technically, Empire Cannabis Clubs says, customers are not buying any cannabis – they’re paying for the “acquisition and transfer” of the cannabis they’re being given as part of the membership. That’s how the company describes the transaction on its website, apparently as an attempt to get around the ban on sales of cannabis by unlicensed sellers.

A strain of cannabis named Gorilla Glue purchased at Empire Cannabis Clubs, the first recreational dispensary in Manhattan.
Packaging labels found at Empire Clubs indicates they are from California. The products weren’t necessarily from California, but there’s no regulated form of packaging yet for recreational cannabis sales in New York State.

Everything about the experience of visiting Empire Cannabis Clubs felt like going to any other legal dispensary – despite the fact that it appears to be operating in a kind of legal gray area.

Rather than calling itself a retail store, Empire Cannabis Clubs operates a “membership service in which the club will acquire cannabis products for its members,” according to the dispensary’s website. When you buy cannabis or various cannabis-based products, you’re paying for “the cost to facilitate the acquisition and transfer of said products,” the website says.

The company apparently sees this as a legal loophole in New York’s current limbo between legalization – which was signed into law in March – and the beginning of legal sales, which aren’t expected until late 2022 at the earliest, and more likely in early 2023.

It’s unclear whether that loophole argument would hold up in court, according to Benjamin Goldburd, a lawyer at the New York City firm Goldburd McCone LLP.

“In a situation like this, it’s decriminalized at the patron level,” Goldburd told Insider, meaning customers purchasing small quantities of what a dispensary is selling are unlikely to face criminal charges. “But at the business level? Especially due to the fact that this is now a moneymaking product for New York? I can’t imagine that they’re not going to try and enforce that that licensing is a requirement.”

In plain terms: Because Empire Cannabis Clubs hasn’t gone through the licensing process (which isn’t set up yet), and it’s not being formally taxed for the products it sells (which also hasn’t been set up yet), New York State could have a reason to pursue legal action.

And even though Empire Cannabis Clubs says customers are paying for membership, rather than paying for cannabis, that may not be a strong enough argument to hold up in court, Goldburd said.

Cannabis Capitol Hill
Few if any Capitol Hill offices require drug testing or ask staffers about their previous cannabis use. If anything, cannabis use on Capitol Hill appears to have gotten more pervasive as an increasing number of states legalize its use and as attitudes change.

Since the state has yet to issue licenses for recreational dispensaries, or to set up how taxation will work, or any other number of policies regarding the newly created adult-use cannabis market, it’s not clear if so-called “clubs” like Empire will face legal action from the city or the state.

One thing is clear: New York State’s Office of Cannabis Management believes any unlicensed sale of cannabis is illegal.

“The unlicensed sale of cannabis remains illegal in New York State and the state will work with its local partners to enforce the law,” a statement from the Office of Cannabis Management communications director Freeman Klopott provided to Insider said. “New York State is building a legal, regulated cannabis market that will ensure products are tested and safe for consumers. We encourage New Yorkers to not partake in illicit sales where products may not be safe, and those attempting to sell illegally must stop immediately. We will continue to work to ensure that New Yorkers have a pathway to sell legally in the new industry as we work to deliver economic justice.”

Empire, meanwhile, has plans to expand to at least two more Manhattan locations in the near future.

Got a tip? Contact Insider senior correspondent Ben Gilbert via email (bgilbert@insider.com), or Twitter DM (@realbengilbert). Use a non-work device to reach out. PR pitches by email only, please.

Read the original article on Business Insider

What will legal cannabis sales look like in New York City? Not even the biggest dispensary chain in the US knows.

People walk past the Weed World store on March 31, 2021, in Midtown New York
People walk past the Weed World store on March 31, 2021, in Midtown Manhattan, New York City. Despite the shop’s name, it doesn’t sell any products containing THC.

  • As of March 31, 2021, cannabis became legal in New York City.
  • It’s still unclear when legal sales of cannabis will begin in America’s biggest market.
  • “We don’t know…and not just on the timeline,” Curaleaf exec Patrik Jonsson told Insider.

Cannabis has been legal in New York City since the end of March, but there’s still no way to legally purchase it.

What is expected to be America’s largest cannabis market is still stuck in limbo as New York legislators hammer out the details.

When will consumers be able to walk into a store and buy cannabis?

“We don’t know, we don’t know,” Patrik Jonsson, northeast regional president at Curaleaf, told Insider. “And not just on the timeline, but also what we’re going to be allowed to do,” he said.

Curaleaf is among the top cannabis MSOs, or multi-state operators, in the United States, according to The Motley Fool. It has over 100 dispensaries in 23 states, including New York State where it operates several medical dispensaries.

Jonsson is responsible for overseeing Curaleaf’s business in Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York and Vermont. He said working on New York City right now is “kind of a moving target,” because it’s impossible to plan for the future without knowing what the regulations will be.

“We’re kind of hedging our bets on how big, how small, how quick,” Jonsson said. “‘Cause none of that is set in stone. We don’t know if we’re allowed to be in one location. Are we allowed two locations? Can it be three locations?”

People in line at Rocky Mountain Cannabis Store, a cannabis dispensary in Dinosaur, Colorado.
In Colorado, cannabis has been legal and regulated for sale in stores since January 2014.

Cannabis laws vary dramatically from state to state, and New York is in a unique position where two of the surrounding states (New Jersey and Connecticut) are concurrently writing their own regulation on adult cannabis use.

In New York, for instance, only existing medical cannabis producers – like Curaleaf – will be able to both cultivate and sell cannabis. New entrants to the recreational market will have to choose to either cultivate or sell, not both.

But without knowing what type of retail stores will be allowed, how many will be allowed, and how they’ll operate – to say nothing of not knowing when they’ll be able to open for business – potential retailers are being more careful before diving in.

“Obviously the prices are pretty steep in a place like Manhattan,” Jonsson said. “So, we’re looking for locations, but we’re also going to be strategic on how do we hold that location without knowing for sure if it’s a location we’re actually going to be able to use. That’s a game that all the current operators are looking at.”

Manhattan retail was hit particularly hard during the height of the COVID pandemic, with tourism and commuters simultaneously disappearing from major sections of midtown and downtown Manhattan. Chains like Starbucks closed dozens of stores, many small businesses shuttered for good, and some new entrants are using that as an opportunity to get a foothold in New York City.

It’s unclear if cannabis dispensaries will be able to take advantage of the current glut of open Manhattan retail space.

Jonsson said that Curaleaf is currently anticipating retail sales to open in New York starting in early 2023, but he’s hoping it’ll be sooner given Gov. Kathy Hochul’s recent fast-tracking initiative and subsequent council appointments.

