Browse Author: Dr. Tichy

Iowa Cannabis Legalization: 2019 Update

Could 2019 finally be the year for meaningful marijuana reform?

In the two years since the Legislature approved a law allowing for medical cannabis production and distribution, legislative leaders have resisted efforts to expand the program, instead choosing to see how their existing heavy-handed regulations work out.

Meanwhile, almost half the states in the country, representing a majority of all Americans, have legalized recreational marijuana or decriminalized possession of small amounts. That includes our neighbors in Illinois, Minnesota, Missouri and Nebraska. Iowa remains one of the states still threatening steep charges, including large fines and possible jail sentences.

Some Iowa politicians are not content to wait. In just two weeks since the 2019 legislative season commenced, lawmakers have introduced at least eight bills related to marijuana. Most seek to improve the medical cannabis program, while a few others target the nonsensically harsh criminal penalties in the Iowa Code.

Sen. Tom Greene, R-Burlington, is pitching a full replacement of the current medical cannabis law. His bill, dubbed the Compassionate Use of Medical Cannabis Act, would be a significant improvement, authorizing more treatment methods, reciprocity for other states’ patients, and more than doubling the number of licensed dispensaries around the state. That last point is particularly important for those of us in Johnson and Linn Counties, as none of the existing five dispensaries are here in Iowa’s second-most-populous corridor.

A group of Senate Democrats wants to allow primary caregivers to administer cannabidiol at school to students who are licensed to use the treatment. There’s a Republican proposal in the House to affirm the chamber’s support for medical research, and one in the Senate to adjust the overly restrictive 3 percent cap on tetrahydrocannabinol in medical products.

In a rare bipartisan filing, Sens. Brad Zaun, R-Urbandale, and Nate Boulton, D-Des Moines, propose amending the law to include any medical condition for which a health care practitioner determines a patient would benefit from cannabis therapy. Currently, fewer than a dozen ailments are covered by the program.

On the criminal justice front, the most ambitious bill, sponsored by five House Democrats, would make possession of up to 42.5 grams of marijuana a civil penalty, carrying a $25 fine. A separate bill would strike the possibility of imprisonment for possession, and also reduce intent to deliver from a felony to a serious misdemeanour. So you can visit here: www.veriheal.com

Another proposal from Zaun may have better prospects this year. His bill would make possession of up to five grams a simple misdemeanour, rather than a serious misdemeanour. Analysis of a similar bill last year found it would save the state $150,000 annually, with additional savings to local governments.

Lawmakers should see in last November’s election results that there was no backlash against their 2017 medical cannabis votes. Polls have shown Americans are steadily warming up to sensible marijuana laws. If legislators don’t act, they may soon pay a political price for their inaction.

It is also worthy of note that as more states legalize medical and recreational marijuana products, critics of the plant say they’re exhausted and their tactics have changed against the now billion-dollar industry.
“It feels really defeating,” said Lorelle Mueting, program director for Heartland Family Service Prevention Department in Council Bluffs.

In addition to running outreach programs, she said she provides local legislators with information on the effects of drugs.

“The legislative session is very time consuming and so at this point in time, we are extremely exhausted from trying to provide information and fight a battle that we can’t win,” she said. “But I keep doing it because I see the effects of it every day.”

Mueting, like other substance abuse advocates, says the marijuana industry is profiting off of its addictive aspects by creating misconceptions about its safety.

“It’s become this sort of wonder drug. We know it’s not true,” said Peter Komendowski, executive director of Partnership for a Healthy Iowa.

Iowa’s limited medical cannabis program allows people with specific conditions and a doctor’s approval to use products with different amounts of two compounds from the plant: cannabidiol and tetrahydrocannabinol.

Cannabidiol, or CBD, is a non-intoxicating compound that has been shown to help with seizures and other conditions. Tetrahydrocannabinol, or THC, is a psychoactive compound that in small amounts is known to help provide relief for people with cancers, Lou Gehrig’s disease and other illnesses.

Komendowski said that although marijuana may have proven positive impacts for a few medical conditions, the industry is exaggerating those benefits as a way to legalize recreational use which he says is dangerous and highly addictive.
Legalization proponents challenge the notion that marijuana is addictive, noting that users who stop do not face physical withdrawal symptoms like those experienced by heavy opioid users or alcoholics.

