Entering the Legal Marijuana Era – Finding the Pitfalls and Profits in the Years Ahead

Entering the Legal Marijuana Era – Finding the Pitfalls and Profits in the Years Ahead


It may sound silly to walk into a bar and order up a beer with a weed chaser or to open a late night box of cereal called “Weedies” to help you sleep, but that is exactly the era we’re moving into.

On Election Day, the citizens of both Colorado and Washington made the bold decision to legalize marijuana and manage it with controls similar to alcohol, prompting speculation about Amsterdam-style "drug tourism" and a new round of jokes about Colorado's official song, Rocky Mountain High.

Certainly, for Colorado, there will be big concerns about stoners on the ski slopes, and in Washington, even bigger concerns about stoned lumberjacks wielding chainsaws. But those tend to be edge cases in a much larger opportunity movement.

Using the two ballot issues as templates, the remaining 48 states will see similar versions of this legalization on their ballots in the coming years.

But for now, Colorado and Washington will be the ones making all of the critical decisions about the massive new industries that are about to unfold.

While the role of being first brings with it some painful policy-making work, it will also attract tremendous attention, and the entrepreneurs in these states are already racking their brains to figure out how to capitalize on it. Here are a few things to expect.

First a Little Background

In 2009 I predicted: “Within ten years marijuana will emerge as a staple at most night clubs and parties.”

After looking closely at the similarities between now and 1933 when prohibition ended, it was an easy prediction to make.

Attitudes about pot laws had been shifting and a 2009 Gallup poll showed 44% of the population supported legalizing marijuana, up from 25% in 1995. A more recent poll in 2011 showed it had risen to 50%.

Since the 1937 Marijuana Tax Act that prohibited the production of both cannabis (marijuana) and hemp, a rigorous effort has been made to vilify the two substances. The reasons behind hemp’s inclusion seem to have centered around a conspiracy orchestrated by the combined efforts of Andrew Mellon, Randolph Hearst, and the Du Pont family.

With the invention of the celluloid-extracting decorticator, hemp was thought to be a very cheap substitute for the paper pulp used in the newspaper industry. Hearst felt that this was a threat to his extensive timber holdings. Mellon, who was then Secretary of the Treasury and the wealthiest man in America, had invested heavily in the DuPont's new synthetic fiber, nylon, and was worried that new hemp fiber derivatives could derail nylon’s popularity.

Scare tactics about pot’s addictive nature and its “gateway drug” potential have long been debunked, but those who oppose legalization still cite these issues as major concerns.

In the Netherlands, where pot is widely available in coffee shops and smoke shops throughout its cities, the Dutch are far less likely than Americans or other Europeans to use marijuana. Roughly 14% of Americans already use marijuana, versus about 5% of the Dutch, according to the United Nations Office on Drugs and Crime.

The Great Legalization Showdown

The Colorado and Washington initiatives have put the Justice Department in an awkward position. The two states have asserted their rights to make it legal, but this legality is in direct conflict with federal law.

These votes have set the stage for a massive showdown between State’s rights and Federal authority. So far the Federal Government hasn’t been willing to budge.

From October 2011 to October 2012, federal law enforcement has shut down 600 medical marijuana dispensaries in California. It was the biggest crackdown since the state legalized medical marijuana in 1996. Prosecutors also tried to seize the assets of sellers and their landlords and threatened them with criminal charges.

This is not a case where we can assume the federal government will follow the lead of the states. Rather, it’s a case where the Justice Department is asserting its authority against the state’s voters and state sovereignty.

Colorado already has 536 medical marijuana dispensaries operating throughout the state and Washington has a similar number. The new legalization vote could trigger 100 times as many outlets.

This will indeed be a thorny issue for the Obama administration, and it may very well end up in the Supreme Court to get a final ruling. And if the Supreme Court doesn’t agree with Colorado and Washington, expect a much larger movement involving protests and civil unrest to ensue.

Uncovering the Opportunities

Entrepreneurs tend to be very optimistic and many are already working the angles to uncover new business opportunities with the presumption that the Fed’s will okay it. Once the showdown dust settles, the new legalization era will officially begin.

