Business
Daily Blackouts Strain a Poor Spanish Neighborhood. Is Marijuana to Blame?
On a recent morning, Ángel Ortiz Rodríguez was slumped on a sofa in his apartment in Granada, in southern Spain, a tangle of breathing tubes protruding from his nose. Since Mr. Ortiz had a heart attack a few years ago, his life has depended on an electronic breathing machine.
But his neighborhood regularly loses power several times a day, forcing his wife, Rosa Martin Piñedo, to keep an oxygen cylinder as a backup. “We can’t really rely on electricity here,” she said.
Daily blackouts plague the 25,000 inhabitants in this poor district of northern Granada. Food rots in refrigerators and phone batteries die. Medical devices stop working, resulting in major health complications, doctors say.
The blackouts have been a part of life here for more than a decade, but they have grown markedly worse in recent years. And Endesa, Spain’s largest electric company, is blaming a surprising culprit: an increase in illegal marijuana farms. Marijuana growers, the company says, illegally connect to the grid and overwhelm it because of the powerful lights and air-conditioning the plants need.
A top manager at Endesa said that in Granada’s northern district alone, about a third of the volume of electricity stolen last year was linked to illegal farms.
The police attribute the rise in the number of farms partly to drug laws that they say are ambiguous. Spain allows small-scale, private growing and use of the drug, and it has relatively short sentences for those who break the law by running big plantations and engaging in drug trafficking.
Residents acknowledge the number of illegal pot farms. But they say that the harping on marijuana’s role — including in the news media — has given the authorities and the electric company the perfect excuse to avoid expensive repairs to a power grid that has been wobbly for years.
The idea of marijuana’s role in the blackouts has taken hold across Spain, where the largest newspaper, El País, ran a headline this year saying, “Marijuana Imposes Its Law on Granada’s Northern District.” Another, from the newspaper El Confidencial, read, “Marijuana Turns Granada Into a Paradise for Illegal Hookups.”
Several residents, frustrated that the focus on marijuana seems to have supplanted their larger concerns, have sued Endesa for failing to provide them with the electricity they need.
“People are dying here because they don’t have light,” said Manuel Martín García, Granada’s ombudsman. “We can’t just point to the marijuana and say, ‘Here’s the culprit.’”
At least a dozen other poor districts across Spain have also been affected by the double scourge of failing electrical grids and illegal marijuana production, according to local rights organizations.
After a two-month blackout in 2020 in a poverty-ravaged neighborhood in Madrid, United Nations human rights experts called on the Spanish government to fix the problem and criticized the authorities for blaming “the power outages on illegal marijuana plantations.”
But the debate over electricity shortfalls seems to be especially pronounced in Granada, where Endesa reports that the number of blackouts last year was three times as high as in 2017.
Just a 15-minute drive from the famed Alhambra palace, Granada’s northern district is the city’s poorest, with half of the population living on less than $8,000 a year. It is a collection of cramped quarters where decrepit tangles of electric cables stretch across the streets — a far cry from the fancy, cobbled neighborhoods of the city center.
In the quarter of La Paz, Joséfa Manzano Melgra recounted how she once slept on her living room floor after falling during a blackout while trying to reach the bathroom. At over 100, she can barely move and uses remote controls for nearly everything, including opening the door of her house.
“If there’s no electricity, they take my life away,” said Ms. Manzano, who was seated in an armchair surrounded by extension cords.
Data collected by local residents’ organizations show that power cuts occur on average nearly 100 times a month in Granada’s northern district. Sometimes they last more than 10 hours, as was the case in La Paz in early February.
“People come to my office and say, ‘We can’t take it anymore,’” said Dr. Marta García Caballos, a family physician. She said diabetic patients were sometimes unable to take their insulin because their blood sugar monitors had run out of power.
A study that Dr. García co-wrote in 2021 noted that blackouts had led to increased mortality, including because of a higher risk of accidents and poisoning.