When asked last week by Insider senior politics reporter Jake Lahut when retail cannabis sales will begin, Hochul declined to comment. In a follow up email, deputy communications director for economic development Jason Gough similarly declined to offer a timeline.

“We will continue to work expeditiously to bring this new industry to life safely,” Gough said.

Got a tip? Contact Insider senior correspondent Ben Gilbert via email (bgilbert@insider.com), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.

Read the original article on Business Insider

The behind-the-scenes story of Rootz Research

marijuana cannabis
Employees tend to medical cannabis plants at Pharmocann, an Israeli medical cannabis company in northern Israel.

Welcome to Insider Cannabis, our weekly newsletter where we’re bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.

Sign up here to get it in your inbox every week.

Hello everyone,

This week, the House Judiciary Committee passed the MORE Act, a bill that would federally decriminalize cannabis, on Thursday by a vote of 26-15, mostly along party lines.

In other news, Aurora Cannabis CEO Miguel Martin told us he thinks the cannabis industry and its investors are too focused on US recreational consumers and are missing a more profitable opportunity: medical marijuana.

“The fact that everyone is just so consumed by this idea that only rec cannabis matters, I think, is a fallacy,” Martin said in a recent interview. Aurora’s medical-cannabis business is a bright spot for the company. Medical sales increased 9% in the most recent quarter, while the company’s recreational sales tumbled 45%.

In other news, Insider’s cannabis team was at the Business of Cannabis conference in New York this week, where Jeremy moderated a panel on how the New York market would shape out as the industry begins to ramp up. We’ll be at a few others in the coming months, so feel free to say hello if you see us around.

– Jeremy Berke (@jfberke) & Yeji Jesse Lee (@jesse_yeji)

If you like what you read, share this newsletter with your colleagues, friends, boss, spouse, strangers on the internet, or whomever else would like a weekly dose of cannabis news.

Here’s what we wrote about this week:

Rootz Research claims it’s using insights from top Wharton professors to upend cannabis data. The real story is far more complicated.

The founder of Rootz Research told Insider he started the company with three Wharton professors. One of the professors told Insider the founder, Eric Spitz, had “grossly misrepresented” his role. The cannabis industry has its share of disingenuous founders and startup failures. Can Rootz chart a different path?

3 top VCs who’ve sunk the most cash into psychedelics say they prioritize data, deep expertise, and a clear market strategy when placing their bets

The top 3 VCs in the psychedelics space told Insider they’d seen hundreds of pitches from startups since early 2020. So we asked them two main questions: What makes a company stands out? What’s an automatic red flag?

A top psychedelics VC who’s evaluated 374 pitches shares the 2 red flags that turn him off every time

Sa’ad Shah, managing partner at the Noetic Fund, told Insider in a recent interview that he’s seen 374 different pitches from startups in the industry and that there are two major red flags he sees among companies in the space, which signal to him that he shouldn’t invest.

Aurora Cannabis is betting on medical marijuana, not the ‘fallacy’ of recreational pot. Here’s why.

Aurora Cannabis is doubling down on its medical business, CEO Miguel Martin told Insider. Aurora’s medical-cannabis business is a bright spot for the company. Medical sales increased 9% in the most recent quarter, while the company’s recreational sales tumbled 45%.

Executive moves

  • US cannabis company MariMed said on Monday that former Neptune Wellness executive Steve West would be joining the company as vice president of investor relations.
  • Cannabis tech company Flowhub announced on Wednesday that former Uber general manager Leandre Johns would be joining as chief operating officer.
  • Cannabis website Leafly said on Tuesday that finance and tech veteran Suresh Krishnaswamy would be joining the company as its new chief financial officer.
  • California-based cannabis company Glass House Brands announced on Wednesday that it had appointed finance and accounting veteran Mark Vendetti as its new chief financial officer.

Deals, launches, and IPOs

  • Trulieve closed its blockbuster deal with Harvest Health & Recreation. Trulieve also raised a $350 million private placement, at an 8% interest rate.
  • Psychedelics company Delix Therapeutics said on Monday that it had raised $70 million in a Series A round led by ARTIS Ventures, RA Capital Management, and OMX Ventures.
  • US cannabis company Jushi Holdings announced on Wednesday that it would be acquiring Nevada-based cannabis dispensary The Apothecarium.
  • Parallel, Beau Wrigley’s cannabis company, is no longer going public after the deal with Ceres Acquisition Corp, a SPAC, fell apart.
  • Former basketball star Chris Webber and his business partner Lavetta Willis are building out a $50 million cannabis facility in Detroit, reports The Detroit News.

Policy moves

  • The House Judiciary Committee passed The MORE Act, a bill that would federally decriminalize cannabis, on Thursday by a vote of 26-15, mostly along party lines.
  • US cannabis company Ascend Wellness Holdings said on Monday that it had reached its $1 million milestone in contributions to the Last Prisoner Project, a non-profit focused on advocacy for individuals with cannabis convictions.

Research and data

  • A new study in the journal Drug and Alcohol Dependence found that more cannabis stores led to more legal sales – without increasing the number of new users. “That’s about the best policymakers could have hoped for,” the study’s author, Brock University professor Michael Armstrong told Insider.
  • A new study in the Journal of the American Medical Association found that with legalization, Hispanic and White individuals increased their marijuana usage while Black individuals did not.
  • A new study from New Brunswick’s Research and Productivity Council found that illicit cannabis is more likely to contain contaminants like microbes and pesticides, and have inaccurate label claims when compared to legally purchased cannabis.
  • Cannabis-related arrests in the US saw a steep drop in 2020, according to new data from the US Federal Bureau of Investigation, which showed that arrest rates dropped 36% in 2020 compared to 2019. Read more at NORML.

Cannabis jobs

Earnings

  • Aurora Cannabis released its fiscal Q4 results on Monday, reporting C$54.8 million in revenue, and a net loss of C$134 million.

What we’re reading

Selling Marijuana on Tribal Lands, a Legal Gray Area (New York Times)

I tried a cannabis-friendly coworking space with smoking and a weed-infused menu. Here’s what it was like. (Insider)

Greener pastures: Marijuana jobs are becoming a refuge for retail and restaurant workers (The Washington Post)

Cannabis industry jobs are on the rise, fueled by the Great Resignation (Insider)

CBD drinks and edibles claiming to reduce anxiety and pain are mostly ‘pointless,’ according to a cannabis researcher (Insider)

Is It Ever OK to Get Stoned With a Client? And Other Questions as Pot Comes to Work (The Washington Post)

Read the original article on Business Insider

Cannabis industry jobs are on the rise, fueled by the Great Resignation

marijuana cannabis
A budtender weighs out marijuana for a customers at ShowGrow, a medical marijuana dispensary in downtown Los Angeles.

