Jamen Shively tore a page right out of the Starbucks handbook on Thursday. At a press conference, the former Microsoft manager announced plans to open chain stores offering a uniform, high-end product that satisfies America’s craving for a mild buzz. Except not coffee—pot.
"Yes, we are Big Marijuana," Shively, 45, brazenly told reporters, outlining his intent to bring in $100 million in investments to establish "the most recognized brand in an industry that does not exist yet.” Colorado and Washington, the two states that legalized marijuana for recreational use last fall, are slated to soon license pot growers, distributors, and retail outlets (and impose steep taxes and strict regulations). Shively says he and his partners plan about a dozen retail outlets in each state, followed by up to 100 in California, where sales of medical marijuana are legal according to state law.
Shively’s plan will test how far entrepreneurs can push the new state laws legalizing pot before the Department of Justice charges them with federal crimes. Shively is shrugging off the risk. “People are saying, ‘You are putting a target on your back,’ but it's really not a big deal,” he said.
Attorney General Eric Holder is the person who will prove Shively right or wrong. Holder said in February that the White House would make a decision “soon” about how to respond to the voter-approved pot laws. Since then, Holder told a House Appropriations subcommittee, "We are certainly going to enforce federal law," but stopped short of saying he would try to overturn state laws in court. Holder’s Department of Justice could also prosecute marijuana sellers in Washington and Colorado, as DOJ has done to some medical-marijuana growers. Mostly, though, the Obama administration has so far targeted growers and sellers who are exceeding the limits of state laws.
Between October 2011 to October 2012, federal law enforcement shut down 600 dispensaries in California that prosecutors said were violating the state’s medical marijuana law. Meanwhile massive fields of medical pot prosper in the California sunshine, and the Arizona department of health actually regulates and inspects medical marijuana gardens.
The White House should cheer on the state inspectors and stay out of the way of entrepreneurs like Shively. If President Obama tries to stop state legalization, he will lose, if not legally, then politically. Three key stated goals of banning marijuana are making the streets safer, weakening gangs, and keeping kids off pot. Legalizing pot is likely to succeed far better at all three than banning it has.
Former Mexican President Vicente Fox started making the case for Shively’s plan Thursday. He joined the press conference to urge Obama to let state legalization proceed in order to stanch the flow of profits to bloodthirsty drug cartels. "Business investment” like Shively’s “will bring a solution to Mexico's huge crime problem," Fox told me. "Criminals won't be able to get the money because the money will be in the hands of people like Jamen.” Legal pot won’t eliminate the cartels, of course. But Fox’s point is that every dollar in pot sales that stays in the hands of a legal business doesn’t go to a violent gang across the border. Shively says he is securing relationships with domestic growers and, to abide by state law, will only sell cannabis in the same state in which it’s grown.
By all accounts, Americans are on Shively and Fox’s side. For the first time this year, a majority of Americans (52 percent) said they support legalizing marijuana. Sixty-four percent of Americans think the federal government “should not” enforce marijuana laws in states that have legalized pot, according to a December poll. That figure includes 43 percent of respondents who don’t think pot should be legal—in other words, even if they don’t like laws like Washington’s and Colorado’s, they still think the president should butt out if such laws pass.
Once legalization becomes a reality, support for it will likely continue climbing. Regulating the pot market is the only way to tightly control it. That includes collecting taxes, which states can use to pay for programs voters like (especially Obama voters). Washington state estimates that it will bring in between roughly $250 and $500 million in taxes annually. Of that, nearly 80 percent will fund health programs, including up to $110 million annually earmarked to address substance abuse.
I'm not thrilled by the prospect of smoking the Starbucks of bud, but I hold out hope that the microbrews of pot can also flourish in the emerging state markets. And since large-scale operations have the most to lose, they will be the most accountable. They have the incentive to check ID (keeping pot out of the hands of kids, since sales to people under the age of 21 remain illegal), pay taxes (Shively expects to pay $300 million a year in taxes), and adhere to the letter of the law, establishing a model for the pot industry that will make it safer than the illegal market.
If Obama and Holder try to stand in the way of all this progress, they’ll have nothing to offer except more years of a failed war on drugs. A federal crackdown would offer none of the benefits of legalization. Rather than fight Jamen Shively and the other would-be moguls who will surely follow him, the president and his attorney general should let them do what the White House can’t—beat the black market at its own game.