Although hardly visible, the presence of indoor marijuana farms is evident in the area. The distinctive smell of cannabis pervades many streets. Several run-down buildings have bricked-up windows and air-conditioning units that purr all day, even when it is not that hot outside. (The plant grows best under controlled temperatures and with artificial light.)
Spanish officials say that besides drug laws that they consider lax, rising poverty after the financial crisis of the 2010s has led some to turn to growing marijuana.
“Marijuana drug trafficking extends like a green stain through almost all the municipalities of the province of Granada,” read a recent report by regional authorities that singled out Granada’s northern neighborhood as a production hub. Some 430,000 marijuana plants were seized in Granada in 2021, nearly three times as many as the year before.
José Manuel Revuelta, the head of infrastructure and networks at Endesa, said pot growers were illegally connecting to the grid, sometimes causing transformers to blow fuses up to 15 times a day.
Endesa employees regularly take part in police raids — 18 so far this year — to cut off illegal connections. But a company report notes that the farms can often be up and running again within hours.
Residents say the real question is how much blame can be placed on pot farms versus structural problems that never get fixed. And those who distrust Endesa say it is difficult to sort out the truth because the company is the keeper of the relevant data.
Endesa, for instance, says that a typical indoor farm in northern Granada — which averages 215 square feet, according to the police — consumes about 20,000 kilowatt-hours of electricity per month, roughly 80 times the average consumption of a Spanish household.
But Daniel Gómez Lorente, a civil engineering professor at the University of Granada, said this figure seemed “quite exaggerated.” Based on his own rough calculations of what a typical farm would need to run, he estimated that it would consume only a quarter as much electricity as Endesa asserted.
Rosario García, the head of a local residents’ association, said that marijuana farms were an “easy excuse” not to address more structural causes for the blackouts. She pointed out that blackouts had been going on for more than a decade but that the marijuana issue had arisen within the past five years.
Instead, Ms. García blamed what she said was deficient electrical infrastructure. Several burned-out electrical boxes are visible in the neighborhood, with a tangle of wires dangling over them.
Mr. Revuelta argues that Endesa has tried hard to fix those problems, investing more than 8 million euros, about $8.75 million, in the area’s infrastructure over the past three years, making it “the most renewed” in Granada.
For now, residents await the verdict in their court case against Endesa, which they accuse of violating their right to health, which is protected by the European Union’s charter of fundamental rights.
No matter the outcome, some fear it may already be too late to put the focus on the people instead of the pot. At the trial, Dr. García said she gave the judges a presentation on how blackouts harmed people’s health, expecting questions on the subject.
Instead, she said, “they asked me about marijuana.”
Business
How Poshmark Is Trying to Make Resale Work Again
Lauren Eager got into thrifting in high school. It was a way to find cheap, interesting clothes while not contributing to the wastefulness of fast fashion.
In 2015, in her first year of college, she downloaded the app for Poshmark, a kind of Instagram-meets-eBay resale platform. Soon, she was selling as well as buying clothes.
This was the golden age of online reselling. In addition to Poshmark, companies like ThredUp and Depop had sprung up, giving a second life to old clothes. In 2016, Facebook debuted Marketplace. Even Goodwill got into the action, starting a snazzy website.
The platforms tapped into two consumer trends: buying stuff online and the never-gets-old delight of snagging a gently used item for a fraction of the original cost. During the Covid-19 pandemic, as people cleaned out their closets, enthusiasm for reselling intensified. It was so strong that Poshmark decided to go public. On the day of its initial public offering in January 2021, the company’s market value peaked at $7.4 billion, roughly the same as PVH’s, the company that owns Calvin Klein and Tommy Hilfiger, at the time.
Then, the business of old clothes started to fray.
Using the Poshmark app, Ms. Eager and others said, started to feel like trying to find something in a messy closet. The app was cluttered with features that did not work or that she did not use, and it felt “spammy,” she said, sending too many push notifications.
Many platforms found selling used items hard to scale. Now, online resellers are trying to recalibrate. Last year, ThredUp decided to exit Europe and focus on selling in the United States. Trove, a company that helps brands like Canada Goose and Steve Madden resell their goods, purchased a competitor, Recurate. The RealReal, a luxury consignor, appointed a new chief executive as the company tried to improve profitability.
