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Kai Ryssdal: There are now three states in the Union in which it's legal to buy marijuana for medicinal purposes. Last week Rhode Island joined California and New Mexico as places where pot can be dispensed with a doctors' prescription. The Rhode Island Department of Health will be able to license three medicinal marijuana dispensaries in total. In some places in California, like, in California in Los Angeles, you can find that many pot clubs in a single block. Marketplace's Jeff Tyler has more now on an industry with not much regulation and plenty of demand.

JEFF TYLER: In some Los Angeles neighborhoods, there are more medical marijuana dispensaries than there are Starbucks or McDonald's. Most sell more varieties of weed than Baskin-Robbins has ice cream flavors.

City councilman Dennis Zine says calling it a boom is an understatement.

DENNIS Zine: It's bigger than a boom. It's a major explosion with these facilities opening up, and they're opening up every single day in the city of Los Angeles.

At last count, there were 600 medical pot clinics in Los Angeles. That's right -- 600.

For many of them, the medical angle is nothing more than a pretext for selling dope. There's a cottage industry for doctors who prescribe pot for conditions as ubiquitous as insomnia or stress. Zine says the city council is working on new regulations to crack down on these free-wheeling pot pharmacies. Many will be closed.

Zine: Oakland, for example, has four medicinal marijuana facilities. That's easy to regulate and control. When you have 600, you can't regulate and control. We will bring this down to a reasonable number.

While the city tries to curb the growth of pot clinics, the marijuana economy in California seemingly can't be stopped. Nobody really knows what it's worth. But some estimate that marijuana is a $14-billion industry in the state.

The THC Expo -- the first pot industry trade show in the nation -- was held recently at the Los Angeles Convention Center. Hundreds of exhibitors showcased everything, from bongs to pot-laced fruit drinks and cannabis candy bars.

STEVE DeAngelo: It's a great growth industry. Anybody whose interested in a career, there's a great future in cannabis.

That's Steve DeAngelo, executive director of Harborside Health Center, a dispensary in Oakland. In the midst of the recession, he's hiring workers.

DeAngelo: The number of new patients coming into my facility climbed 84 percent in the first four months of this year. And what's driving that growth is that we're seeing the very beginnings of the conversion of the huge illegal market for cannabis into a legal market for cannabis.

To be clear, pot has not been legalized. But the Obama administration has taken a hands-off approach to medical marijuana. DeAngelo says gross sales at just his clinic run around $20 million a year. Though he quickly reminds me that, by law, medicinal pot clinics are not-for-profit.

To really cash in, DeAngelo recommends starting an ancillary business. He charges up to $400 an hour as a consultant to budding pot entrepreneurs.

DeAngelo: How do you develop a competitive edge so that people come to your shop instead of going to other shops.

To help dispensaries boost business, Steep Hill Medical Collective provides pot quality control. It tests for pathogens, like molds and mildews, and quantifies the level of THC -- the active ingredient in pot.

Co-founder Addison DeMoura says the lab tests help consumers be better informed.

Addison DeMoura: What we're actually doing is allowing patients to pinpoint the cannabis that's more specific for some of their ailments. It kinda gives them more of a value for the dollar they're spending at a collective.

He says varieties like "bubba kush" and "granddaddy purple indica" are good for severe pain. While "sour diesel" and "super-silver haze" sativas may reduce anxiety. Cash-strapped cities may also see value in weed.

In Oakland, pot clinics are behind a ballot measure that would impose a new tax on everything related to medical marijuana. Again, dispensary owner Steve DeAngelo.

DeAngelo: We really want to demonstrate that we are good corporate citizens and that our communities can actually benefit in a tangible way from having medical cannabis dispensaries located in them.

In July, voters will decide on the tax. If approved, Oakland could collect around $300,000 in pot taxes to help the city's budget.

In Los Angeles, I'm Jeff Tyler for Marketplace.