(David McNew/Getty Images)
May 22, 2013

Go East, Young Marijuana Dealer

Chuck used to sell marijuana in California. But the legalization of medical marijuana in the state meant he was suddenly competing against hundreds of marijuana dispensaries. So he moved to New York, where marijuana is still 100 percent illegal. Since making the move, he says, he's quadrupled his income. (For the record: His name isn't really Chuck.)

He spends pretty much every day dealing what he calls "farm-to-table" marijuana. On a recent afternoon in his dimly lit New York apartment, he was just about to complete a daily ritual: loading about 50 baggies of marijuana, worth a total of about $3,000 into his backpack, before heading out to make deliveries. "We're helping keep people stoned on a Friday night in New York City," he said.

Eighteen states and the District of Columbia have now legalized marijuana, either for medical use or for fun. And, it turns out, when one state brings an underground market into the mainstream and another doesn't, there are economic consequences in both places.

Dealers aren't the only ones with an incentive to move marijuana out of California. The legalization of medical marijuana led to a rush of pot farmers with permits to grow marijuana legally. That in turn led to a supply glut — and plummeting wholesale prices. Some growers haven't been able to unload all their crops at the price they want on the local, legal market. So they break the law and send it out of state.

Special Agent Roy Giorgi with the California Department of Justice is supposed to stop the illegal flow of marijuana in California. That can mean crouching in the brush in some remote part of the mountains, or it can mean heading to a FedEx or UPS in California's pot country to take a look at all the outgoing parcels and try to detect marijuana inside.

He estimates that 1 in 15 packages he examines has marijuana in it. "Right now, Northern California bud, that trademark, that stamp, is really some of the best in the world," he says.

Of course, all of Giorgi's efforts to catch marijuana growers and dealers tend to drive people out of the illegal marijuana business. That, in turn, means Chuck has less competition — and can charge higher prices.

Chuck sells marijuana for about $60 for an eighth of an ounce; in California, it would be anywhere from $30 to $45. With his New York customers, Chuck talks about marijuana like it's a rare California wine. When he pours out the contents of his backpack to reveal strains with names like Girl Scout Cookies and AK47, his clients are wowed.

Because Chuck is working in an illegal market, his customers have a hard time finding other marijuana retailers. "There's plenty of weed in New York; there's just an illusion of scarcity, which is part of what I'm capitalizing on," he says. "This is a black market business. There's insufficient information for customers."

This is what economists call information asymmetry: Chuck knows more about the market than his customers do. If weed were legal, his customers could comparison shop — they could look at menus and price lists and choose their dealer. As it is, once they find Chuck, they're likely to stick with him.

Note: A version of this story originally aired as part of the WNYC series The Weed Next Door. The headline on this post was inspired by @MichaelMontCW


Apple CEO Tim Cook
(J. Scott Applewhite/AP)
May 21, 2013

Apple’s Cook Faces Senate Questions on Taxes

Apple's CEO is disputing assertions by a Senate panel that the company avoids billions of dollars in U.S. taxes by shifting profits to foreign affiliates.


Recycling center
(Jackie Northam/NPR)
May 21, 2013

Global Afterlife of Your Donated Clothes

On a bright and warm Saturday morning, there's a steady flow of people dropping off donations at Martha's Table, a charity in downtown Washington, D.C. A mountain of plastic and paper bags stuffed with used dresses, scarves, skirts and footwear expands in one corner of the room. Volunteers sort and put clothes on hangers. They'll go on sale next door, the proceeds of which will help the needy in the area.

It's a scene played out across the U.S.: people donating their old clothes, whether through collection bins or through large charities, to help others.

Melissa Vanouse donates clothes a couple times a year.

"I think it all pretty much stays local, that's kind of the idea," she says.

But it doesn't. Martha's Table, like other charities, only has so much room and can only keep clothes for so long. At some point, charities call in a textile recycling company.

Varied Uses

About 80 percent of the donations are carted away by textile recyclers, says Jackie King, the executive director of Secondary Materials and Recycled Textiles, a trade association for textile recyclers. She says that means about 3.8 billion pounds of clothing that is donated each year is recycled.

"Thirty percent of the materials are made into wiping cloths that are used in commercial and industrial use," she says.

About 20 percent of the donated clothes and textiles are converted into fibers that are then made into a variety of other products, including carpet padding, insulation for autos as well as homes, and pillow stuffing.

King says nearly half the donated clothes - about 45 percent - is exported.

A forklift shuttles large pallets stacked with bins of donated clothes at Mac Recycling on the outskirts of Baltimore. A large section of the warehouse is packed with colorful 800-pound bales of clothing ready to ship out.

Robert Goode, the owner of Mac Recycling, says textile recycling is a huge international industry. He says his small warehouse alone ships about 80 tons of clothes each week to buyers throughout the world, including Central America, South America, Asia, Africa and Europe.

"Pretty much you can pick any country and there's a market for these items," he says.

'Competitive Business'

Goode says when the shipment arrives overseas, a wholesaler will break down the bales and send the clothes into different markets. At each step along the way in this process, someone makes money from the donated clothes.

"It is an extremely competitive business ... items are bought and sold by the pound and you can literally make or lose a deal over half a cent a pound, quarter of a cent a pound," Goode says.

He says the business has changed dramatically over the years. Customers in foreign markets are now setting up their own operations in the U.S., cutting out a middleman. King, SMART's executive director, says textile recyclers are still finding strong demand for used clothing. But she says selling cheap garments, like those made in Bangladesh, is becoming increasingly difficult.

"I think one of the problems when they're trying to sell the clothing abroad is the distinction between what's good quality used clothing versus clothing that has maybe not been manufactured to the highest standards," she says.

King says ultimately she hopes that more clothes — of good quality — are donated every year. Her organization, SMART, says 85 percent of all the clothing sold each year ends up in landfill.


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