  • Retail workers are finding refuge as they move into marijuana-related jobs, The Washington Post first reported.
  • The legal cannabis sector is currently one of the fastest-growing industries in the US.
  • Millions of people across the US are quitting their jobs in the Great Resignation, fueled by COVID-19 pandemic stresses.
  • See more stories on Insider’s business page.

As more Americans choose to leave their current jobs amid the COVID-19 pandemic, the question remains: where are they going? One answer is the booming legal marijuana industry.

The cannabis industry has become a place of refuge for frustrated and under-appreciated retail workers who left their jobs, the Washington Post reported. Despite unemployment and a temporary economic recession in 2020 fueled by the pandemic, resulting in one of the worst years for US economic growth in 80 years, employment in the industry grew by 32%. The industry added over 77,000 jobs across the sector, according to a 2021 Leafly Jobs report. There are now 321,000 American working in the legal cannabis industry, more than those who are EMTs and paramedics, aircraft pilots, or electrical engineers, the report said.

“I am so much happier,” a cannabis dispensary employee Jason Zvokel told The Washington Post. “For the first time in years, I’m not miserable when I come home from work.”

Zvokel left his job as a Walgreens pharmacist, which he held for over twenty years, according to the Post, taking on a job at a dispensary where his pay is 5% lower, but hours and work expectations are more manageable. Between administering dozens of coronavirus vaccines daily, the pressures of meeting high sales and prescription goals, and the lack of overtime pay or raises, Zvokel felt inclined to quit.

“People were quitting left and right and I was being asked to do a lot more than I physically could,” Zvokel added.

Similar stresses are echoed throughout different industries, like retail, food service, and healthcare – fueling the Great Resignation, where US workers are quitting their jobs in droves for better pay, work-life balance, and feeling valued at work. Almost 70% of workers in the US considered changing their careers for more job flexibility, even at the expense of lower pay. Some underqualified workers are outright “ghosting” their employers without notice, leading to a sharp decline in worker retention, especially in the restaurant industry.

Mario Porter, the co-owner of a Michigan-based dispensary, Hempire Collective, told The Washington Post he was able to expand his dispensary staff in 2021. He received hundreds of applications, many of which came from retail workers who left their jobs during the pandemic.

Like jobs in the retail sector, most entry-level jobs in the cannabis industry are minimum wage, but there are more opportunities to move up quickly, the Post reported. Lucrative managerial and executive jobs in the industry can rake in 6-figure salaries.

But as the industry’s workforce grows, cannabis worker’s rights groups have pushed to establish firm guardrails to avoid worker’s issues prevalent in industries like retail.

“Without proper structures and safeguards in place at the outset, cannabis could end up looking like many other U.S. industries,” according to a report from the Economic Policy Institute. These industries are dominated by “strictly profit-maximizing firms” that treat find ways to keep wages low and undermine worker power, the report continued.

Though medical marijuana is now legal in 37 states, and 18 states and Washington DC have legalized recreational marijuana for all adults, the substance is still prohibited on the federal level.

In June, Democratic senators proposed sweeping reforms to legalize cannabis. The legal cannabis industry is expected to shoot to $100 billion over the next eight years according to analysts at Cowen investment bank, given it becomes legal in the coming years.

Read the original article on Business Insider

Civilized founders pushed out

GettyImages 1178310599
As the legal cannabis market grows in the US, there are many ways for investors to gain exposure to the industry.

Welcome to Insider Cannabis, our weekly newsletter where we’re bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.

Sign up here to get it in your inbox every week.

Hello everyone,

In some respects, the fight over how to legalize cannabis is a microcosm of larger social debates, pitting social justice activists against more free-market-oriented folks.

Take the debate this week over the SAFE Banking Act.

The cannabis banking bill passed the House for the fifth time last night. This go-around, language from the bill – which would open up the banking system to cannabis companies and allow consumers to pay with credit cards – was shoehorned into the National Defense Authorization Act.

The NDAA usually passes the Senate without much fanfare. But Senate Majority Leader Chuck Schumer, Sen. Ron Wyden, and Sen. Cory Booker have their own more comprehensive cannabis bill, The Cannabis Opportunity and Administration Act. Booker has said that he opposes adding cannabis banking protections to the Senate’s version of the NDAA ahead of broader criminal justice reforms.

It remains to be seen whether SAFE will be included in the Senate’s version of the NDAA. Many cannabis activists say that the SAFE Act would only help banks and large cannabis companies make more money in the industry. They’d rather see full-scale legalization or at least record expungement and other criminal and social justice measures passed first.

But supporters of the SAFE Act say it’s a necessary tool to help protect and grow small businesses since many social equity license holders are unable to get loans or open lines of credit to start their businesses, and that dealing in all cash is a safety risk.

In other news, Amazon doubled down on its support for cannabis legalization and said it was lobbying the federal government for legalization. Aurora Cannabis closed a major facility and cut around 8% of its workforce. The company delayed its earnings until next week. Tilray closed its Nanaimo, British Columbia facility as well.

California will be adding a cannabis competition to its state fair, where farmers will show off their best buds.

I’ll be moderating a panel about the New York cannabis opportunity at the Prohibition Partners x Business of Cannabis conference in New York City on Wednesday, September 29. I’m looking forward to seeing many of you in person, and let me know if you’ll be around.

– Jeremy Berke (@jfberke)

If you like what you read, share this newsletter with your colleagues, friends, boss, spouse, strangers on the internet, or whomever else would like a weekly dose of cannabis news.

Here’s what we wrote about this week:

Investors are pushing out the founders of troubled cannabis startup Civilized. We got ahold of the full memo.

Investors are pushing Civilized founders Derek and Terri Riedle out of the company, according to a memo circulated among investors on Monday and obtained by Insider. The investors say the founders, Derek and Terri Riedle, saddled the company with debt.

A startup accelerator that’s worked with J&J and L’Oréal is getting into psychedelics as the industry goes mainstream

A new accelerator program is targeting early-stage ancillary startups focused on psychedelics, in the latest sign that psychedelics are entering the mainstream and that funding dollars are trailing closely behind.

The House just passed cannabis reforms as part of a defense bill. Here’s what would change for businesses and their customers.

The US House of Representatives has passed the Secure and Fair Enforcement Banking Act, or SAFE Banking Act, yet again.

Lawmakers tucked the cannabis banking bill into the National Defense Authorization Act that passed lower chamber on Thursday. It’s not clear whether the Senate will include cannabis reforms in its version of the defense package once the upper chamber takes it up.

Executive moves

  • New York Governor Kathy Hochul on Wednesday announced two more appointees – Reuben R. McDaniel, III and Jessica Garcia – to the board of the Office of Cannabis Management, the regulatory body responsible for building out the adult-use cannabis industry in the state.

