BUDDING WEALTH IN THE WEED

With the Courts Striking Down the Federal Government's Monopoly on
Supplying Medical Marijuana, Private Growers Are Bullish on Pot's
Commercial Potential

Eric Nash can barely contain his excitement waiting to hear from
Health Canada whether he can start growing marijuana for 250 patients
now that the Federal Court of Appeal has struck down the government's
monopoly on supplying medical marijuana.

That would be just the start. He says there are tens of thousands
more who are ailing across the country, clamouring for his organic B.C. bud.

"There is a great opportunity here for the government to collect
significant tax revenue currently being lost to the street market,"
enthused Nash, whose company, Island Harvest, has cleared the
industrial security regulatory hurdles and meets the standards set by
Ottawa to grow cannabis legally.

"Our vision is to have a sustainable commercial agriculture
operation," he said. "There's no reason we can't achieve that. Look
at the number of compassion clubs, look at the number of people using
marijuana to relieve a headache or premenstrual cramps!"

On Oct. 27, the federal government lost its appeal of a 2007 Federal
Court ruling that the government's policy allowing licensed producers
to only grow marijuana for one sick person was unconstitutional. That
decision was stayed pending the appeal.

The appeal court agreed with the trial judge -- the medical marijuana
scheme was constitutionally deficient -- and refused to suspend the
impact of their ruling to give the government time to amend the regulations.

Health Canada spokesman Phillipe Laroche said the department was
still studying the ruling and had not decided on its response.

More and more research is supporting previous anecdotal evidence that
cannabis may have a wide range of therapeutic uses, from the
treatment of Alzheimer's, depression, glaucoma, epilepsy and cancer
to HIV/AIDS, hepatitis and ADD/ADHD. Its most ardent promoters say
cannabis may be an addition to the modern pharmacopoeia that rivals
Aspirin in the breadth of its applications.

Until now, the government's program has artificially depressed the
medical market by making it difficult for patients to qualify,
supplying what many consider poor-quality marijuana and restricting
qualified licensed growers to supplying only one patient.

Doctors have been reluctant to prescribe marijuana, claiming they
have no guide on dosage or the usual pharmaceutical medical studies to rely on.

Nash said three serious analyses of the medical marijuana market in
the last eight years give an idea of its scope and potential.

While Health Canada has issued roughly 2,500 exemption permits over
eight years, the Canadian Medical Association Journal in 2000
estimated the number of self-medicating marijuana patients to be 1.9
per cent of the population. A Price Waterhouse report prepared for
Health Canada two years later concluded it was more like four per
cent of the population, and a report in 2004 by a member of the
federal government's advisory committee on marijuana suggested the
reality was closer to seven per cent.

The four-per-cent model would put sales at more than $400 million
annually, Nash said.

More optimistic projections say the medical market, including
ancillary products such as vaporizers and paraphernalia, could be as
high as $20 billion.

Currently, Ottawa sells maybe $1 million a year worth of the pot
produced in a Manitoba mine, and compassion clubs across the country
sell about $10 million worth of cannabis products.

By far the vast majority of patients who need marijuana as a medicine
continue to buy their drugs from the black market -- that's one of
the fundamental reasons behind the Oct. 27 court ruling.

The government adopted the Medical Marijuana Access Regulations
(MMAR) and accompanying bureaucracy in 2001. It has modified it since
then in the face of judicial warnings that it was constitutionally inadequate.

The federal court decision promises an economic boon immediately for
the hundreds of legal cannabis producers and increased opportunity
for many others.

Nash said it was good news for both the consumer and producer.

Restricting growers of medical marijuana results in a huge gift of
revenue to organized crime.

Stephen Easton, an economist at Simon Fraser University and with the
Fraser Institute, has done the most respected work on the size of the
domestic pot industry.

In the 1990s and even throughout the early part of this decade, he
said, tons and tons of Canadian marijuana flooded into the U.S.
market. People were backpacking across the border with as much weed
as they could carry, or kayaking across with a stash of bud worth as
much as emeralds.

Between 1990 and 2000, the Canadian pot market doubled in size,
fuelled primarily by increased hydroponic production.

Nationally, Canadians apparently spent $1.8 billion toking up -- just
shy of the $2.3 billion we burned on tobacco.

By 2006, when he did his calculations, Easton said the numbers
indicated a provincial wholesale market of $2.2 billion. You could
increase that to $7.7 billion retail if consumers paid top dollar for
their bud.

That dwarfed any other B.C. agricultural product.

The result on the street was easy to see: a proliferation of gangs
duly documented by the RCMP, as every crook plucked what Easton
called "the low-hanging fruit."

With the tightening of the border post-9/11, smuggling now is more
the purview of the very organized and the very desperate.

U.S. authorities have charted the rise of their own domestic
production as American states relaxed enforcement and sentencing --
pot production in California rivals Canada's total output.

And with the north-south route to market becoming problematic, more
B.C. bud has moved east either to be sold or to find a less monitored
area of the border before turning south.

By far the biggest factor in the marijuana market in recent years,
however, has been the revolution in production -- the ease,
predictability and, most importantly, the portability that has come
with advances in indoor cultivation.

