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AUGUST 13, 2007
Edited by Deborah Stead Talk Show "[We're] paying the price for our passivity over the last 25 years."—Crawford Hill, Bancroft family heir, on the sale of Dow Jones to Rupert Murdoch's News Corp., as reported by The Financial Times. REEFER MADNESS "Hands Up, And Back Away From The Brownies" (Extended) Raids and arrests are up, but so are the number of dispensaries—and more states are coming aboard. Activists say regulation could help When California voters approved the nation's first medical-marijuana law in 1996, the idea was to help people like Jamie Green, a 73-year-old cancer patient who says he can't stand traditional painkillers such as morphine and Vicodin. "One puff and my pain is gone," he says. Alas, medicinal marijuana is producing nothing but pain for California politicians and law enforcement officials. The Golden State has seen an explosion of dispensaries where people with written recommendations from a doctor can buy all kinds of pot products, from multiple grades of herb sold by "cannabaristas" in black aprons to marijuana-infused candy bars and baked goods with names such as Reefer's Peanut Butter Cups and Munchy Way. An estimated 600 dispensaries have sprouted up statewide in the past three years, a $1 billion-a-year business by one estimate. Many use coupons, newspaper advertising, and the Internet to attract customers with come-ons that include free grams for first-time visitors, discounts for people who have served in the armed forces, and $150 credits towards doctors' visits. The relatively easy access to the drug has been lampooned on popular TV shows such as HBO's Entourage and Showtime's Weeds, the star of which—a pot-dealing suburban mom—has trouble competing with all the new medical-marijuana establishments. It has even inspired related businesses such as Potpartner.com, an online dating site for marijuana smokers that launched in April and has been advertising on Los Angeles radio stations. Richard Kapustin, one of the site's founders, says he has been giving out promotional lighters with his company's logo at the dispensaries. "The response has been very good," he says. Good Guys vs. Bad Guys There's one big problem with this, of course: Marijuana is still illegal under federal law. In July federal agents raided a dozen dispensaries across the state. Fourteen people were arrested, including several dispensary owners, a doctor who made referrals, and a handful of protestors. The Drug Enforcement Administration also has sent letters to the landlords of 150 dispensaries warning them that their property may be subject to forfeiture. The feds say the dispensaries are just fronts for illegal drug-dealing. In one indictment, Larry R. Kristich was charged with running a chain of seven dispensaries from San Francisco to San Diego that operated under the name Compassionate Caregivers. Although California's law says medicinal ganja cannot be sold for a profit, the indictment says the business generated more than $95 million in sales, allowing Kristich to purchase a $70,000 Mercedes and real estate in Costa Rica. The U.S. Attorney's Office in Los Angeles says Kristich is now a fugitive. Calls to the Compassionate Caregivers branch in Reseda, Calif., were not returned. Don Duncan, whose California Patients Group is a nonprofit, says the feds are tarring all dispensaries with the same brush. Ironically, he was arguing for more regulation of the industry at Los Angeles' City Council when his dispensary was raided on July 25. "The DEA can't tell the difference between the good guys and the bad guys," he says. The city council ended up initiating a moratorium on new dispensaries. Councilman Dennis Zine says complaints about the dispensaries' staying open too late and distributing promotional fliers near schools has the city considering a number of regulations, including making sure they are collecting sales taxes and prohibiting consumption on the grounds, "just like liquor stores." Never an Overdose Meanwhile, the federal crackdown is prompting a lot of dispensaries to close up shop. Kern County Sheriff Donny Youngblood says there were six dispensaries in Bakersfield when he took office in January. But two federal raids, including one that led to arrests on July 17, as well as his own warnings have prompted them all to shut down. "It is a federal crime," he says. "And federal law trumps California law." A dozen states now have medical marijuana laws, the latest being New Mexico, whose law went into effect on July 1. Most of the laws list specific ailments such as cancer, glaucoma, and AIDS, for which doctors may recommend the drug. California left its law open to interpretation by allowing physicians to suggest it for any illness they believe marijuana may help. Dr. Alfonso Jimenez, who owns four clinics in California that give patients recommendations but don't sell pot, says he has treated 5,000 people over the past four years, many for anxiety and depression. "I've got patients who come in and say: "I don't want antidepressants that will cause suicide or hurt my liver,"? he says. "It's a great treatment for chronic insomnia. I've been an ER doctor for 10 years. I've never seen a patient come in with an overdose of marijuana." Los Angeles won't be the first California city to regulate the dispensaries. In San Francisco at one point, the number of people coming to downtown Oakland to buy medical marijuana grew so large that the neighborhood