Poshmark is undergoing perhaps the biggest reinvention. In 2023, Naver, South Korea’s biggest search engine as well as an online marketplace, bought the company in a deal valued at $1.6 billion, less than half its IPO price.
Something of a mash-up of Google and Amazon, Naver is betting it can rebuild Poshmark, which has 130 million active users, with the same technology that made Naver dominant in its own country.
It may also help breathe new life into the resale market. Analysts think the resale fashion market still has room to grow in the United States, with revenue expected to increase 26 percent to $36.3 billion by 2028, according to the retail consultancy firm Coresight Research.
New legislation in California could help. The law, passed last year, requires brands and retailers that operate in the state and generate at least $1 million to set up a “producer responsibility organization” to collect and then reuse, repair or recycle its products. Resale platforms like ThredUp and Poshmark could be in a position to help brands carry out that mandate.
At the moment, though, Naver’s focus for Poshmark is more basic: Make it a better place to sell and shop. The company has the “operating know-how” to do that, said Philip Lee, a founder of the media outlet The Pickool, which covers both South Korean and U.S. tech companies.
“They’re trying to renovate Poshmark and then expand the market share,” he said.
A Marriage of Search and Commerce
Poshmark, which is based in Redwood City, Calif., was founded in 2011 by Manish Chandra, an entrepreneur and former tech executive, and three others. In trying to expand, Poshmark faced a problem common to resellers: Capturing the excitement of the secondhand-shopping treasure hunt while not frustrating buyers with an endless scroll. The company knew it needed better search, as well as interactive elements that gave people more reasons to come beyond paying $19 for a J. Crew sweater.
For its part, Naver was looking for ways to push beyond South Korea, where its commerce and search businesses were already mature. The growing online resale market in the United States presented an opportunity, and also gave the company access to the largest consumer market in the world.
“Commerce is a big growth engine for us,” Namsun Kim, Naver’s chief financial officer, said. And the peer-to-peer sector, where users sell to one another, was still in its infancy, with room to expand. But, Mr. Kim added, “it’s a more challenging segment, and that’s why it’s harder for a lot of the larger players to enter.”
There are two common business models for resale: peer-to-peer and consignment. With consignment, a platform collects and redistributes physical goods. Poshmark uses the peer-to-peer model, which relies on scores of people — many of them novices — haggling over prices and then mailing items to one another. This decentralization can be a headache for brands, which like to maintain a certain level of control of their products. And platforms like Poshmark must make buyers comfortable with trusting the sellers on their site.
Before the Naver purchase, it was difficult to push through needed technological changes, said Vanessa Wong, the vice president of product at Poshmark.
“I would always talk to my engineers and ask, ‘What if we do this or do that?’ They’re like, ‘That’s hard. The effort’s really high,’” Ms. Wong said.
Naver’s purchase offered both the investment and the expertise to pull off the changes. Founded in 1999, the company is everywhere in South Korea.
“We are not just a simple search technology or A.I. service,” said Soo-yeon Choi, the chief executive of Naver, whose headquarters are near Seoul. The company, she said, “alleviates the frustrations of people, which is what is needed to help growth.”
Search built Naver “into the massive power that they are in Korea,” said Mr. Chandra, who stayed on as chief executive after Naver’s purchase. It was the top priority when the company bought Poshmark.
Several new elements for users and sellers have been introduced. With a tool called Posh Lens, users can take a photo of an item and, using Naver’s machine-learning technology, the site populates listings that are the same or similar to the shoe or tank top that they’re searching for. A paid ad feature for sellers called “Promoted Closet,” pushes listings higher on customer feeds.
Poshmark also introduced live shows, some of which are themed, to draw in the TikTok generation and increase engagement. One party auctioned off clothing previously worn by South Korean celebrities, a connection that was made with the help of Naver.