However, according to the CDC, studies show that about one in 10 marijuana users will become addicted and the National Institute on Drug Abuse maintains that If marijuana users develop dependence, marijuana users can experience withdrawal symptoms such as decreased appetite or irritability.…

Moving Some Money Around

I have (had) a fair amount of cash sitting at Virtualbank. Part of it is earmarked for paying off my 0% credit card balance in January. The rest is savings. I’ve been using it to purchase I Bonds for a month now and plan to continue on that path at least until the new rates are announced in May of 2006. Virtualbank is paying 3.55% which by today’s standards kind of sucks…

So I’ve decided to move some money around to increase my return. Here’s the plan:

  • Move the bulk of the 0% balance and a few extra thousand to my HSBC account (currently paying 4%). Their transfers are a little slower than Virtualbank but the additional interest more than makes for the couple of days they take advantage of my float.
  • Since Virtualbank is already set up with TreasuryDirect I’ve decided to leave enough cash there to complete the funding of my I Bond purchase through April 2006. At that point I’ll re-evaluate whether I Bonds are still the right choice for my early retirement cash flow funds.
  • In order to get some additional gain out of the above funds I’ve decided to purchase some 28-day Treasury Bills. Thanks to Jonathan at MyMoneyBlog for the idea. I’ve scheduled the purchase and will be earning just under 4% for the next 28 days. I’ve left enough in the Virtualbank account for the next round of I Bonds at the end of this month.
  • I’ve also funded my risk-capital brokerage account @ Ameritrade. I’ve had the account for several years but haven’t traded in close to a year as I needed the cash for the other expenses we’ve shelled out this year. Since we’re relatively stable for now I think it’s time to reward myself with a little play money… 🙂 I’ll post about this account as I find ideas and execute on them over the next several months.
  • I’m going to explore other brokerage accounts as well. Ameritrade is fairly reasonable and allows me to trade on margin and write calls but they don’t allow bond trading. More on this later as I explore the world of Muni’s in order to reduce our future tax load.

All this activity has had my money in the ether for several days. Sort of annoys me that a transaction that should (and in reality does) take only a few seconds get stretched into days so my banks can make some money off of my funds……

Cashing in the I Bonds

After some deliberation, I’ve decided to start cashing in the I Bonds I purchased a year or so ago. It’s not that I don’t think they are good investments, they just don’t fit my needs right now.

First off, due to the purchase of our new house, our not having sold the old house and buying a car for cash a few months ago we’re carrying some debt outside our mortgage for the first time in over a year. I’ve recently paid off our HELOC with what is essentially 0% money but am not charging it up again to pay off one of the 0% balances (which I hope to get again and pay the HELOC back down.) I am also getting ready to apply for some new credit lines (to use for 0% balance transfers) and need to get my overall credit card utilization down to have the best shot at acceptance. In order to give us some flexibility and more cash to work with I’ve decided that instead of rolling our I Bonds over into new ones with a slightly higher fixed interest rate we’ll take the cash and put it to work. So as of today, my Treasury Direct account looks like this.

I’ll be entering redemption requests for the other four I Bonds on or about the 1st of the month that they turn one year old. By redeeming before the bonds are 5 years old I am sacrificing 3 months’ worth of interest. This is a good time to do this however as I’ll be giving up 2% interest for 3 months. With the higher yield in the previous six months, the fact that the bonds are really closer to 11 months old and their exemption from state taxes (really not a big deal in Illinois) I’ll still net close to 5% for the year I’ll hold them.

Once our house in Michigan does sell, I will very likely start over and once again build a ladder of I Bonds. I still think they can be an important portion of our retirement portfolio, providing stable income to supplement our other sources. I just have better uses for the funds now. I also have a $2,000 CD at Netbank that comes due in March, I’ll likely be cashing that in as well.…

Investment experiment that you should know about

Made a few trades last week that both generated some cash and put me back in the black for at least one of my positions. I still have a ways to go however.

