A Look Inside Marijuana Dispensaries and How They Work

Source: Theo Stroomer/Getty Images

Source: Theo Stroomer/Getty Images

Like it or not, marijuana is headed your way. Cannabis, following a long and troubled past with prohibition, is finally starting to be legalized in small pockets around the country through a variety of voter and government actions. While the federal government is still holding fast to all-out illegalization, states around the country are chipping away at marijuana laws to the benefit of local economies and even law enforcement professionals.

Thus far, Colorado and Washington are the only two states to have passed voter initiatives fully legalizing marijuana for recreational use. While there are still some caveats to the law, the benefits have been immense. Colorado has been raking in huge tax revenues since sales first started around the beginning of the year, and Washington, although lagging behind in the implementation of retail sales, is set to keep up. Both of these states had robust medical marijuana industries prior to full legalization, making the transition a bit easier for citizens. While the industries and laws vary from state to state, the basic premise of medical marijuana dispensaries, along with collective gardens and the donation system, work generally the same.

It’s through these systems of collective gardens and donations that medical marijuana dispensaries have been able to open up legally and thrive, serving the sick and needy of their respective constituencies. Naturally, there are those who abuse the system, using the medical loophole to simply get their hands on cannabis products for recreational use. But the medical marijuana industry plays an immensely important role in the lives of many. For many, cannabis products and their derivatives are the only thing that supplies relief to people suffering from cancer, chronic pain, anxiety, and countless other issues.

As a resident of Washington state, I’ve had the chance to check out dozens of local medical marijuana access points and speak with the individuals who own and operate them. Most run through a legal loophole which allows ‘collective gardens’, in which multiple medical marijuana patients, who are allowed to grow or possess a certain number of plants or weight in dried product, to come together by pooling their resources. Turning these collective gardens into a non-profit business is tricky, but by walking a fine legal line, it can be done.

Here is an inside look at how many of the medical marijuana access points in Washington, specifically the Seattle metro area, operate.

Source: Frederic J. Brown/Getty Images

Source: Frederic J. Brown/Getty Images

The collective garden concept is integral to the entire medical marijuana industry, especially in Washington state. Every time you enter a dispensary or access point, you will be asked to brandish your identification and medical marijuana paperwork, or ‘green card’. New patients are then asked to fill out paperwork, essentially becoming a member of that particular collective garden, which allows for them to take cannabis product from the storefront in exchange for monetary donations. Patients can become members of as many collective gardens they want, providing unlimited access to the hundreds of dispensaries across he state.

A bit of a squirrely system, but that’s more or less the way it works.

This is also important when it comes to understanding exactly how access points get the product they offer patients and customers. As collective gardens, shops are able to grow their own cannabis, along with the allotment of plants for each of their members. This can reach incredibly high numbers, which is how some grow operations can become so huge and yet still operate (somewhat) legally.  In many cases, this provides more than enough product to stock dispensary shelves.

Other people have decided to grow for themselves, and specialize in certain product offerings. This is where the true innovation in the cannabis marketplace comes from; multiple patients working on different products, and seeing what works. This also holds true with different strains of marijuana.

There are two basic types of cannabis: sativa, which offers a more upbeat, cerebral sensation, and indica, which is used more as a pain killer, and gives users more of a sedative effect. By finding the perfect match of cannabinoids, or chemical compounds found within the cannabis flower, patients can often find highly-effective medications for their ailments. For example, patients who are suffering from insomnia would be better-off using a heavy indica, which would help them relax and fall asleep. Many people who go to work and deal with chronic pain might want to opt for hybrid of an indica and sativa, which would help fight pain, but also not cause drowsiness.

By experimenting with the nearly limitless amount of combinations, new strains are found and classics are made to be as potent as ever. In fact, specific strains are being cultivated with certain chemical makeups to fight very specific conditions, as in the case of the Charlotte’s Web strain.