Still, the resale market is going through growing pains and has not quite found its footing since the height of the pandemic. It’s not clear whether the changes taking place at Poshmark will be enough. In May, Mr. Kim, Naver’s finance chief, said in an earnings call that Poshmark’s profitability was improving, but by November, the company was cautioning that growth had slowed because of weakness in the peer-to-peer resale market in North America.
Missteps and Reinvention
The company has already done some backpedaling on unpopular decisions.
In October, Poshmark introduced a new fee structure, which increased costs for buyers. Sellers, fearing that higher costs would make consumers bolt, revolted. Within weeks, the company scrapped the new fee structure.
And there are still user headaches: tags and keywords that help users find what they’re looking for can be miscategorized. Sellers sometimes tag their products incorrectly to get more eyeballs on their less popular products. (Hard-to-offload Amazon leggings, for example, may be listed as Free People apparel.)
The company is beta testing changes with its frequent sellers — people like Alex Mahl, who sells thousands of dollars in apparel on the site each year. And within dedicated Facebook groups related to Poshmark, there’s a lot of chatter about the changes that sellers and buyers would still like to see.
“The only way for it to do well is there’s going to be constant changes,” Ms. Mahl said about the tweaks on Poshmark. “If you were just on an app that never changed — one, it would be boring, and two, the opportunity to just do better wouldn’t be there.”
One recent morning, Ms. Eager, the seller who joined Poshmark back in college, was pleasantly surprised to find that the app had some new features she actually liked. She snapped a photo of her Aerie gray tank top with Posh Lens. Within seconds, the app populated listings of similar products. It was so much better than conjuring up the adjectives needed to describe it.
“Love it,” Ms. Eager exclaimed.
Business
When receipts of home renovations are lost, is the tax break gone too?
Dear Liz: I have sold my family home recently after almost 50 years. I had done lots of improvements throughout those years. Due to a fire 15 years ago, all the documentation for these improvements has been destroyed. How do I document the improvements for the capital gains tax calculation?
Answer: As you probably know, you can exclude $250,000 of capital gains from the sale of a principal residence as long as you own and live in the home at least two of the previous five years. The exclusion is $500,000 for a couple.
Once upon a time, that meant few homeowners had to worry about capital gains taxes on the sale of their home. But the exclusion amounts haven’t changed since they were created in 1997, even as home values have soared. Qualifying home improvements can be used to increase your tax basis in the home and thus decrease your tax bill, but the IRS probably will demand proof of those changes should you be audited.
You could ask any contractors you used who are still in business if they will provide written verification of the work they performed, suggests Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. You also could check your home’s history with your property tax assessor to see if its assessment was adjusted to reflect any of the improvements.
At a minimum, prepare a list from memory of the improvements you made, including the year and the approximate cost. If you don’t have pictures of the house reflecting the changes, perhaps friends and relatives might. This won’t be the best evidence, Luscombe concedes, but it might get the IRS to accept at least some increase in your tax basis.
If you’re a widow or widower, there’s another tax break you should know about. At least part of your home would have gotten a step-up in tax basis if you were married and your co-owner spouse died. In most states, the half owned by the deceased spouse would get a new tax basis reflecting the home’s current market value. In community property states such as California, both halves of the house get this step-up. A tax pro can provide more details.
Other homeowners should take note of the importance of keeping good digital records. While documents may not be lost in a fire, they may be misplaced, accidentally discarded or (in the case of receipts) so faded they’re illegible. To make sure documents are available when you need them, consider scanning or taking photographs of your records and keeping multiple copies, such as one set in your computer and another in a secure cloud account.
When an employee is misclassified as contractor
Dear Liz: A parent recently wrote to you about a son who was being paid as a contractor. I know someone else who got a job that did not “take out taxes from his paycheck.” Such workers believe they are pocketing more money, but unfortunately, too many do not know about the nature of withholding. They only learn if they choose to file for their expected refund, but instead discover an exorbitant tax liability that a paycheck-to-paycheck worker cannot pay.
The sad fact is that many of these employers improperly classify their workers, who are truly employees, as independent contractors! And they do this to avoid paying their own portion of Social Security and unemployment taxes and also workers compensation insurance.