On the 14th, I bought 500 shares of Gasco (GSX) @ 3.60. While I was already too concentrated in this stock I couldn’t resist. It paid off as the next day I sold 500 shares at $4.05 and on the 16th sold another 500 shares at $4.37 per share. This makes me just about break-even on GSX overall with a small paper profit on the Puts I sold a while ago. I expect Natural Gas will continue to rise from here. I am a buyer of this stock under $4 and will likely sell another 500 shares if it goes much above $4.50 to get back to my core position.
TD Ameritrade (AMTD) has made a bit of a comeback, closing at $15.36 on Friday. This is a bit higher than the $14.60 I got when I sold half my position but I’m not kicking myself over it. The Puts I shorted are now out of the money so that will make up for some of the losses but Ameritrade continues to be my biggest losing position, even taking the dividend into account.
Sara Lee (SLE) continues to hold up well.

Shanda (SNDA), not so much though it is up from it’s lows. I believe the stock may be getting ready for another run. Might use some of my new-found cash to pick up another 100-200 shares to drive my average cost down.

I am still looking to establish a long-term position in Yahoo (YHOO) but am going to wait until later this month to see if I will need to take the 200 shares of Microsoft (MSFT) I shorted Puts on.

I am loving this down market, there are so many bargains out there it should be easy money later in the summer.

You can see my results at OpenPortfolios. The Ameritrade puts are not tracking correctly so the portfolio is a little bit off but it’s still close. As you can see, I am still down overall but am making forward progress.…

How to earn from a vacant house.

Our house in Michigan sits empty (aside from a bed and TV I left there for my visits for work.) It is on the market and priced competitively with other properties in the area but the housing market in and around Detroit is very slow at the moment.

Between the Big-3 laying off workers and salaries stagnating or falling there just isn’t a lot of demand for housing. Many people are leaving the area as well (as we have) which has had the effect of increasing the supply of real-estate on the market. To top it off, foreclosures are at double the rate of the nation as a whole so banks are dumping these homes on the market as well, at much lower than previous market value.

We’ve had several people interested, but nobody with enough money to buy the place, or even justify a showing. It’s a great property and I know it is just a matter of time before it sells, but uncertainty is something I’ve never liked. I’d also like to have the cash to put into stocks as I think we’re on the verge of a very good market for the next year or two.

I’m pretty much assuming that the property will be on the market for a while, several months at least. While we can afford the dual mortgage payments, taxes and insurance it is putting a strain on our cash flow.

There is also the issue of maintaining the property. Work that I would normally have done, mowing the lawn, clearing snow etc. will now cost money as we will need to hire someone to do it. The amount is not trivial either since we mow about 2 acres of grass and our driveway is around 200 feet long…

I spoke with our insurance agent last week and was informed that because the house is vacant our premiums will be increasing dramatically, from around $1,200 a year to nearly $2,400!?! I can see why there would be some increased risk for vandalism etc, but sincerely doubt it’s double what it was if we were still living there… I turn the water off whenever I’m not there and have left the heat on (set @ 50 degrees).

The furnace is only a year old so I see very little risk of it failing with the exception of a power outage. To reduce the risk of damage to the place if the power does go out for an extended time, I will be draining the plumbing and filling the traps with antifreeze the next time I am out. This will at least confine any damage to the lower levels of the home should the worst happen.

All of this has gotten me to thinking about either renting the place out, or having a caretaker live there. Both options have advantages and disadvantages but may be better than the alternative of letting the place sit, especially in a market where property is no longer appreciating. While my wife and I haven’t discussed this yet, I thought I’d write down some pros and cons of both.

Renting

Pros

  • Possibly generate enough income to cover the hard costs of owning the property. (Mortgage interest, taxes etc.)
  • Tenant will pay utilities.
  • Possible to have lawn care/snow removal done by tenant.

Cons

  • Difficulty of finding trustworthy tenants.
  • Potential damage to property, making it more difficult to sell.
  • Having to subject tenants to moving out if the property does sell. May be a time lag between offer and closing because of this.
  • Even with rental income, the house will still very likely be running a negative cash flow.
  • Difficulty of evicting a non-paying tenant. (Takes around 4 months from what I hear.)