Deals, launches, and IPOs

  • Cannabis tech company Dispense said on Tuesday that it had raised a $2 million seed round led by NextView Ventures and Poseidon Asset Management.
  • Michigan-based cannabis company SKYMINT said on Tuesday that it raised $78 million and acquired 3Fifteen Cannabis. Investors in the round include Tropics LP, an affiliate of Sundial Growers’ JV SunStream Bancorp Inc., and Merida Capital Holdings.
  • Christine De La Rosa, the CEO of The People’s Ecosystem, is raising a $50 million fund to invest in BIPOC and women-led cannabis businesses.
  • Psychedelics company Delic Holdings Corp said on Monday it would acquire Ketamine Wellness Centers Inc, increasing its footprint to 12 clinic locations across the US, in a $5 million cash-and-stock deal.
  • Crain Communications is acquiring cannabis financial media site Green Market Report. The terms of the deal were not disclosed.
cannabis legalization
Marijuana activists hold up a 51-foot inflatable joint during a rally at the U.S. Capitol to call on Congress pass cannabis reform legislation on Tuesday, Oct. 8, 2019.

Policy moves

  • The House of Representatives on Thursday passed the SAFE Banking Act, a cannabis banking bill, as part of the National Defense Authorization Act. It’s not clear whether the Senate will include cannabis reforms in its version of the defense package once the upper chamber takes it up.
  • Italy is expected to hold a referendum on legalizing cannabis early next year after organizers gathered the 500,000 signatures within a week, reports Reuters.

Research and data

  • A new report from the nonprofit Economic Policy Institute found that unionized cannabis workers could make $8,690 more per year than non-unionized peers.
  • Psychedelics company Atai Life Sciences said on Tuesday that its platform company DemeRx has started its early-stage clinical trials of ibogaine to treat opioid use disorder.
  • Cannabis data firm BDSA says in a report that cannabis sales will hit $31 billion this year, a 41% increase over last year. By 2026, BDSA expects cannabis sales to exceed $62 billion.

Earnings

  • MedMen reported its Q4 and FY21 results on Thursday. The company reported $42 million in revenue and a net loss of $46 million in Q4. For the full year, the company reported $145 million in revenue and a net loss of $157.6 million.

What we’re reading

Why Amazon wants to make sure everyone knows it’s totally cool with smoking pot now (Insider)

Lawyers, race and money: Illinois’ messy weed experiment (Politico)

‘Millions of pounds’ of legal marijuana diverted to underground market, California lawsuit alleges (MJ Biz Daily)

Getting high before exercise is the secret to sticking with a fitness routine, some athletes say (Insider)

Illegal marijuana farms take West’s water in ‘blatant theft’ (Associated Press)

Marijuana banking sponsor discusses path through Senate after House approves reform for fifth time (Marijuana Moment)

Read the original article on Business Insider

Why Amazon wants to make sure everyone knows it’s totally cool with smoking pot now

Cannabis Capitol Hill
Amazon is relaxing cannabis testing for employees.

Amazon is actively lobbying the United States government to federally legalize cannabis, the company said on Tuesday morning.

The announcement is the latest volley in Amazon’s ongoing efforts to spur federal cannabis legalization in the United States, following an announcement back in June that it would no longer pre-screen employees for cannabis use.

Amazon has already spent at least $5 million on cannabis legalization lobbying, Insider’s Kimberly Leonard and Jeremy Berke previously reported.

So, why is Amazon so interested in legalizing weed in the US?

At least part of the answer has to do with the Amazon warehouses, known as fulfillment centers, that employ the vast majority of Amazon’s hourly workforce.

Amazon is running out of workers to hire

In its announcement on Tuesday, Amazon senior VP of human resources Beth Galetti directly attributed the company’s interest in cannabis legalization to hiring: “Eliminating pre-employment testing for cannabis allows us to expand our applicant pool,” she said.

Hourly employees had a turnover rate of about 150% every year, data reviewed by The Times indicated.

Of the over 350,000 workers Amazon hired between July and October 2020, many stayed with the company “just days or weeks,” the report said.

The problem is reportedly big enough that some Amazon execs worried they would run out of hirable Americans.

Relaxing marijuana testing is just one way Amazon has attempted to appeal to potential workers – and other corporations could soon follow suit.

“The fact that Amazon, one of the world’s leading companies, is moving forward with this stance will certainly put pressure on all major employers who are taking a slower approach,” J. Smoke Wallin, CEO of hemp manufacturing company Vertical Wellness, told Insider.

Public opinion around weed is changing

As many corporations faced labor shortages this summer, Amazon announced plans to raise pay for some workers and pay for college educations to recruit employees.

Appealing to marijuana users could lead to a wider pool of job applicants. Marijuana use among US workers increased by 16% between 2014 and 2019, according to a study by Quest Diagnostics.

Legal marijuana use has risen as more states and municipalities decriminalize cannabis use. Marijuana sales skyrocketed in 2020, increasing 46% year-over-year to a record $17.5 billion.

Though the tight labor market could explain why Amazon is currently fighting for marijuana legalization, many other corporations have relaxed drug testing due to shifts in public opinion around weed, said Paul Armentano, the deputy director of the NORML Foundation. NORML is a non-profit dedicated to educating the public about marijuana policy.

Drug screening has been declining in popularity for since the late 1990s, Armentano said. Off-the-job marijuana use has not led to increased workplace injuries, according to a 2020 report in the peer-reviewed journal Substance Use & Misuse.

“It is time for workplace policies to adapt to this new reality and to cease punishing employees for activities they engage in during their off-hours that pose no workplace safety threat,” Armentano said in a statement.

Read the original article on Business Insider

Amazon is lobbying the US government to make pot legal

amazon fulfillment
An Amazon shipping warehouse, which Amazon refers to as “fulfillment centers.”

  • Amazon is lobbying the US government to legalize cannabis, the company announced Tuesday.
  • The company ended pre-employment drug testing earlier this year and said it supports national legalization.
  • Amazon’s warehouse employees have a high turnover rate, and national legalization could help with hiring.
  • Visit the Business section of Insider for more stories.

Amazon is actively lobbying the United States government to federally legalize cannabis, the company announced on Tuesday morning.

“Given our previous support for legalizing cannabis at the federal level, as well as expunging certain criminal records and investing in impacted businesses and communities, Amazon recently announced our support for, and began actively lobbying on, the Marijuana Opportunity Reinvestment and Expungement Act of 2021 (MORE Act),” the company said. “We are also pleased to endorse the recently introduced Cannabis Administration and Opportunity Act.”

Both bills aim to remove cannabis from the federal list of “Schedule 1” drugs, which includes LSD and heroin, and to enable some level of national legalization.

Amazon first announced support for federal cannabis legalization back in June.

At the same time, Amazon consumer CEO Dave Clark said the company would no longer screen potential employees for cannabis use as a condition of hiring.