If workers believe that they have been misclassified (the IRS website provides all criteria), they can file IRS Form SS-8 and Form 8919, which will allow them to pay only their allocated half of their Social Security taxes. Hopefully the IRS will then contact these employers to correct their wrong classifications. And finally, it should be a law that, when hired, all true independent contractors should be given a clear form (not fine print on their employment agreements) that informs them of their status and the need to make estimated tax payments.
Answer: A big factor in determining whether a worker is an employee or contractor is control. Who controls what the worker does and how the worker does the job? The more control that’s in the employer’s hands, the more likely the worker is an employee.
However, the IRS notes that there are no hard and fast rules and that “factors which are relevant in one situation may not be relevant in another.”
The form you mentioned, IRS Form SS-8, also can be filed by any employer unsure if a worker is properly classified.
Liz Weston, Certified Financial Planner®, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
Business
Inside Elon Musk’s Plan for DOGE to Slash Government Costs
An unpaid group of billionaires, tech executives and some disciples of Peter Thiel, a powerful Republican donor, are preparing to take up unofficial positions in the U.S. government in the name of cost-cutting.
As President-elect Donald J. Trump’s so-called Department of Government Efficiency girds for battle against “wasteful” spending, it is preparing to dispatch individuals with ties to its co-leaders, Elon Musk and Vivek Ramaswamy, to agencies across the federal government.
After Inauguration Day, the group of Silicon Valley-inflected, wide-eyed recruits will be deployed to Washington’s alphabet soup of agencies. The goal is for most major agencies to eventually have two DOGE representatives as they seek to cut costs like Mr. Musk did at X, his social media platform.
This story is based on interviews with roughly a dozen people who have insight into DOGE’s operations. They spoke to The Times on the condition of anonymity because they were not authorized to speak publicly.
On the eve of Mr. Trump’s presidency, the structure of DOGE is still amorphous and closely held. People involved in the operation say that secrecy and avoiding leaks is paramount, and much of its communication is conducted on Signal, the encrypted messaging app.
Mr. Trump has said the effort would drive “drastic change,” and that the entity would provide outside advice on how to cut wasteful spending. DOGE itself will have no power to cut spending — that authority rests with Congress. Instead, it is expected to provide recommendations for programs and other areas to cut.
But parts of the operation are becoming clear: Many of the executives involved are expecting to do six-month voluntary stints inside the federal government before returning to their high-paying jobs. Mr. Musk has said they will not be paid — a nonstarter for some originally interested tech executives — and have been asked by him to work 80-hour weeks. Some, including possibly Mr. Musk, will be so-called special government employees, a specific category of temporary workers who can only work for the federal government for 130 days or less in a 365-day period.
The representatives will largely be stationed inside federal agencies. After some consideration by top officials, DOGE itself is now unlikely to incorporate as an organized outside entity or nonprofit. Instead, it is likely to exist as more of a brand for an interlinked group of aspirational leaders who are on joint group chats and share a loyalty to Mr. Musk or Mr. Ramaswamy.
“The cynics among us will say, ‘Oh, it’s naïve billionaires stepping into the fray.’ But the other side will say this is a service to the nation that we saw more typically around the founding of the nation,” said Trevor Traina, an entrepreneur who worked in the first Trump administration with associates who have considered joining DOGE.
“The friends I know have huge lives,” Mr. Traina said, “and they’re agreeing to work for free for six months, and leave their families and roll up their sleeves in an attempt to really turn things around. You can view it either way.”
DOGE leaders have told others that the minority of people not detailed to agencies would be housed within the Executive Office of the President at the U.S. Digital Service, which was created in 2014 by former President Barack Obama to “change our government’s approach to technology.”
DOGE is also expected to have an office in the Office of Management and Budget, and officials have also considered forming a think tank outside the government in the future.
