A Swiss company that for years has provided Massachusetts with cigarette tax stamp services — helping the state thwart the black market — has its eyes set on what could be a much bigger public contract: tracking legal marijuana from seed to sale to keep it from being diverted to criminal enterprises.
“Cannabis obviously fits and aligns with the programs we already provide the Commonwealth to prevent criminal activity and protect the public,” said Alex Spelman, a vice president of business development at SICPA Holding SA, which already does a multimillion-dollar business here.
Such product tracing is one of dozens of industries that could see a big boom in business when recreational marijuana shops, growhouses, testing facilities, and infused-product manufacturers (think candy and brownies) open in Massachusetts, probably next year.
Possibilities abound: Contractors to transform fallow warehouses to marijuana greenhouses for cultivators. Heating, ventilation, and air conditioning mechanics to keep the plants thriving. Security guards to keep watch over the drug — and the cash used to pay for it. Lobbyists to beat back some regulations, and promote others. Scientists to test for contaminants. Chefs who know how to make a delectable marijuana treat.
All could make a killing when the retail market begins sales, most likely in July 2018.
And much of that money probably will stay in Massachusetts, as marijuana remains strictly illegal under federal law, making interstate commerce risky.
“There is a limit to how much you can outsource to another state,” said Andrew Freedman, who served as Colorado’s pot czar for three years and now runs a cannabis consulting firm focused on good government oversight and responsible industry practices. He said a lot of the goods and services for the industry will have to come from within the state.
A 2016 study from the Marijuana Policy Group, a cannabis-focused economic and public policy consulting firm in Denver, found that each dollar spent on retail marijuana in Colorado — both recreational and medical — generated $2.40 in economic activity.
Adam Orens, a coauthor of the study, which was paid for by the consulting firm, ticked through several ancillary industries that saw a boost.
“In Colorado, we found security services got a good bump,” he said. “There is a whole class of specialized lawyers, and consultants — like me — that have done well. There’s real estate. We saw the cannabis industry rent a lot of B- and C-class retail space, and also transform a lot of industrial space,” he said, adding that packaging companies also saw more business.
Orens underscored the unique economic amplification effect of the federal prohibition on marijuana.
“It’s like those ‘buy local’ campaigns,” he said with a chuckle. “A dollar spent in the cannabis industry in Massachusetts will mostly stay in Massachusetts and will then get spent within the cannabis industry or other industries that are closely related, or are serving it.”
Pueblo County, Colo., population 164,000, has become a hub of that state’s marijuana business since recreational sales began in January 2014.
County Commissioner Sal Pace, long a proponent of the industry, said a lot of ancillary businesses in the county have seen great success.
‘In Colorado, we found security services got a good bump. . . . There’s real estate. We saw the cannabis industry rent a lot of B- and C-class retail space, and also transform a lot of industrial space.’Adam Orens, coauthor of a 2016 Colorado study
“Here in Pueblo County, 40 percent of all construction permits countywide have been attributed to the cannabis industry,” said Pace, who met with Boston city councilors on a fact-finding tour to Colorado earlier this year.
But caveats abound.
Even though Massachusetts voted last year to legalize marijuana, the drug remains illegal under federal law. And the Trump administration has indicated a crackdown on the recreational marijuana market may be coming.
While federal authorities under former president Obama more or less left alone marijuana operations that were legal under state law, the new Department of Justice leadership could change tack, chilling the industry.
Lawmakers in Massachusetts are also examining the state’s recreational marijuana law and are poised to make changes — perhaps major ones — to the voter-passed statute in coming months.
While the governor and top legislators have repeatedly said they will respect the outcome of the ballot measure, proponents of legalization worry they will gut the law.
Still — and, in some cases, because of the legislative action — there are already signs of marijuana-related money flowing into some non-marijuana businesses in Massachusetts.
The Marijuana Policy Project, a national pro-legalization group, has retained lobbying firm Lynch Associates Inc. to keep track of all legislative efforts related to the voter-passed legalization law, according to disclosures filed with Secretary of State William F. Galvin.
“We are working with experienced legislative agents to protect what 1.75 million people voted for,” said Will Luzier, who managed the successful Yes on 4 campaign. He added that the sooner the industry was up and running, the sooner the benefits will flow both to ancillary industries and to the state in the form of taxes.
But there are plenty of potential downsides that economic projections don’t take into account. One that opponents point to is the deleterious effect broader access to marijuana may have on worker productivity and public health.
Patrick J. Kennedy, the former congressman from Rhode Island and current advocate for people struggling with addiction, said adding a new legal drug — whatever the economic benefits of marijuana may be — is, on balance, a bad deal. And the bigger the profits associated with recreational marijuana and feeder industries, the harder it will be to regulate “Big Marijuana.”
But for SICPA, the Swiss tracking business, regulation is poised to be profitable. The company has been working with two California counties to help them trace legal marijuana.
And it hopes to convince Massachusetts officials about the suite of services it can offer the Commonwealth — for a price.Joshua Miller can be reached at email@example.com. Follow him on Twitter @jm_bos. Click here to subscribe to his weekday e-mail update on politics.