Source: Chris Hondros/Getty Images

Source: Chris Hondros/Getty Images

Patients growing their own cannabis can bring it to access points, or even marijuana farmers markets, and attempt to sell it through the donation system. This is also where most shops get their edibles and oils. As the market sees specialization, some patients can form their own small businesses by focusing their talents on certain products. One patient may have an excellent way to make cannabis-infused soda, for example, and find a way to produce and market it under a specific name. They can then bring these sodas to different shops, and stock the shelves with their product.

It’s no different from any other industry, really.

This also has helped develop a wide array of products for patients to try. From edibles of every conceivable kind to oils and dabs. Those, which are usually referred to collectively as concentrates, are quickly growing in popularity due to their high potency. Concentrates are made through a variety of different methods, but essentially consist of find a way to boil down cannabis until the chemical compounds are almost the only element remaining. Concentrates can be smoked, and sometimes eaten or applied topically.

From dried flower to edibles and concentrates, having patients develop their own brands of cannabis product effectively creates a supply chain to keep feeding the demands of the industry. Obviously, offerings will be different from location to location, and many shops are actually able to tailor their product lineups to the specific needs of the patients in their areas. One example would be an access point located near old industrial sites, where many people have developed cancers as a result of exposure to chemicals or radiation. Dispensaries in these areas may tailor their offerings to include more indica-heavy products, which typically help with chronic pain and other common issues cancer patients face.

Naturally, by creating supply chains and specific brands of products, there comes the need for all kinds of administrative and financial work, which also presents a whole new set of challenges for those engaged in the industry.

Source: Kevork Djansezian/Getty Images

Source: Kevork Djansezian/Getty Images

When it comes to normal business activities, like banking and finances, the marijuana industry is still a bit stuck, for lack of a better word. Many banks and credit unions won’t allow dispensaries to hold accounts, as they are still dealing with a product that is illegal at the federal level, and they don’t want to be caught associating with it. Yes, a bit ironic considering some of the world’s largest banks have been caught many times laundering money for drug cartels, but this is more or less the reasoning behind it.

Because of this fear, cash has become the main way to conduct transactions. There are some places that take credit cards, but once again, many companies offering merchant services are wary of the industry and want to keep their distance. This is changing now, as legal marijuana markets are opening up and federal officials have given the nod to allow businesses to go forward without fear of legal retribution.

This has also been the case when it comes to marketing. Shops really don’t have the traditional means of marketing available to them, such as television commercials or billboards, so new ways have been developed. Alternative weekly newspapers, like Seattle’s The Stranger are great places for shops to advertise, and one of the few print options available. Other than that, online has been the major source of exposure.

Websites like Leafly and Weedmaps have become two staples for patients to find dispensary locations, and also to do research regarding strains and chemical content of edibles or concentrates. Essentially, they both provide a Yelp-like platform to leave reviews and share thoughts regarding new products or strains.

Source: Thinkstock

Source: Thinkstock

Finally, complying with local laws is the basis on which the entire industry lies. The law is different from state to state, city to city, with some municipalities banning collective gardens and dispensaries altogether. Obviously, the medical community is not even recognized in any real sense by the federal government, which still, to this day, conducts the occasional raid on medical dispensaries. But for the vast majority of access points, simply complying with the law, only offering their services to certified patients and steering clear of trafficking activities will keep them in the clear. There is always a certain level of risk, but considering that full legalization has taken effect, especially in Washington, things are as lax as ever.

That, in a nutshell, are the basics of the medical marijuana industry, as they apply in the state of Washington. Things are different all over the country, but the essence of the field is the same. Legal recreational shops operate differently, and it’s unclear at this point if the medical shops will be rolled in together with the recreational stores at some point. There are plenty of reasons why that could be a good or bad thing, but that is a bridge to cross when legislators come to it.

If there is one interesting thing to take away from examining the medical marijuana industry, it’s that these patients all across the country have shown that there is a lot of hard work, entrepreneurial spirit and ingenuity on display all across the country. As legalization takes hold in more states, this will only grow, and the economical benefits will be more visible. By creating new products, new businesses and creating new jobs, those in the medical marijuana industry are paving the way for an entire new business sector to take hold in the United States.

If you ever wanted to see free-market economics on full display, keep your eye on the marijuana industry. Things are going to get interesting.

More from Money & Career Cheat Sheet: