One Toke Over The Line now on a high

By Peter Huck

Rachel Schaefer of Denver smokes marijuana on the official opening night of Club 64, a marijuana-specific social club in Denver, Colorado.  Photo / AP
Rachel Schaefer of Denver smokes marijuana on the official opening night of Club 64, a marijuana-specific social club in Denver, Colorado. Photo / AP

When Barack Obama said it was time for Americans to have a national "conversation" on marijuana laws - he was careful to say he did not support legalisation - back in December, the President, who smoked pot with the "Choom Gang", high school stoners, was trying to catch up with the nation's rapidly shifting mood.

By April this year, the Pew Research Centre said that, for the first time, a majority of Americans, 52 per cent, supported legalisation, an 11-point rise since 2010. Forty-five per cent were opposed.

This sea change is echoed by support for "medical marijuana" in 18 states and Washington DC as public attitudes towards the banned Schedule 1 drug thaw, drawing support across the political spectrum.

When citizen-driven referendums legalised recreational marijuana use in Colorado and Washington in November - opening up the prospect of a legal marijuana industry and huge profits - the Obama Administration was left struggling to respond.

"This is a tough problem, because Congress has not yet changed the law," Obama said in December. "I head up the executive branch; we're supposed to be carrying out laws."

The most pressing challenge is how to reconcile federal and state laws. As marijuana comes in from the cold, should the United States crack down or exempt the drug from federal raids in states where it is legal?

Pragmatism won the day. On August 29, the US Justice Department announced it would adopt a "trust but verify" attitude towards the rebel states, a historic move.

The onus was on both states to create a "strong and effective regulatory and enforcement system". At least 10 states want to legalise marijuana by 2017, with Oregon and Alaska likely to try next year.

"It's certainly true there's a large across-the-board shift in attitudes," says Alec Tyson, a Pew research assistant. Lawmakers will note that support for, and use of, marijuana [an estimated 7 per cent of Americans are regular users] cuts across party, state and demographic lines, and 72 per cent say US marijuana laws cost "more than they are worth".

And whereas 60 per cent told a 1977 Gallup poll marijuana is a "gateway" drug, just 38 per cent believe that now.

This grassroots rebellion is promoting policy shifts, as cash-strapped states contemplate a marijuana tax windfall - estimated at "hundreds of millions" in Washington State - and US law makers confront the imminent prospect of a legal marijuana industry. How, for instance, can state banks accept marijuana profits without breaching US laws against laundering illicit drug money?

Marijuana dispensary owners operate cash-only businesses because banks won't accept their profits. Banks are leery of fines, like the $1.9 billion levied at HBSC last year as part of a federal probe into laundering drug cartel profits.

A bipartisan House of Representatives bill seeks to "update federal law to reflect the reality of the situation in the states" and allow banks to get into the legal marijuana business, a key condition if a reputable industry is to emerge.

"As a small business owner, I can't imagine trying to operate a legitimate business without access to the banking system. Forcing legitimate businesses to operate on a cash-only basis without bank accounts is an invitation for robbery, tax evasion and organised crime," said co-sponsor Denny Heck.

Has the time come for Big Marijuana's close-up?

Opponents fear so.

"We are at a precipice," Smart Approaches to Marijuana director Kevin Sabet told US lawmakers last week. "We're about to create Big Marijuana by allowing the commercial production, retail sales and mass advertising of this drug similarly to how we have had Big Tobacco for the last hundred years."

Supported by David Frum, who penned George W. Bush's "axis of evil" line, Sabet argues Big Marijuana will target teenagers and minorities and groom binge smokers. He cites the 2013 US Institutes of Health survey that reports growing teen marijuana use, ignoring research that "heavy" use before 18, when the brain is developing, can be harmful. The author of Reefer Sanity, Sabet will attend the NZ Drug Foundation Conference in November.

Nine former Drug Enforcement Agency chiefs, in a letter to Attorney General Eric Holder, also predict looming reefer madness.

"When marijuana will be fully legal to buy, diversion of the drug will explode," they forecast.

Which spells money. ArcView, which links angel investors with marijuana product companies, anticipates the "greatest business opportunity since the falling of the Berlin Wall and the opening up of the free market in Europe".

So what's the bottom line? A 2006 report by the Coalition for Rescheduling Cannabis, a pro-legislation lobby, identified marijuana as America's biggest cash crop, worth about US$35.8 billion ($43 billion). This was debunked in a 2012 study by UCLA, the Rand Corporation and others as "larger than the best estimates of the retail sales value of all marijuana consumed in the US", including imports.

Still, even allowing for hyperbole, there is a sense of a pending "green rush" bonanza. Quoting a financial analysis firm that said medical marijuana made US$1.7 billion in 2011, the Wall Street Journal pointed investors at ancillary industries, such as insurers, lawyers, online sellers and farm equipment firms.

"More and more people see the inevitability," Brendan Kennedy, head of Privateer Holdings, a private equity firm that has earmarked US$7 million for the burgeoning industry, told the Los Angeles Times.

The big boom could come if, and when, industrial-scale marijuana cultivation creates a national industry, like tobacco, with attendant jobs and cash flow. "I believe we are on the brink of a huge opportunity," says ArcView head Troy Dayton. He thinks a "responsible" marijuana industry can avoid the mistakes - such as targeting children - made by the alcohol and tobacco industries.

"The hippies are right. They were right about personal computing. They were right about organic food. They were right about renewable energy. And they're right again about cannabis." ArcView also offers insurance to the industry, along with market research and analysis.

"It won't be long before entire floors of Wall St will be dealing with this industry," says Dayton.

The last time advocates hoped for a breakthrough, in the 1970s, stoners speculated Big Tobacco had secret plans to exploit the market. A Brown and Williamson memo, posted by SAM, noted: "We have the land to grow it [marijuana], the machines to roll it and package it, the distribution to market it."

It proved a false dawn. Widespread public support was lacking.

Will Big Tobacco step in this time? Daryl Jayson, vice-president of the Tobacco Merchants Association, is doubtful. "Marijuana is like a Pandora's box. There are legal issues. Right now you can't move marijuana across state lines. To sell marijuana in Washington you have to live there."

- NZ Herald

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