WHO'S MAKING MONEY OFF MEDICAL MARIJUANA?

It's Not Who You'd Think; Growers Don't Get Rich -- Unless They Break the Law

In a small second-story office on Main Street in Ann Arbor, Liberty
Clinic is doing brisk business, selling medical marijuana for $360 to
$400 an ounce. In just 3 1/2 months, 750 patients have come through its doors.

In Lansing, Danny Trevino has expanded beyond his HydroWorld
hydroponics store, adding two medical clinics, grow classes and a dispensary.

And in Ypsilanti, Darrell Stavros and his partners have set up a
medical marijuana service center, renting space to a support group,
doctors and a bong shop. "This is creating an enormous amount of
businesses that never existed," he said.

Medical marijuana, one of the state's newest industries, is taking
off. Dozens of hydroponics stores, medical clinics and grow schools
are popping up. And at support groups, cafes and dispensaries,
patients and growers are buying and selling the drug.

As with any industry, there are challenges, such as crop failures and
theft. And limits on the size of growers' crops make it all but
impossible for growers to get rich, though they can earn some decent money.

"A few people will make a few bucks. Most people won't make much,"
said Adam Brook, organizer of the annual Ann Arbor Hash Bash.

Entrepreneurs Cashing in on Services Tied to Growing

In Michigan's burgeoning medical marijuana industry, few rules exist,
much of the business occurs in secrecy and the only way for growers
to make big bucks is to break the law.

"If you operate within the law, you're not going to make a lot of
money," said Leili Russo, who grows marijuana for medical purposes
and serves as the secretary of the Genesee County Compassion Club in Flint.

Growers, also called caregivers, say that at best, they can make
$40,000 a year. And that's after spending $1,000 or more on equipment
and other supplies, and putting in countless hours every day tending to plants.

Under Michigan's medical marijuana law, caregivers can supply only
five patients. Each patient can have 12 plants. But growers who
choose to ignore these rules can easily make $100,000, said Brook, an
industry consultant, an annual rally to support reforming marijuana laws.

Sometimes, Greed Doesn't Pay

With these conditions, it's no surprise that medical marijuana is
becoming a big business in Michigan's depressed economy. Nineteen
months after residents voted to legalize medical marijuana, the
industry has attracted more than 8,000 caregivers, people who grow
and harvest marijuana plants so they can be turned into medicine for
patients, according to the Michigan Department of Community Health.

For caregivers who abide by the law, this kind of work is usually a
second job. That's the case with Corey Hathaway, 33, of Eaton Rapids.
Hathaway used to run his own commercial construction company, but
that business dried up when the economy tanked. So he found a job
working at HydroWorld, a hydroponic shop in Lansing. To supplement
his income, he also is a caregiver with five patients.

"The people that are greedy don't succeed because they can't maintain
the patient-caregiver relationship," he said.

The law is vague about what caregivers can do if they produce more
marijuana than their patients need. To make extra money, some sell
their overages on the black market or to dispensaries, clinics or
other caregivers.

Making Money Without Plants

Growing marijuana is just one part of the rapidly expanding industry.
Experts say more lucrative opportunities can be found selling the
hydroponic equipment that caregivers need and teaching them how to
grow marijuana properly. Another moneymaker: operating clinics that
help people get the paperwork they need to qualify as medical
marijuana patients.

These kinds of service businesses are springing up all around the
state and are the most visible part of the industry. Already, price
wars have sprung up among the dozens of hydroponic shops that have
opened in southeast Michigan.

The intense competition hasn't stopped Kriss Pullen-Gideons from
believing that her store, Gro Blue in downtown Ann Arbor, has a
bright future. She used some of her retirement savings to open the
small shop on West Liberty, and her son and daughter are co-owners.

"People are surprised at how many regular people just walk through
the door," she said. "It's definitely going to be a growing industry.
We should embrace it."

Hydroponic stores aren't the only ones cashing in. Attorneys, grow
consultants, grow-room designers and contractors and grow schools are
all finding a market for services.

"There are so many people that are excited about being able to work,"
said Michael Komorn, a Southfield medical marijuana attorney and the
treasurer of the 17,000-member Michigan Medical Marijuana
Association. "They want to get back into the marketplace."

Entrepreneurs also are flocking to the sales side of the business,
operating an estimated 20 dispensaries, cafes and clinics in the
state, according to medical marijuana attorneys. At Liberty Clinic in
Ann Arbor, above bd's Mongolian Grill on Main Street, patients pay
$12 for an annual membership that allows them to purchase different
strains of marijuana, which are displayed in small see-through
packets on a counter. Liberty buys its marijuana from caregivers
throughout the state.

"We hope to be a model," said the owner, a former home inspector for
Bank of America who would only give his name as James Chainsaw.

Michigan law does not specifically address these kinds of clinics and
dispensaries. But industry experts expect that it will only be a
matter of time before courts challenge their legality. Already, a
number of cities and towns have passed ordinances prohibiting medical
marijuana businesses.

Groups Could Change Things

To stay within the law, many patients and caregivers are buying and
selling marijuana at facilities operated by a few so-called
compassion clubs, which act as support groups for patients.

The Genesee County Compassion Club is the state's largest, with more
than 1,000 members. Every Tuesday, Thursday and Saturday, it holds
private meetings for members at its office in a small strip mall in
Flint; smoking marijuana is permitted. Membership costs $20 a year
and includes a T-shirt.

The Ypsilanti Compassion Club takes a different approach. Its members
meet at the 3rd Coast Compassion Center in Ypsilanti, which is open
every day except Sunday. Marijuana smoking is allowed in some of the
rooms. "We provide them a safe office environment," said Darrell
Stavros, one of the owners of 3rd Coast, which rents space to the club.

Whether these kinds of facilities will become the main avenue for
medical marijuana sales in Michigan remains to be seen. But one
thing's for certain. With more than 1,000 medical marijuana patient
applications arriving in Lansing each week, the industry is only
going to get bigger, with all kinds of business ventures likely to be launched.

"It's definitely the wild, wild Midwest," said Matthew Abel, one of
the state's leading medical marijuana attorneys.