earned the nickname Oak-sterdam. Even the city's mayor at the time, the famously liberal Jerry Brown (he's now California's Attorney General), sought to rein in the dispensaries, closing some down and setting a limit of four in the city, according to Dale Gieringer, a state coordinator for the National Organization for the Reform of Marijuana Laws. Many medical-marijuana proponents lament that aggressive growth and marketing of California's pot dispensaries has set back the medical-marijuana movement. Scott Imler, a Methodist minister who helped write California's medical-marijuana proposition back in 1996, says he would prefer to see the federal government control production and distribution of the drug. Imler says he read that one of the dispensaries in Los Angeles kept a sawed-off shotgun on the premises. "Have a shoot-out over a bag of weed—that's exactly what we were trying to avoid," he says. "We were trying to get patients off of the black market, not institutionalize it." By Christopher Palmeri   REEFER MADNESS Online Extra: Slide Show: A Peek Inside A Marijuana Dispensary California voted to legalize medical marijuana, but dispensaries like L.A.'s Green Goddess are still targeted by the DEA. The proprietor of the Green Goddess allowed BusinessWeek a look inside. CHINA A Frenzy Of Trading In Tea The latest investment craze sucking in yuan from China's eager speculators: Pu'er tea. Like a fine wine, the earthy-tasting fermented brew, often sold in circular cakes, gains flavor--and value--with age. The price of the tea, which comes from the southwestern tropical province of Yunnan, has gone from $2.56 to $3.85 a kilogram a year ago to seven times that range now. For the vintage stuff, prices can easily run as high as $300 per kg--and a 60-year-old 100-gram batch fetched $38,400 at auction earlier this year in Guangdong province. (The winning bidder was a Malaysian businessman.) The buyers and sellers in this hot market tend to be those in the tea industry and business types already speculating in stocks, real estate, or Chinese art. And as with other investing sectors in China today, it's a market that can fluctuate wildly. Prices fell by more than half recently, after Yunnan farmers jacked up production and the market was flooded by some low-quality Pu'er passed off as a better vintage. "The price has kept going up and down like the stock market," says An Min, a Yunnan native and founder of Beijing-based Pu'er Tea International Group, which owns three tea shops and plans to open seven more over the next year. Now she and others are becoming concerned about the speculation that has prices see-sawing. The market frenzy, they say, encourages unscrupulous dealers who try to sell inferior young teas as high-quality, aged Pu'er. In a recent interview with the official English language newspaper China Daily, Zheng Bingji, chairman of Yunnan Pu'er Tea (Group) Ltd., warned that "such illicit behavior will seriously harm the growth of the Pu'er tea industry." By Dexter Roberts PAY DAYS Where You Are Headed Joe Giordano, chairman of Seattle-based PayScale, says he is underpaid, and he should know: PayScale.com, his Web site, has gathered data on the salaries of more than 7 million Americans. In exchange for finding out how their earnings compare with those of others in similar jobs, site visitors anonymously provide detailed data (if you're a nurse, the questionnaire wants to know at what kind of hospital; if you're a translator, of which languages). One question routinely asked by PayScale, which was launched in 2002: "What were you doing five years ago, and how much were you making?" It is about to use the answers it stores in a feature called GigZig, which tells users what people who had their job title five years ago are doing and earning today. For example, plugging in "barista" (median income: about $18,000) shows some people who had that title in 2002 are now graphic artists ($34,500) or store managers ($41,000). The idea is to help users plot their next move, Giordano says. Penelope Trunk, author of Brazen Careerist, agrees that "seeing the results of other people's action could be a help." She cautions, though, that because the work environment is changing so fast, events in the past five years may not be good career-path predictors. PayScale makes its money by selling ads on the site--and salary data to businesses. Some mortgage companies pay for a service that combines the salary data with special algorithms to flag loan applicants who may be exaggerating their incomes. Fred A. Bernstein SECOND LIFE And Now, A Virtual Dress Code More signs that we're taking virtual life ever more seriously: IBM (IBM )--once known for its unwritten white-shirt-and-wingtip dress code--has issued etiquette guidelines for employees visiting Second Life, where it has a business presence, and other online worlds. Created collectively by SL-savvy IBMers, the document asks colleagues to be "sensitive to the appropriateness of your avatar or persona's appearance when you are meeting with IBM clients." Meanwhile, Jesuits are looking at SL as a venue for saving souls. In an article in La Civiltà Cattolica, a Rome-based Jesuit publication, Father Antonio Spadaro warns that SL has "an erotic dimension" but notes that it also has virtual cathedrals, mosques, and synagogues. "At heart," he writes, "the digital world may be mission territory." By Aili McConnon THE BOARDROOM Profiles In Sycophancy Flattery will get you everywhere, including on the