British Columbia

Calif. pot vote threatens B.C. bud industry

B.C.'s billion-dollar illegal marijuana economy could be facing a financial crisis if Californians vote to legalize marijuana during mid-term elections on Nov. 2.
B.C.'s pot industry is built around illegal grow operations like this one busted by police last year in Chilliwack. Nearly 3,000 marijuana plants were growing in each room of the underground grow-op, RCMP said.

B.C.'s billion-dollar illegal marijuana economy could be facing a financial crisis if Californians vote to legalize marijuana during mid-term elections on Nov. 2.

The province's marijuana industry is widely estimated to generate billions of dollars a year in untaxed economic activity, but much of the crop is smuggled south to the lucrative U.S. market.

Economist George Penfold, who has studied B.C.'s marijuana trade, says there won't be much need for B.C. bud if marijuana is legally grown in California, and that could have a big effect in places like the Kootenays where the profits have become a key part of the economy.

"Because that is a cash business and a lot of that is spent regionally, there will be a significant impact on the retail and service sector here. Restaurants, retail stores are bound to feel the effects of it," he said.

Prices already falling

Lawyer Don Skogstad, who represents people charged with growing pot, said prices are already falling because medical marijuana has already been legalized in 15 states, including California, even though it is still illegal under federal laws.

The B.C. marijuana industry depends on smuggling into the lucrative U.S. market. In September police caught three men with nearly 50 kilograms of pot stuffed in backpacks. ((Ryan Remiorz/Canadian Press))

"This could only decrease the marketability of Canadian pot further. It just might get to the point where the risk isn't worth it. It will shut the business down of going across the border," he said.

One study by an American non-profit group suggested that if California were to vote yes to legalize marijuana, prices could plummet by up to 80 per cent and California would quickly move to dominate the industry. The state has the fifth largest economy in the world and more people than Canada.

If passed, California's Proposition 19 would allow municipal governments to legalize the use and possession of up to 28.5 grams of marijuana by adults and cultivation for personal use. It would also allow the local governments to tax and charge fees on marijuana, but would outlaw sales to minors.