“In the past, like many employers, we’ve disqualified people from working at Amazon if they tested positive for marijuana use,” Clark said. “However, given where state laws are moving across the US, we’ve changed course.”

Amazon warehouse employees, which make up the majority of Amazon’s vast workforce, have a notoriously high turnover rate at the company: Around 150%, according to a New York Times report earlier this year. Hiring new employees to replace outgoing ones is a big enough problem that some Amazon executives worry the company will run out of hirable Americans.

Notably, Amazon said on Tuesday that part of the reason it’s pushing for legalization is to make hiring a bit easier.

“We’ve found that eliminating pre-employment testing for cannabis allows us to expand our applicant pool,” Amazon senior VP of human resources Beth Galetti said.

Amazon has already spent at least $5 million on lobbying efforts, according to records reviewed by Insider, alongside over 160 other groups that lobbied the government in favor of legal cannabis in the second quarter of 2021.

Got a tip? Contact Insider senior correspondent Ben Gilbert via email (bgilbert@insider.com), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.

Read the original article on Business Insider

Teen marijuana use stays flat

cannabis
Welcome to Insider Cannabis.

Welcome to Insider Cannabis, our weekly newsletter where we’re bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.

Sign up here to get it in your inbox every week.

Hello everyone,

It was a short week this week and dealmaking in the industry slowed to a crawl after a head-spinning August – but we’re not expecting the quiet to last long.

We’ve got a ton of good stories for you in the works. Until then, enjoy your weekends!

– Jeremy Berke (@jfberke) & Yeji Jesse Lee (@jesse_yeji)

If you like what you read, share this newsletter with your colleagues, friends, boss, spouse, strangers on the internet, or whomever else would like a weekly dose of cannabis news.

Deals, launches, and IPOs

  • Psychedelics company CaaMTech announced on Wednesday that it had raised a $22 million Series A funding round, led by the Noetic Fund, to advance its compounds into clinical trials.
  • Psychedelics company Journey Colab said on Tuesday that it had raised a $12 million Series A funding round.
  • Canadian cannabis company The Green Organic Dutchman said on Friday that it had received approval to list on the Canadian Securities Exchange.

Policy moves

  • New York Senate Majority Leader Andrea Stewart-Cousins on Thursday named former senator Jen Metzger as her pick to sit on the Cannabis Control Board, the regulatory body responsible for shaping New York’s adult-use program. On Wednesday, Assembly Speaker Carl Heastie tapped attorney Adam Perry as his choice, according to the Times Herald-Record.
  • Rodney Hood, the former chairman of the National Credit Union Administration, said federal legalization is inevitable and criticized Congress’s lack of action on cannabis banking reform, reports Marijuana Moment.
  • Italy is set to decriminalize marijuana for personal use, with the rules allowing for the cultivation of up to four marijuana plants at home, reports The Independent.

Research and data

  • A study in the Journal of the American Medical Association found little evidence that the legalization of either recreational or medical marijuana encourages teen use.
  • However, a report from the National Institute on Drug Abuse found that marijuana use among college students hit record highs during the pandemic, the highest mark since 1983. The report found that binge drinking declined among college students as well.

What we’re reading (and watching)

The cannabis industry is booming, but for many Black Americans the price of entry is steep (The Guardian)

Minorities struggle for headway in the legal weed business (PBS News Hour)

In the weeds: How cannabis businesses get around a web of online advertising barriers (Morning Brew)

Growers in the Emerald Triangle are Facing a Potential Extinction Event (High Times)

Cannabis researchers seek to unlock the healing power of pot (Wall Street Journal)

Legal woes of CEO’s spouse bring marijuana MSO Trulieve unwanted attention (MJ Biz Daily)

Read the original article on Business Insider

Why starting a marijuana business is so hard

  • Starting a cannabis company can take $1 million in startup capital to even get a license.
  • With weed still federally illegal, companies could face jail time if they don’t follow the rules.
  • But if they can play the game right, there’s lots of opportunity for success in a surging industry.
  • See more stories on Insider’s business page.

Following is a transcription of the video:

Narrator: Growing, harvesting, and selling weed legally is really hard in the US. From tracking to packaging, the laws are different in every state.

Adrian: There’s a lot of red tape that just doesn’t make sense.

Narrator: Licenses to start a farm can cost up to $80,000 alone.

Jeannette: The regulations are really part of what layers on those costs.

Narrator: If marijuana companies can get it right, there’s a lot of opportunity for success.

Jeremy: It can become over a $100 billion industry. That’s, like, approaching what the beer industry is.

Narrator: But if a business makes a mistake …

Jeremy: It can quickly slide from paying a fine to severe jail time under drug trafficking laws.

Narrator: We visited three marijuana companies across the US to see why the regulations are so tough to follow and how they’re keeping entire communities out of the industry. Marijuana with THC – or the stuff that gets you high – is now fully legal for medical use in 36 states and DC. Of those, 18 and DC have legalized it for recreational use. But it’s still illegal on the federal level. So every state has free rein on how to regulate it.

Nancy: That’s probably the most challenging thing about the regulations. There are many of them, and they differ state by state.

Narrator: And it all starts with the business license, the first barrier to the marijuana industry. Will and Adriana wanted to start a farm in California. But there, a license to grow can cost almost $80,000, with an $8,000 application fee. That’s a lot more than a liquor license in California, which can cost just over $15,000 max.

Jeremy: So basically, anyone who can afford to get a license, they can get one, which makes it very competitive.

Nancy: The competition for licenses becomes extremely fierce and very expensive.

Jeannette: Some states do things like, in addition to the fee, require you to have liquid capital of $250,000, for example. And who’s got $250,000 in liquid capital? Few, few people. That begins to immediately lock out whole communities.

Narrator: Will and Adriana couldn’t afford California’s cultivation license. So they decided to put down roots in Oregon. There, a license and application fee costs between $4,000 and $10,000. And the liquor license? $800. In both states, aspiring cannabis entrepreneurs also have to sign a lease on a property before they can apply for a license.

Jeremy: That is a property that you’re paying monthly rent on. It’s sitting there empty. You’re not making any money, but you know, your license application may not go through.

Adriana: We waited two years for a license.

Narrator: They got approved in 2020 and started their company, Magic Hour Cannabis, in Portland.

Will: These are so small.

Adriana: I know, it’s good for me.

Will: Does this look ridiculous?

Adriana: No.

Will: Nice and fitted.

Adriana: We finally waited these two years. We just waited four months for our plants to be ready to harvest, and were basically dwindling with no money. It was very scary. We didn’t know if we were going to go under before we even got up.

Narrator: So Will and Adriana applied for a grant through NuLeaf, a nonprofit that helps fund Black- and brown-owned cannabis companies.