Professional Caretaker

Pros

  • House will be ‘lived in’, there will be furniture there to give the rooms scale for prospective buyers.
  • Property will be maintained (lawn care/snow removal) at caretaker’s expense.
  • Caretaker may make some small rent payments.
  • Insurance rates may be cheaper.
  • Professional caretakers typically maintain their own insurance or bond, this protects us against property damage.
  • There is an understanding up front that the house is for sale and that the caretaker may have to vacate the property within 30 days notice.

Cons

  • Difficulty in locating a suitable caretaker.
  • Income (if any) will not be enough to break even on hard ownership costs.
  • I’m sure I’ve left somethings out. I’ve only just begun thinking this through…

I know without even talking to my wife that neither of us are crazy about the idea of strangers living in our house. Nearly everyone we know who has been a landlord has some horror stories to share. Because of this, I have strong reservations about doing this. However, with my somewhat uncertain employment status I would feel better knowing that at least a portion of the sunk costs are being covered. I also strongly believe that a house that is lived-in will generate a better selling price, when the market improves.

We do have one ray of hope. Some friends of ours, who sold their house and moved to North Carolina a year and a half ago are considering moving back. Apparently he can get his job back at one of the auto makers and she is a teacher and is very capable of finding a job.

We’d feel very comfortable renting the place to them and know that they would take very good care of it. Depending on the jobs they get, they may even consider buying the place. 😉

Have any of you considered renting out a former residence while waiting for it to sell? If so, what are your thoughts or experiences? I’d appreciate any and all input.…

A conversation about investment and retirement

My dad’s a smart guy. He worked hard, had a successful career, put my sister and I through college (for the most part) and still managed to retire comfortably several before his 65th birthday. (He worked a couple of extra years to pay off his and his wife’s retirement home before retiring.)

I’ve recently been corresponding with him about what to do with our excess cash above maxing out our 401Ks. Here’s his reply:

—– snip ——

As to investments

  • Payoff ALL debt. Credit card first if you have any. Then don’t spend any money you don’t have in hand. Look at your expenses and CUT them. You can save a lot more than you might think.
  • Take a given amount each pay period and sock it away. Sounds like you have exhausted pre-tax so go to tax deferred next. Ladder EE Bonds, tax differed annuities and such. Yes, the rate is low right now but it is safe and you won’t have to think about it. Over the years you will create a money stream in retirement that will help you avoid using your retirement money until 70 1/2.
  •  Take the rest of the loose money and invest in some mutual funds — Canada, South America, energy are good right now. There are others. You will have to keep an eye on these but, go for the long term.

You may not agree with all this but, it will work over time.

Oh, and don’t try to retire too soon. Look for a “next career” at a slower pace at the right time. The “next career” should be unrelated to what you have done to date. IE: NO COMPUTERS! Selling fine cars or a rock band comes to mind. I think I’m kidding — Maybe not?

—– snip ——

All in all I can’t say I disagree with him on any of the above. I do have some credit card debt at 0%, just using it to generate some interest. Overall though I am not sure it’s worth the time and effort. I also think I Bonds are going to be a better investment than EE Bonds in the next few years at least, but the basic premise is a powerful one. I remember after I graduated from college my dad would buy an EE bond every week out of his paycheck. By the time he retired they were starting to mature. This is generating income for him and I don’t believe he’s had to tap into his retirement savings yet. Not sure if I am ready to pay the mortgage off though. Our actual interest rate after tax deductions is around 3.5%. Given inflation that is nearly free money in my opinion. I think I’d rather invest in I Bonds or some other short-term instruments, at least for now, and keep the money a bit more liquid.

I also like his point about not retiring too soon. My dad is retired but still works quite a bit. The difference is that his job now is helping the Senior Citizens in the town he lives in and other volunteer efforts. I have to imagine it’s quite fulfilling. I’ve thought for a long time now that my goal should be to retire at 55. In retrospect, that’s not really the case. By age 55, preferably sooner, I’d like to be able to work at something I really enjoy doing (i.e. the money will be secondary.) Not sure what this will be but it should be fun to think about. I work in a career that doesn’t really add a lot of value to society and that bothers me sometimes……