Daily Archives: March 3, 2016

Growing Pot Is No Way to Get Rich

Brendon Scorey has learned the hard way that there is truth to the old adage: crime does not pay.

The Cairns District Court has heard how 22-year-old Mr Scorey had no criminal record, but was broke and looking for work when he discovered a group of people planning to grow cannabis for profit. Mr Scorey was told he would earn between $10,000 and $100,000 for his role in the venture.

Instead, all he got from a year’s involvement was $5,000, a criminal record, and a suspended prison sentence.

Dollar signs in his eyes, Mr Scorey ignored the early signs that his investment was not working. Scorey and another man worked hard clearing land, setting up an irrigation system and creating garden beds. After a year trying to grow cannabis, most of the crop had been destroyed by wild pigs, rats, and the weather. Scorey was left for long stretches of time to mind the crop on his own.

For all his efforts, Scorey said he only cultivated about 2.7kg of cannabis and ended up with about $5,000.

Despite his earnings being well below the minimum wage, Mr Scorey foolishly tried his luck again, devising a new plan to grow more cannabis.

The court was told how police became involved when a man who was minding the new crop took his own life.

Mr Scorey’s criminal defence lawyer told the court that his client was young, down on his luck, and had turned his life around since the hapless venture.

He was given a three year suspended prison sentence; any breach of which will likely see him behind bars.

The Real Costs of Growing Cannabis

In Colorado, where it is legal to sell and use cannabis for recreational purposes, there are some very sophisticated harvesters who are able to sell approximately 600 pounds a year.

One grower based in Colorado says that since legalisation, ounces are selling for around 125 to 150 US Dollars. Selling 600 pounds a year would bring in $1,440,000, which seems impressive, until you factor in that he spends a third of his profits growing and prepping the cannabis for sale and has 15 employees to pay.

Down the other end of the production chain, people aren’t seeing this kind of money.

Obviously in Australia, despite the difficulties, some people have been able to make substantial profits growing and selling cannabis illegally. The increased profits are balanced with the increased risks of being ripped-off or dobbed-in by the people you’re working with, violence, receiving a criminal record, and being sent to prison.

But now that Australia is looking to make medical cannabis available to those with a prescription, we are likely to see the farming of crops become more mainstream and competitive here as well.

The Wall Street Journal describes the situation in Denver, where medicinal cannabis is grown and sold legally:

“Trying to make a profit in this business is harder than expected. When grown and sold legally, marijuana can be an expensive proposition, with high startup costs, a host of operational headaches and state regulations that a beet farmer could never imagine.”

Confluence Denver reports that the extremely high energy costs of growing cannabis are a killer for both profits and the environment:

“Now that it’s legal and grow houses have, well, grown to meet demand, it’s also had an impact on the electric grid. ‘There have been situations where we’ve had to upgrade transformers,’ says Xcel Energy spokesperson Gabriel Romero. The utility has also had to upgrade the power lines going into the grow houses when they weren’t equipped for the higher voltage.

“Those changes are paid for by the warehouse owner,” says Romero. “Those things are pretty expensive startup fees.” It can cost hundreds of thousands of dollars to upgrade the electric equipment in some situations.”

When the Wall Street Journal asked veteran cannabis farmer, Elliott Klug, about the secret to making a profit in the cultivation of cannabis, he said: “Start with lots of money.”

Perhaps the old joke about vineyards is equally applicable to cannabis farms:

“Know how to make a million dollars in a vineyard? Start with 5 million”.