Mr. Musk’s friends have been intimately involved in choosing people who are set to be deployed to various agencies. Those who have conducted interviews for DOGE include the Silicon Valley investors Marc Andreessen, Shaun Maguire, Baris Akis and others who have a personal connection to Mr. Musk. Some who have received the Thiel Fellowship, a prestigious grant funded by Mr. Thiel given to those who promise to skip or drop out of college to become entrepreneurs, are involved with programming and operations for DOGE. Brokering an introduction to Mr. Musk or Mr. Ramaswamy, or their inner circles, has been a key way for leaders to be picked for deployment.
That is how the co-founder of Loom, Vinay Hiremath, said he became involved in DOGE in a rare public statement from someone who worked with the entity. In a post this month on his personal blog, Mr. Hiremath described the work that DOGE employees have been doing before he decided against moving to Washington to join the entity.
“After 8 calls with people who all talked fast and sounded very smart, I was added to a number of Signal groups and immediately put to work,” he wrote. “The next 4 weeks of my life consisted of 100s of calls recruiting the smartest people I’ve ever talked to, working on various projects I’m definitely not able to talk about, and learning how completely dysfunctional the government was. It was a blast.”
These recruits are assigned to specific agencies where they are thought to have expertise. Some other DOGE enrollees have come to the attention of Mr. Musk and Mr. Ramaswamy through X. In recent weeks, DOGE’s account on X has posted requests to recruit a “very small number” of full-time salaried positions for engineers and back-office functions like human resources.
The DOGE team, including those paid engineers, is largely working out of a glass building in SpaceX’s downtown office located a few blocks from the White House. Some people close to Mr. Ramaswamy and Mr. Musk hope that these DOGE engineers can use artificial intelligence to find cost-cutting opportunities.
The broader effort is being run by two people with starkly different backgrounds: One is Brad Smith, a health care entrepreneur and former top health official in Mr. Trump’s first White House who is close with Jared Kushner, Mr. Trump’s son-in-law. Mr. Smith has effectively been running DOGE during the transition period, with a particular focus on recruiting, especially for the workers who will be embedded at the agencies.
Mr. Smith has been working closely with Steve Davis, a collaborator of Mr. Musk’s for two decades who is widely seen as working as Mr. Musk’s proxy on all things. Mr. Davis has joined Mr. Musk as he calls experts with questions about the federal budget, for instance.
Other people involved include Matt Luby, Mr. Ramaswamy’s chief of staff and childhood friend; Joanna Wischer, a Trump campaign official; and Rachel Riley, a McKinsey partner who works closely with Mr. Smith.
Mr. Musk’s personal counsel — Chris Gober — and Mr. Ramaswamy’s personal lawyer — Steve Roberts — have been exploring various legal issues regarding the structure of DOGE. James Burnham, a former Justice Department official, is also helping DOGE with legal matters. Bill McGinley, Mr. Trump’s initial pick for White House counsel who was instead named as legal counsel for DOGE, has played a more minimal role.
“DOGE will be a cornerstone of the new administration, helping President Trump deliver his vision of a new golden era,” said James Fishback, the founder of Azoria, an investment firm, and confidant of Mr. Ramaswamy who will be providing outside advice for DOGE.
Despite all this firepower, many budget experts have been deeply skeptical about the effort and its cost-cutting ambitions. Mr. Musk initially said the effort could result in “at least $2 trillion” in cuts from the $6.75 trillion federal budget. But budget experts say that goal would be difficult to achieve without slashing popular programs like Social Security and Medicare, which Mr. Trump has promised not to cut.
Both Mr. Musk and Mr. Ramaswamy have also recast what success might mean. Mr. Ramaswamy emphasized DOGE-led deregulation on X last month, saying that removing regulations could stimulate the economy and that “the success of DOGE can’t be measured through deficit reduction alone.”
And in an interview last week with Mark Penn, the chairman and chief executive of Stagwell, a marketing company, Mr. Musk downplayed the total potential savings.
“We’ll try for $2 trillion — I think that’s like the best-case outcome,” Mr. Musk said. “You kind of have to have some overage. I think if we try for two trillion, we’ve got a good shot at getting one.”
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