Jeannette: Specifically to build intergenerational wealth for the communities most harmed by the war on drugs. Those two things come together, a high capital-intensive business, and then the lack of personal capital, personal wealth. And it’s a hard place to start for a Black founder in cannabis.

Will: We applied for the NuLeaf grant, and we were able to get $10,000, which honestly, for cannabis companies, especially grows, is not that much. It gave us little more time to sell. We started making sales and gaining momentum.

Narrator: But the expensive regulations don’t just stop at the license. In Oregon, the government requires farms to have seed-to-sale tracking.

Jeremy: This is basically an effort to reduce, or at least understand, the flow of cannabis into the illicit market.

Narrator: The state tracks plants using tags with barcodes.

Adriana: As you can see, all these metric tags here are made out of plastic. You can’t reuse them. The tag takes me hours on end. And then you have to physically go and loop them around each plant. They cost around 50 cents a pop, which is really expensive when you have 1,100 plants in your facility.

Narrator: They go on every plant when they’re young.

Will: This is considered the baby room.

Narrator: And the tags stay with the plants through harvest.

Will: These are even turning purple. So that’s one indicator that the plant is quote-unquote “finishing up.”

Adriana: We just come down here to the very bottom of the plant, chop it off, and then we’ll hang this up here. We have to individually weigh every single plant according to the tag number that we got. I’ll read him the tag – 05579 – Weigh this – 183 grams – and then go onto the next one. It’s a pretty tedious process, but for regulations, we have to do it.

Will: So we weigh it wet, we weigh it dry, and then we weigh the waste from each plant and enter that in. It’s making sure that every single part of the plant is accounted for. It’s a pound of that Gelato, baby.

Narrator: And then there’s a whole other set of regulations for turning marijuana into edibles. Based in Denver, Wana Brands is one of the top THC gummy makers in the country. It launched two years before Colorado legalized recreational marijuana.

Nancy: I like to say it was kind of the Wild West in Colorado back in 2010. There really were not a lot of regulations in place.

Narrator: That’s founder Nancy Whiteman. She’s expanded Wana into 11 different states. But remember, cannabis is federally illegal, so it cannot cross state lines.

Nancy: Which essentially really removes our ability to scale.

Narrator: So in every state it enters, Wana has to partner with licensed growers and manufacturers. Those partners grow and make the product locally using Wana’s recipes and brand name. Then the companies share the revenue.

Jeremy: The issue with that is they don’t have as much control over the supply chain as they might like. If, say, their grower in California is less high-quality than the grower in Colorado, what does that do to the brand? It’s sort of very hard to control that.

Narrator: In each new state it enters, Wana also has to follow different manufacturing and packaging laws. For one, the THC symbols stamped on the gummies come in all forms.

Nancy: In Colorado and several of our other states, has the pictures of fruit on it. Certain states have decided that looks too tempting for children, so you can’t have fruits. You can use color, but you can’t use fruit.

Jeremy: Different states will have different dosage requirements. In Oregon, one dose is 5 milligrams. In other states, one dose could be 10 milligrams.

Nancy: When you start having these variations in every single market, that’s where it becomes extremely costly.

Narrator: Those regulations follow all the way to the last step: delivery.

Adrian: Hey, hey. Thanks so much. You have a good one.

Narrator: When Adrian Wayman moved to Portland in 2016, he had to fight hard for his company to even exist.

Adrian: There was no type of license for delivery-only retailers. I immediately started going to all of the public hearings for the rulemaking, basically to plead my case and let them know, like, hey, I love that delivery’s an option, but these proposed rules, no one can run an efficient business. So let’s move this, get rid of this. And luckily, they decided in my favor.

Narrator: Because of Adrian’s lobbying, Portland passed a law allowing cannabis delivery in 2016. Adrian then opened Green Box, a delivery and subscription service.

Adrian: I’ve been selling weed since high school. Got arrested for it, was on probation, did the whole nine. When I was getting fingerprinted for my license, it was just really weird, because I was like, man, the last time I’ve gotten fingerprinted, I was going to jail for selling pot, selling weed, and now I’m getting fingerprinted to get a license to sell it legally.

Narrator: When Adrian first started delivering, only $100 worth of cannabis was allowed in the car at one time.

Adrian: Our average order is over $100, so that just wouldn’t make any sense.

Narrator: Adrian again lobbied and got the limit raised to $3,000.

Adrian: I don’t like being told no. I hate restrictions. So I got an order, pull it up on my phone, and this is basically a box of pre-rolls. This one is going to Northeast Portland. Here’s my manifest for the state tracking. That whole drawer is just all manifests, just from deliveries. I have to keep them for three years.

Narrator: Each of those manifests lists out exact turn-by-turn directions that Adrian has to follow on a delivery. Jeremy says that’s because regulators want to make sure no marijuana products go out the back door.

Adrian: That’s just not practical. When I’m building my manifests, Google Maps may tell me the quickest time at that point, but an accident may happen, and I may have to detour. And if I do not follow those directions, I have to go back and update my route. I do understand that it needs to be regulated and tracked. But I do think some things are just a little ridiculous or just not practical.

Narrator: But those tough regulations can’t be ignored.

Adrian: They come about twice a year to check in. They will pop up and knock on your door. And it’s the scariest thing ever. It’s just very stressful.

Narrator: If compliance officers find that rules aren’t being followed, a lot of bad stuff can happen.

Nancy: At the least severe, you’re probably going to get a reprimand and perhaps a fine.

Jeremy: Remember, it is cannabis. It is illegal. So if you are caught growing a supply of unlicensed cannabis, then you’re talking about a felony, and then you’re talking about jail time. And so that’s a delicate dance to try and make sure that they’re staying on the side of regulations no matter how rapidly they’re changing. They’re risking themselves personally and financially.

Narrator: All these unavoidable regulations make starting a weed business really expensive. Forbes reported startup costs could be as high as $1 million for a dispensary. And raising that kind of capital can be hard.

Adriana: We can’t traditionally go and just get a small-business loan.

Jeannette: Because of it being a federally illegal substance. So banks won’t loan for that reason.

Jeremy: They can’t take credit cards, because it’s federally illegal. They’re doing business mostly all in cash.

Jeannette: So you really got to get your business funded from your personal wealth or from your network wealth.

Nancy: Those situations begin to favor people who’ve traditionally had good access to capital.

Jeremy: And oftentimes that correlate with being white.

Adriana: It is very white male-dominant. And there’s no reason that that is what it should be.

Narrator: Only 2% of cannabis entrepreneurs are Black. Yet Black Americans were most affected by marijuana’s illegal status in the past.

Jeremy: There is kind of a clear throughline from the war on drugs. According to the ACLU, Black people are four times as likely than whites to get arrested for cannabis use, despite using at very similar rates across age groups, across different states.