boards of some publicly held companies. That's the major finding of a study of 760 outside directors published in the April-May issue of the Academy of Management Journal. The AOM, a group of management scholars, has about 18,000 members in 102 countries. The study involved board members at 300 large and midsize corporations randomly selected from "a popular index." The authors, professor James Westphal of the University of Michigan Ross School of Business and assistant professor Ithai Stern of Northwestern University's Kellogg School of Management, polled and interviewed their subjects from 2000 to 2003. The questions focused on three activities: identifying with or flattering other board members; monitoring and controlling CEO behavior; and giving advice or information to management when asked. (A sample question from the first category: "In speaking with Director X, to what extent do you point out attitudes and opinions you have in common?") After creating a profile for each director, Westphal and Stern tracked the group for 12 months to see how they fared. The most frequent flatterers, it turned out, got the most seats on other boards--specifically at companies where their original board mates served as CEOs or on board nominating committees. "Ingratiation had the strongest effect," says Westphal, who adds that he was "surprised" it outranked advice and counsel as an influence. "We hypothesized that ingratiation would have some effect," he says, "but didn't think the magnitude would be as much as it was." By Nanette Byrnes THE BOARDROOM 
AARP MARKETING It Was Tough Rhyming "HMO" It's not exactly We Shall Overcome. But the AARP realizes the power of music in stirring the emotions of the citizenry and is now producing a song it has written to push one of its top two lobbying issues--universal health care. In coming weeks, the organization of people aged 50-plus will premiere In America on its Web site and at events. The song, about a family made homeless by the cost of a daughter's serious illness, was written by AARP marketing staff and recorded--with a John Mellencamp kind of sound--by a relative unknown, Nashville singer Danny Archer. "Sometimes an issue is so big it goes beyond just talking," says AARP Chief Brand Officer Emilio Pardo, who is concerned that health care, AARP's biggest issue (along with Social Security protection), could be eclipsed by the Iraq War in the Presidential campaign. AARP hopes the song (in which "soccer games" rhymes with "insurance claims") spreads virally. The group is also releasing a second--professionally written--song, Stand Up for Yourself. Recorded by Aretha Franklin, it's the theme for AARP's current "Divided We Fail" campaign, a call to its 39 million members to push for bipartisan solutions to health care and financial security problems. Pardo thinks both songs will raise awareness, but sponsored tunes seldom take off. Even sung by the Queen of Soul, AARP's music may have a tough time getting R-E-S-P-E-C-T. By David Kiley HEART HEALTH An Easy Test For Aspirin Resistance About 50 million Americans take an aspirin tablet daily in hopes of reducing their risk of heart attacks and strokes, according to The Journal of the American Medical Association. But research in the past decade has found that up to 40% of them--the numbers are in some dispute--may be resistant to aspirin's blood-thinning effects. Now, Corgenix Medical (CONX ), a Denver diagnostic test-kit maker, has developed AspirinWorks to help doctors identify those not likely to benefit from a daily aspirin dose. A report on the test's efficacy was presented in July by independent Canadian and Australian researchers at a meeting of the International Society on Thrombosis & Haemostasis. Corgenix believes that the annual global market potential for all aspirin resistance testing is more than $1.2 billion. Approved by the FDA in May, AspirinWorks measures the blood-clotting chemical normally blocked by aspirin. If levels are high, a doctor can prescribe additional or alternative medications such as blood thinners. The kit isn't the only test for aspirin resistance. But it's the first to test urine instead of blood and to assess levels of the blood-clotting molecule instead of signs of clotting, which can have many causes. "Aspirin is a mainstay of cardiac therapy," says Dr. Alexander Duncan, director of the special hemostasis lab at Atlanta's Emory University, one of the first in the U.S. to use the kit. "This is the first time there is a simple-to-use lab test to measure the efficacy of aspirin."
By Kerry Capell BLOGSPOTTING Food Fight http://usfoodpolicy.blogspot.com/ Former USDA economist Parke Wilde, a professor at Tufts University's nutrition science and policy school, puts out a full spread in this blog about how America grows, markets, and consumes its food. His latest focus: the controversial farm bill (its voyage through Congress, he writes, is "a great education in the cynical economist's view of public policy decision-making"). With the old 2002 farm law set to expire this fall, Wilde opines knowledgeably about the new bill's nutrition and conservation provisions and its subsidy tweaks--including the elimination of subsidies for farmers making more than $1 million a year. He also takes readers on a useful tour around the Web sites of various public interest groups--analyzing why some support the bill, just passed by the House, and others oppose it. By Michael Loeb 
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