Unpacking this ganja business


Friday, January 17, 2014    

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FINANCE Minister Peter Phillips must be in seventh heaven. Our lads have found the crock, the mother lode, the El Dorado which eluded Cortez, Drake, Vespucci, Manley, and Seaga -- ganja. It's been in our backyard since the Indians smoked, medicalised and sacramented it in rituals centuries ago. We will soon be a "ganja-free zone" and the taxes will make us prosper beyond the riches of Croesus. IMF, we are gone clear!

What consenting adults do in their own space is their affair. If you find a bit of fabric you wish to smoke or my guest. I want to believe in the ganja business, but investment is not faith; the business plan, SWOT analysis, capital, market, factory, IP, costs are real. If it seems too good to be true, it often is. I want legal ganja millionaires across the island -- Shrimpy of no fixed address, Paul of Birdsucker and Byah of Campus too! Should we legalise? decriminalise? Or repeal all ganja laws and just leave it? We have none for callaloo, gungo peas or cerasee, why one for ganja? It needs no fixing it ain't broken!

Reality check! It was inevitable we would turn to ganja. We have had a love affair since dreadlocked Swami indentured Indians brought it. We obsess about ganja. We had no plan to work for riches. We don't see work as redemptive; we want a messiah -- magical as bauxite, gold, Hearts of Palm, oil. We do not hold work in high esteem. We worship at the shrine of the very high ganja, and our move to make it the pivot of growth is in character. I am not dismissive of these values, just verifying its flatulence. It is euphoric, we like it; it can make us rich, do it! So where is the business plan for ganja enterprises?

Supply is crucial. We are not the first to seek riches in exploiting a plant of provenance. The trinity of nature's treasures: poppy flower -- heroin; coca leaf --cocaine; marijuana plant -- ganja were used from antiquity, but prospered no nation. Why? Supply is one leg. We need market. Afghanistan grows over 80 per cent of the world's poppies. It ain't rich, but millions get jobs at low wages. The coca plant is dominant in Colombia, Peru, Bolivia; it is grown freely so do they have many small coca millionaires? No! The Spanish taxed it when they "discovered" the land; all are still poor. We got ganja and locks a century ago, but it was ethnic to "coolies", not for black man. Now we own it, we grow the best, we will make billions, zillions! Hmm! Peter, just stay the IMF course.

Demand is key. Our past is export, our present and future is export -- the market rules. We need Europe and America as they have democracy and income to buy quality ganja. We may sell to rich Arab nations but expect to lose a few body parts. The enterprise highway is littered with roadkill, so don't plant until you have market. The USP of our ganja is quality; not special for us as we have the world's best coffee, "Blue Mountain". We have it for generations, so most of us are coffee rich -- lie! But the best ganja will do it? The best means high price and few buyers; everybody buys "Betty", Excelsior crackers, and plain Arabica coffee is bought by 99.9 per cent -- rakes in billions. Blue Mountain? Turkey makes no-name cars and sells millions; quality Rolls Royce sells 100,000, and Maybach sells 250; now out of business. The mass market rules. Quality gets the awards, others get the cash. Is not our cocoa the best? Ginger too? Look at the rich ginger or cocoa growers -- where? No nation prospered from poppy, ganja or coca leaf after centuries of growing and decades of being legal or medicalised. Make history with good business plans.

Technology and investment are necessary. The history of this trinity of plants is that "big pharma" wins and even tech giants, as India, only get generics. Ganja needs big bucks to unlock its many goodies; market access and big marketing budgets. The Germans took poppies and coca leaves, created heroin, cocaine and the names. Bayer sold OTC cocaine and heroin into the 20th century. Cottage industry will not do. Where are the small investors who funded the Black Star Line? The Diaspora who failed to buy Air Jamaica or invest in a bauxite plant in their district? Garvey took the fall and Smith et al fell as a Ponzi man. Cabinet must protect small investors from hype: "Ganja is salvation; every man a grower; full employment, pay tax; growth; riches!" Like all primary goods the producer will gets spit. Those who dig the gold in South Africa get union wages. Those who dig "blood diamonds" elsewhere live worse than slaves, so welcome to the ganja trade union. Despite the price of cocaine, millions of coca growers earn slave wages. Can we go where none have gone? A market, business model and massive investment?

Monoculture never worked for us -- sugar cane, banana, now ganja. Use the sugar and banana lands, rope in agro parks and 500,000 small growers -- no praedial larceny -- every man under his vine -- rich! Sadly we like to own land not to till it. Can cooperatives work? Priests started this thing, so is a vow of poverty a precursor to success? Industrial processes require scale -- ganja estates or coops; aggregations need labour -- who me? Processors need volume, and since ganja use makes you hungry, who will grow food?

Price is a function of demand and supply. The best price ganja growers will ever get is now. In future, growers will talk of the good old days when they could pay police and buy a car from a square. The value chain is now short; it will soon be grower, consolidator, processor, wholesaler, retailer, tout, export. A grower gets about 10-15 per cent of the value. When coca growers hear the street price they rue the growing. Low price high sales; high price (quality) low sales. Ganja is no silver bullet -- the vampire will control it!

Taxes is what Peter needs, and we hear ganja growers will pay readily... right? So the grower sells to big pharma; GCT of 16.5 per cent, withholding tax 25 per cent. The recreational grower sells to you and me. They dodge tax for years, will they pay the taxman now? GCT, income tax -- no way! Black market is back. More evasion, crime, enforcers, corruption, violence -- been there. But the taxman will now know what he is not getting.

Our nation is in a fragile state. We emerged from 50+1 years of grief; capital and skills flight, financial meltdown, failed politics, Ponzi schemes -- don't trifle with the nations psyche. Every time we focus some fool distracts us with a circus. Cabinet must not allow wild ganja hype. Do not offer easy riches as we are hard-wired that way already. Cabinet must not allow a repeat of self-inflicted, greed-fuelled meltdown or neo-Bedwardism. If ganja enterprise is the route to prosperity, do due diligence. Will it do for us what the poppy failed to do for Afghanistan, ganja for India, or coca for Colombia? We still have the world's best coffee; high priced, legal, in demand -- plant it! Legal cocoa and ginger plant, legal yellow yam for oestrogen -- plant. Why wait? Peter, you do not have the luxury to bet on ganja. Facilitate ganja enterprises, but don't budget ganja taxes. Let's see investors and plans. Stay conscious, my friend!

Dr Franklin Johnston is a strategist, project manager and advises the minister of education.





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