Narrator: Those in favor of federal legalization believe it could close the capital gap and ease regulations.

Jeremy: With full-scale federal legalization, there would be loans available for minority entrepreneurs. So if you’re a minority entrepreneur and you aren’t connected to these wealthy private investors, you can actually get a loan on pretty favorable terms from a bank.

Narrator: In July 2020, Sen. Chuck Schumer proposed legislation that would legalize marijuana federally. Jeremy says at the core of that legislation is equity.

Jeremy: To give the economic benefits of legalization to people who generally have not received those benefits in the past, i.e. minority entrepreneurs, Black and brown people.

Narrator: That would include …

Jeremy: A certain percentage of the licenses for those people specifically.

Jeannette: Expungement of cannabis crimes. Cannabis taxes must go into reparative justice for Black, Indigenous, and Latinx communities.

Narrator: The bill would also mean the FDA would standardize regulations in every state.

Jeremy: That could be as simple as the labeling or as complicated as how much THC is allowed per unit.

Nancy: Please, God, give us a universal THC symbol so we don’t have to have that across every single state.

Narrator: Marijuana could also then cross state lines.

Will: If we were able to export, our sales would definitely open up even more.

Adrian: One thing that I really wish would be allowed is inventory in our vehicle. Something like our hottest items in the trunk and the safe ready to go.

Narrator: But Jeremy doesn’t think federal legalization will pass within the year. There’s been pushback on the bill.

Jeremy: A lot of people are really unable to divorce themselves from the stigma that drugs are bad. Cannabis is a drug, so why are we saying it’s OK? No. 1 is simply highway safety.

Narrator: There’s no such thing as a cannabis breathalyzer yet.

Jeremy: A lot of police unions are really worried about what it’s like when people drive high. There’s no standard to say like, OK, you’re high after you’ve had two puffs. Everybody has a different tolerance. THC binds to your fat cells. A blood test after the fact, it might tell you you smoked last week. Another key hurdle is around teen use. There is a lot of troubling research that cannabis does really impact the development of adolescent brains. In terms of developing mental conditions like anxiety, depression, even suicidal ideation.

Narrator: But studies in states with legalized marijuana show teen use is actually down.

Jeremy: Because it’s just not really cool anymore, right? Like, their mom is buying it. 93% of Americans polled say at least medical marijuana should be legal. So with any hot-button issue with that much public support, it’s only a matter of time. I think there will be a lot of push and pull that will likely take us probably through the end of Biden’s term, if I had to kind of put a timeline on it.

Narrator: So until then, these entrepreneurs will keep working within the complicated regulation system, hoping to stay afloat in the growing big business of legal weed.

Read the original article on Business Insider

The story of El Chapo’s escape from prison in a laundry cart and his triumphant return to Sinaloa

A book cover shows a colorful painting of El Chapo beneath the title, in bold white letters
The cover of El Chapo: The Untold Story of the World’s Most Infamous Drug Lord

In early 2001, Joaquín Archivaldo Guzmán Loera, the Mexican drug trafficker better known as El Chapo, decided he didn’t want to be in prison any longer.

El Chapo had been at Puente Grande, the maximum-security prison outside of the city of Guadalajara since 1995, locked up for his role in a bloody shootout in 1993 at the Guadalajara airport. And he’d been doing alright at Puente Grande, had enjoyed many of the same creature comforts during his years in Puente Grande as he had on the outside-good food, women, volleyball-and unlike his life on the outside, he even got to sleep in the same place every night. Much of this was thanks to his patronage of Dámaso López Nuñez, who’d taken over as deputy director of security in 1999 and had proved even more pliant than his predecessor in seeing to it that all of El Chapo’s needs were met. When Dámaso arrived, El Chapo immediately began to shower money and gifts on him: ten thousand dollars in cash here, a house there. When one of Dámaso’s children was injured in an accident, it was El Chapo who paid the child’s medical bills.

“When I needed anything, I would ask and he would give it to me,” Dámaso said years later.

Unfortunately for El Chapo, Dámaso had left Puente Grande in the fall of 2000, under a cloud of suspicion amid drastically belated efforts by the government to investigate corruption there. And on January 18, 2001 everything changed for El Chapo when the Supreme Court of Mexico ruled that the United States could extradite Mexican prisoners such as El Chapo, as long as the death penalty was taken off the table. His worst fear, an American prison cell, was suddenly much closer to reality.

A woman in a cramped shop holds up a shirt that reads "Who do you trust" with a picture of El Chapo.
A vendor in Sinaloa state, El Chapo’s birthplace in Mexico, shortly before he was sentenced in 2019.

So the next day he left, smuggled out the door tucked into a laundry cart, rolled to freedom by a guard known as El Chito. And nobody saw fit to stop him.

In the book Narcoland, journalist Anabel Hernandez argues that the laundry cart story was a tall tale cooked up in the wake of the escape to hide the real story: that El Chapo had simply walked out the door. Others have joined Hernandez in speculating that the laundry cart story was a fanciful tale ginned up to cover up a more mundane escape made possible by systemic corruption. (Years later, when El Chapo was finally put on trial at a U.S. federal court in Brooklyn, the laundry cart theory was retold repeatedly by multiple former accomplices.)

Regardless of whether El Chapo was rolled out, or walked out in a stolen guard uniform, it was his ability to buy the right people that allowed him to escape.

El Chapo was back. Within days, he was holding a series of meetings with his partners, including the man who in the ensuing years would become his most steadfast ally, Ismael “El Mayo” Zambada García. At one of the first meetings at a lieutenant’s ranch, El Mayo made it clear that he was backing El Chapo to the hilt.

“I’m with you one hundred percent,” El Mayo said. “I’m going to help you with anything you need. And any kilo of coke that I receive from Co- lombia, I’m going to give you half. So for now, just take care of yourself, stay in hiding.”

Two police are seen standing in the back of a vehicle and facing a prison complex, seen in the distance.
Mexican federal police patrol the surroundings of the Puente Grande State prison.

But the question was where. El Chapo was travelling with a hard-to-conceal entourage of armed men, and his face was plastered across televisions and newspapers all over Mexico. Where could he lay low without attracting attention?

El Mayo had an idea.

“Let’s go to Sinaloa,” El Mayo said. “Let’s go back to your native lands.”

“El Cielo”

Perched atop a peak that looms over La Tuna, a ring of cypress trees sits like a crown, blowing faintly in the breeze. From below, across the valley, the trees are all you can see of “El Cielo,” or the Heavens, the home El Chapo built for himself.

It’s a sanctuary he never got to truly enjoy, but which he visited from time to time, sneaking back into his hometown to throw a party or visit his mother.

