APRIL 2024

Bahoura said building costs of
$1 million with build-out costs of another
$1 million are not unusual for
grow operations. That is not inclusive
of added costs for water, light, and
equipment or operating expenses. If
a crop becomes infested, fails to pass
inspection, or other difficulties occur,
an entrepreneur can sink very
quickly. On the retail side, a busy store
requires upward of $1 million in inventory
to remain competitive. Retailers
are also hampered by IRS Code 280E,
which classifies marijuana retailers as
controlled substance sellers and takes
away the standard expense deductions
available to other businesses.
Despite the increasingly mainstream
culture forming around the
marijuana industry, vestiges of its outlaw
roots seem buried everywhere. Future
Grow Solutions owner Mark Savaya
says his company cannot transport
or test its own product. By law, those
services must be outsourced.
For those who met the buy-in threshold,
navigated the regulatory minefield,
and shined the tarnish off a once illegal
industry, gold did indeed appear at the
end of the rainbow. Nagging legacy regulations
and major tax hassles have not
stopped the industry from maturing and
growing. Some companies have formed
a rather large footprint.
Justin Elias is president of Puff Cannabis,
a business that operates 10 locations
of cultivation, processing, and
retail operations in Michigan. Puff has
expanded substantially since forming
in 2009, from its original nine employees
to its present roster of 500. Elias says
Puff had revenues of $7 million in its first
year, charted $150 million last year, and
expects to see $250 million next year.
When we talked to Elias and Coowner
Nick Hannawa, Puff was doubling
its staff and planning to move
into a new 20,000-square-foot headquarters
in Troy.
Future Grow Solutions owner Mark
Savaya made the move from the convenience
store industry to marijuana
a few years ago, when “caregiver” operations
were permitted to grow a limited
number of plants. Before dispensaries.
Before recreational sales.
Savaya saw the potential in the industry
and moved to North Carolina to
learn about hydroponic towers that feature
vertical towers to maximize space,
water recycling and no soil. The grow
The Risks of Cannabis
April is National Cannabis Awareness
Month, so we wanted to take
the opportunity to give you an update
on the industry and on the status of the
opposition to legalized marijuana. The
legal industry is still young; we know
that many Chaldeans have gotten in on
the ground floor, capitalizing on their
shrewd business skills. But others are
not happy with the new legal status.
Scientists are still learning about
the benefits as well as the risks of cannabis.
The CDC reports that nearly 31%
of 12th graders in one study reported using marijuana in
2022, and almost 6 ½ % reported using marijuana daily. Using
alcohol and marijuana at the same time will likely cause
greater impairment and risk of physical harm than using
either one alone.
The CDC study shows that teens who use marijuana may
be less likely to graduate high school or attend college. Even
more alarming, research shows that using marijuana during
your teen years can cause damage to the brain, which is
actively developing until around age 25. Usage may impair
thinking, memory, and learning itself. Marijuana use has
been linked to depression and social anxiety in adults.
While there have been studies on the effects of smoking
marijuana in its natural state, we have limited data on the
operations locate in repurposed industrial
spaces, much like standard indoor
agricultural set-ups, but the towers allow
for about eight times the number of
plants in a standard configuration, taking
advantage of the building’s cubic
(three-dimensional) space rather than
just is square footage, or floor space.
His business has grown, from a single
location as of 2022 to three as of November
2023, with another five readying
for business early this year. He says
he also owns seven growing locations.
Savaya now employs 300 people,
each earning $20 to $50 per hour; he
said he planned to add benefits to the
mix early this year. He often hires employees
convicted of non-violent marijuana
crimes. He says this gives them a
second chance and provides him with
a workforce familiar with the product.
Despite the prohibitive costs and
regulation endemic to his industry, Savaya
has found creative ways to meet
his business goals. In 2022, his tower
CHALDEAN
STORY
Edible cannabis products are often
designed to appeal to minors, despite
the minimum age requirements.
growing arrangement allowed him to
grow 12,000 plants in a physical space
that historically accommodated 1,500
plants, with the attendant savings on
water—90 percent of which he said
constantly recycles—and electricity.
Savaya also found creative ways
to administer payroll and deal with
the cash-only nature of the marijuana
business. While many in the industry
have turned to credit unions—which
are not federally regulated—to do their
banking, Savaya formed an employee
leasing company and “leases” employees
to his multiple dispensaries
and grow operations. He manages the
huge amount of cash his businesses
generate by paying contractors who
build out his facilities in cash.
Risky Business
As the industry adapts and matures, it
continues to face issues preventing it
from operating under the same rules
as other industries. 280E, the tax code
This report is made possible with generous support from
Michigan Stories, a Michigan Humanities Grants initiative.
use of edibles. Marijuana packaging is
often deceiving and appeals to young
people with its graphic art and bright
colors. Compounds in marijuana can
be extracted to make oils and concentrates
that can be vaped or inhaled.
Smoking oils, wax concentrates, and
extracts from the marijuana plant,
known as “dabbing,” is on the rise.
Cannabidiol (CBD) is a compound
found in marijuana that shows signs
of helping with seizure disorder and is
also used as a topical cream for pain
relief. Scientists are still learning about how CBD affects
the body, however, although we know it does not cause
impairment and doesn’t get you “high.”
CBD is not risk-free. The FDA has limited data on its
safety. There are some known side effects of its use, including
liver damage, drowsiness, and changes in mood
and appetite. In addition, the risks of mixing with other
medications are unknown.
The Catholic Church is a powerful critic of the marijuana
trade. On the Chaldean Diocese of St. Thomas the Apostle
website, a statement is made about marijuana which
reads in part: “The Chaldean Diocese of Saint Thomas the
Apostle joins the Church at large in condemning the use of
ALL drugs outside of ‘strict, therapeutic grounds.’ ”
law, has become the front-and-center
issue for licensees. As the businesses
scale, they are forced to remain cashonly
entities, not eligible to deduct
their considerable business costs
from their tax bill and not permitted
to engage in interstate commerce—an
increasingly important issue as many
licensees have multi-state expansion
plans waiting on the runway.
Bahoura said the number of people
exiting the business has accelerated
as new owners discover they underestimated
start-up costs. Some of them
are selling their businesses at reduced
rates, simply to get out. Underscoring
his points about prohibitive entry costs
and high risks, Bahoura said he has
helped about 100 applicants prequalify
for licenses, but only about a dozen
have gotten to the point where they
open an operating facility. He said the
big question he always asks his clients
is, “Do you have enough money to get
over the finish line?”
Despite the patchwork of sometimes
conflicting local laws, cultural
acceptance seems to have arrived. Bahoura
pointed out that dispensaries
were considered essential businesses
during the most restrictive part of the
COVID-19 lockdown. They remained
open during the pandemic, even offering
curbside service.
44 CHALDEAN NEWS APRIL 2024