B.C. bud ruled in the 1990s when the underground marijuana trade was
responsible for keeping afloat many small communities buffeted by
resource-market gales, but these days be you in Barrie, Ont., or Joe
Batt's Arm, N.L., you can easily obtain good seeds and fail-safe
equipment and within a few months be producing marijuana to rival B.C.'s best.

Some estimates in the 1990s suggested as much as 50 cents of every
dollar generated in some Kootenay towns could be traced directly to pot.

Former Drug Enforcement Administration agent Celerino Castillo III
spent 12 years in the USDA infiltrating Manhattan drug rings,
destroying jungle cocaine labs and training anti-narcotics agents.
The climax of his career was pulling the curtain back on
drug-smuggling by the Nicaraguan Contras with links to Lt.-Col.
Oliver North and the CIA.

Mexico is again considering legalization because of the violence and
social upheaval caused by illicit drug trafficking, and Canada should
be headed down the same path, he says. So should South America and the U.S.

"The corruption is everywhere -- every month we arrest a law
enforcement official, every month," he insisted, "whether it's a
border patrol agent or a customs agent or a DEA agent or an FBI
agent. We arrest a law enforcement officer once a month. It's huge.
The amount of money is just so big. 'I have a mortgage to pay, I have
to send my kids to college.' That's always the excuse."

He shakes his head.

He explained that in his state, drug couriers once arrived with
suitcases of cash to deposit in local banks: "Now they buy the banks.
Especially now with this upheaval. Who else has the ready cash?"

He laughed.

"But that's actually how they're money-laundering today -- they buy a
bank," Castillo added. "There's no way we can keep up."

In retirement, Castillo has become a featured speaker for Law
Enforcement Against Prohibition, an association of former police,
corrections and judicial officers who want to change drug policy.

"There's more production, more product and more of everything than
there ever was. The war on drugs doesn't work," he said.

Dana Larsen, the former NDP candidate, who stepped down during the
federal election when his recreational drug use was publicized, is
promoting a new Vancouver compassion club.

Larsen, who used to be the leader of the B.C. Marijuana Party, thinks
the time has come to move into the medical field.

"I think there's enough of a market in town to support another
dispensary," Larsen said.

His menu of cannabis products included six strains of dried
marijuana, four kinds of hash, two pot products in capsules and
double-strength bonbons -- cannabis-infused organic chocolates.

In Oakland, Calif., the private dispensaries that support the state's
medical marijuana program are said to be generating revenues in
excess of $70 million a year.

Michelle Rainey is one of roughly 2,500 Canadians with a licence to
possess and use marijuana. Rainey has Crohn's disease and finds her
homegrown pot an effective replacement for the expensive
pharmaceutical drugs she'd been prescribed.

She believes the country's health-care system could save a fortune if
there was a working medical marijuana program. The roughly 110,000
Canadians suffering from Crohn's disease and the 90,000 living with
ulcerative colitis, for example, are estimated to spend $162 million
a year for prescription drugs.

Many of those people are already benefiting from marijuana, Rainey
said, but many, many more could be.

Consider, too, that many battling cancer and HIV/AIDS find edible
cannabis products work to stimulate the appetite, but they've got to
buy them on the street.

"We have a huge problem with physicians being apprehensive about
signing for patients even though the proof is there," Rainey said.

"Our seniors, for instance, are spending their pensions on big pharma
only to end up with more aches and pains, when all they may need is a
puff or a brownie!"

In its decision, the Federal Court of Appeal did more than simply
hand Ottawa a legal loss. It said the government had been knowingly
dragging its heels since at least 2003.

As a result, lawyer Kirk Tousaw told B.C. Supreme Court that this
decision renders the criminal law invalid based on that history of
jurisprudence, which ties enforceability of the criminal law to the
existence of a constitutionally adequate medical access scheme.

He said the judgments in Ontario courts and now the federal court
mean the state of the law is unclear and therefore criminal sanctions
cannot be imposed.

In this latest case -- called Sfetkopoulos et al v. Attorney General
of Canada -- some 27 patients with exemptions to possess marijuana
for medicinal use applied to Health Canada for authorization to
designate Carasel Harvest Supply Corporation as their marijuana producer.

Health Canada refused, saying that violated the regulations that
restricted growers to supplying only one patient at a time.

But the Federal Court Trial Division agreed with the patients and
declared part of the MMAR unconstitutional because it threatened
their liberty and security of the person by preventing them from
choosing their marijuana producer.

The judge accepted that sick people should have access to marijuana
for the treatment of serious medical conditions and they should not
be forced to risk imprisonment to buy their medication on the black market.

He interpreted the constitutional guarantee of security of person
rights to include access to medication without undue state interference.

Ottawa appealed and the Oct. 27 ruling was the result.

The question is how Ottawa will respond to the appeal court's decision.

Since the impugned marijuana access scheme is a product of regulation
rather than statute, the government can quickly promulgate new rules.

"They could make cosmetic regulatory changes," Nash acknowledged,
"which would force another court challenge.

"But I think the judges are pretty fed up with them doing that."