A man is seen wearing a grey winter coat and looking tentatively to the side.
El Chapo is pictured on July 10, 1993 at La Palma prison in Mexico after being apprehended.

It sits unoccupied now. With El Chapo serving a life sentence at a supermax federal prison in Colorado, it’s unlikely he’ll ever set foot here again. (But don’t tell his mother that-the family once threw out a television reporter who had the temerity to ask Doña Consuelo directly how she felt about her son spending the rest of his life in prison.)

If he were to get out of prison, however, he might want to head to this mountaintop retreat. Indeed when he escaped from Puente Grande prison in January 2001, it was to El Cielo that El Chapo returned, to plot his new empire-and to see his mom.

Things were looking good for him then. He was free, back in the mountains in which he had grown up and gotten his start, where much of the population loved and supported him, and where the remoteness and the rugged terrain provided a natural defense that allowed him to move about with relative ease.

He was moving coke again, and marijuana and heroin as well-there was always more money to be made in cocaine, but the local economy of his sanctuary still relied heavily on the production of those two trusty cash crops, the hills dotted with red poppy flowers and redolent stalks of cannabis.

By purchasing these drugs from local farmers, he could make a handsome profit, prop up local business, and buy an enduring base of support. Who’s going to turn on the guy who pays wholesale for their crops?

Among the farmers El Chapo bought from in those days was a man named José,* an affable father of three, born, raised, and still living in a small town just off the highway. (Names marked with an asterisk are pseudonyms.)

An elderly woman is seen seated in a car and looking out the window.
Maria Consuelo Loera, El Chapo’s mother, leaves the US embassy in Mexico City in 2019 after applying for a visa to visit her son.

Like El Chapo, José and his neighbors learned how to grow weed and opium from their fathers, using tried-and-true methods to grow the crops on little plots of land in the hills above their village. In the early 2000s, José was working an area of land roughly equal to the size of about five football fields. The area was under the protection-or the control-of El Chapo, to whom José and other growers paid a 30% tax in exchange for protection from the soldiers who might otherwise raid the area, burning crops and sending months of work up in smoke.

For several years after the escape from Puente Grande, José did not meet the man to whom he paid taxes. But that finally changed in 2005, when, short on funds, he decided he wanted to make a proposition. A friend agreed to make the introduction, and they drove together up the highway, onto the dirt road, and on to La Tuna. When El Chapo received them, José made his proposal: What if El Chapo covered the expense of planting, and then they split the eventual profit fifty-fifty?

El Chapo readily agreed; that’s just the kind of guy he was, José recalled.

“He was a very simple man, and very natural,” José said. “You just felt like talking to him, never found him to be aggressive.”

The relationship between trafficker-strongmen and the people who grow opium and weed is rarely an even one, and can sometimes be downright feudal: Growers rarely have much choice in whom they sell to, so the people buying are able to set the asking price. The exchange is one of constant negotiation, and often features a certain degree of coercion-whether through the direct threat or deliverance of violence, or through the local boss withdrawing his protection and opening the farmer up to the full fury of a state that is, technically, dedicated to wiping out the farmer’s livelihood.

A small white and red church is seen in a lush and hilly stretch of land.
A cemetery known for the many prominent narco-traffickers who are buried there sits on a hilltop in Santiago De Los Caballeros, in Mexico’s in Sinaloa state.

Until very recently, small-time, self-employed farmers like José formed the backbone of the opium and marijuana industries. (This status quo has been upended in recent years as widespread legalization of marijuana in the United States and the introduction of synthetic opioids like fentanyl into the heroin supply have caused prices of both crops to plummet.)

As in any good capitalist system, farmers did most of the work, and were exposed to the most risk at the hand of the state. It pays well, better than most legal work; but by the time a stamp of heroin or a dime bag of weed has been sold on the streets of New York or Philadelphia, only about 1% of the total profits find their way back to the farmer.

The real profits, the billions of dollars that flow from the street sales to the money launderers to the front companies and bank accounts of traffickers, don’t trickle all the way down to little villages nestled in the mountains of Sinaloa or Guerrerro, or to the streets of the border towns through which the drugs pass on their way north. But it’s on the heads of these small-timers that most of the violence of the drug war falls.

Origin stories of the drug trade in Sinaloa often highlight the region’s legacy of upheaval, banditry, and rebellion. But early drug-trafficking clans of Sinaloa were hardly treated as outlaws.

The Mexican sociologist Luís Astorga writes that early Mexican drug traffickers emerged from within the state power structure, rather than as actors outside of it. They came along at a time when that power structure itself was just taking shape, and managed to negotiate for themselves a cozy little cubby within it, one that worked for the state, for the wealthy elite, and for the drug traffickers and cultivators. To a more limited extent, it also worked well for the poor peasants living in areas like Sinaloa.

There is a proud tradition of independence and autonomy in the Sierra, and the drug trade allowed the people of the Golden Triangle to continue to fend mostly for themselves without posing a true threat. The drug traffickers who came before El Chapo acted as local power brokers, playing a key role as unofficial intermediaries between the government and the people of the Sierra. The government allowed them to get rich trafficking drugs as long as the traffickers kept a relative peace in rural areas and made sure the local peasants showed up to vote for the ruling Institutional Revolutionary Party, or PRI.

A man faces the camera wearing a black button-down short.
The author Noah Hurowitz

José and others in the highlands of Sinaloa talk of those years right after El Chapo’s escape as something of a Golden Age, when you knew who ran things and you could look the boss in the eye, make a deal with him, and then have a pleasant chat. As this went on, El Chapo would often pay José, who played in a band in his spare time, to perform at his parties. It felt good to hang out with a guy like El Chapo, José said, to be in the presence of someone regarded in these parts as a great man.

“He is a legend, truly, a legend,” José said. “It was a privilege to speak with him, to have a friendship with him like I did.”

Even if José was giving the sanitized-for-gringo-reporters version, many people in the mountains of Badiraguato knew only this side of El Chapo, the magnanimous local chieftain. This area of Sinaloa was, for many years, spared the violence that the drug trade-and the war on drugs-wreaked on other areas of Mexico. And when violence did arrive, it usually came in the form of the heavy hand of the state, rather than the cruelty of narco hit men.

But even as El Chapo was spreading his goodwill around his hometown and surrounding villages, he and his allies were inflicting violence elsewhere. For when El Chapo arrived back in La Tuna in 2001 and began to rebuild his empire, he was a man hell-bent on revenge.

* * *

Excerpted from El Chapo: The Untold Story of the World’s Most Infamous Drug Lord, published by Atria, a division of Simon & Schuster, Inc. Copyright © 2021 by Noah Hurowitz.

Noah Hurowitz is a journalist based in New York City. He covered the trial of El Chapo for Rolling Stone.

Read the original article on Business Insider