Mind the Gap
by

Vancouver’s abandoned mansions helped spawn this mysterious frontier market

Hongkongers were early-stage enablers in the billion-dollar medical marijuana business

PUBLISHED : Sunday, 24 April, 2016, 9:01am
UPDATED : Monday, 16 January, 2017, 10:26am

The old hippie smelled so strongly of marijuana he could have been an air freshener in a glaucoma outpatient clinic.

“Is that marijuana?”

“No it’s medicinal marijuana.”

“Here’s the prescription. And I’m not going to tell you why because it’s between me and my doctor.”

Welcome to the legalised medical marijuana scene in California and Vancouver where Hong Kong money and expertise have played a pioneering role in developing technology that continues to revolutionise the industry.

The US$5.4 billion spent in the US on legal medical and recreational marijuana last year is about $500 million more than what was brought in during 2014, according to reports released by ArcView Market Research and New Frontier Data, two marijuana industry market research groups.

ArcView estimates the legal market could grow to US$6.7 billion in sales in 2016. Few industries or consumer sectors are growing at these rates. A 30 per cent annual growth rate could push the legal marijuana industry to about US$22 billion in annual revenues by 2020.

Before Vancouver’s real estate market was dominated by hordes of mainland Chinese buyers, it was infested by house upon house of illegal indoor marijuana grow operations. They were financed by local entrepreneurs, criminals and a contingent of new Hong Kong money. After the Expo 86, Vancouver attracted a new wave of Hong Kong immigrants looking to establish a residence ahead of the uncertainties of 1997.

Unwitting Hong Kong parents, who were too busy to visit Vancouver, paid for a sizeable home that their children were supposed to live in while they studied at local schools. They even bought the kids a German luxury car. Complete the necessary equipment with a BlackBerry, the dominant smartphone for drug dealers of the period, and you have all the necessary gear for prosperous underground commerce.

Besides detached homes, Hong Kong money fuelled the purchase of entire rows of houses and apartments whose adjoining walls were punched out to create one contiguous garden. Easy mortgages allowed Hongkongers to play a major role in the lucrative production and smuggling of the marijuana to the US.

Marijuana was still illegal in Canada and the US in the late 80s and through the 90s. And criminal organisations always follow illegal substances. But, that never scared away the Chinese. After all, one of the abiding beliefs in the Hong Kong business scene is that a criminal is only someone who has actually been convicted.

These operations evolved into large, highly sophisticated grows using the latest technology such as high powered lights, pumps, cooling and chemicals to supercharge the growing cycle. Sophisticated levels of security concealed it from police and thieves. Much of this equipment is developed and manufactured in Shenzhen and Dongguan.

Today, the legalisation of medical marijuana in the states like California and Colorado represents the opening of a huge national market for a product that is likely to be as popular as alcohol.

Like the emergence of the semiconductor in Silicon Valley, British Columbia’s early, hippie, marijuana subculture seeded a core competency that paved the way for inventions and improvements. It is the kind of technology where Hong Kong entrepreneurs have displayed a competitive advantage.

business-article-page