We already know about the number of businesses launched and jobs created through the 17 states that have legalized medical marijuana. If we assume an exponentially larger industry to emerge from outright legalization, the number of jobs created could easily be over a million.

Ironically, a huge percentage of the new jobs won’t involve the consumption of pot, but will instead involve peripheral industries.

Here is a sampling of some of the new industries this will spawn:

  • New Products - With a growing aversion to “smoking,” the style and form of marijuana will need to be shifted into edible and drinkable products. This will include everything from sodas, to candies, to cookies, to inhalers, to lotions, and much more.
  • Conventions & Events – Seattle’s Hempfest is already the world’s largest pot gathering with over 250,000 people getting together, smoking dope, and discussing the stoners view of the world ahead. Look for the number of conventions, contests, Meetups, and other kinds of events to expand greatly.
  • Associations – Many new associations will come out of the woodwork including retailers associations, growers association, standards associations, etc.
  • Testing Laboratories – The alcohol industry is already tightly controlled, but marijuana brings with it a thousand times as many variables as booze. Testing will be the centerpiece of control for this industry.
  • Ratings Organizations – We hear a lot of hype about which kind of pot is the best, but this will open the doors for new companies to do a thorough ranking of the industry options.
  • Newspapers & Magazines – There is already an underground newspaper and magazine industry for the weed world, but this will grow dramatically.
  • News Specials – The first wave of opportunity will develop around news organizations, as this will become a rich vein of news programming.
  • Education, Training & How To Guides – Everyone looking to enter the field will be searching for quick ways to bring themselves up to speed. This type of training will become more formalized over the coming years, and some of the coming legislation will likely require it.
  • Movies, Documentaries & TV Shows – Look for industry-related new sitcoms, comedies, documentaries, and other ingenious “potlines” to involve an entirely new set of good guys and bad guys.
  • Patents – Expect a rush to patent new marijuana devices, gadgets, formulas, processes, and much more.
  • Support Groups – There will be many negative issues resulting from legalization and each one will likely create the need for support groups to help people work through them.
  • Pharmaceuticals & Alternative Medicines – Suddenly THC will be finding its way into a variety of stress relieving, pain controlling, and sleep enhancing pills. Big Pharma is already licking their lips on this one.
  • Farmers Markets – Get it right from the source. Farmers markets will welcome the new weed dealers with open arms.
  • Marijuana Tourism – While this seems to be the primary focus of the news media, marijuana tourism will only be a tiny piece of a much larger industry.
  • Many More – Look for additional opportunities in agriculture, processing plants, transportation, distribution, marketing, advertising, training, certification, regulators, and much more.

Final Thoughts

As Napa valley is to the wine industry, Colorado and Washington will be to the emerging Marijuana industries.

The biggest early-stage opportunities will involve inventing the industry itself. Elected officials and policymakers are usually pretty inept at visualizing all the possibilities ahead, so those who can help them think through the possibilities will be in huge demand. The early stage people who shape this industry will also help define the kinds of opportunities that it creates.

We are entering unchartered territory and the Obama administration will be heavily scrutinized for virtually every decision they make. In the end, marijuana will become legalized, and this movement will them transform into a movement to reinvent the justice system.

America now imprisons more of its own citizens than any other nation on Earth. The first step will be to release all of the prisoners convicted of marijuana possession. The next step will be far more dramatic, to reform the heart and soul of American-style justice and rein in the system that has grown wildly out of control.

Most people thought the election was about selecting our next President. While that selection will affect people for the next four year, the legalization of marijuana will affect the future of world from here on out.

By Futurist Thomas Frey

Author of “Communicating with the Future” – the book that changes everything




14 Responses

  1. Dave


  2. The ratification of legalized marijuana (LM) in two of these United States is clearly a major step towards legalization. It is eminently clear that the Supreme Court will strike down any attempt at having State Law override Federal Law, no matter the issue at hand. It is written in our constitution that Federal Law is supreme.

    A major movement will have to convince Congress that LM is in the best interest of the country and their political careers. The first path will be very challenging.

    The second path could be very effective and relatively quick if well orchestrated. It would only take a few seats changing hands because of support, or not, to motivate the rest. Given the voting percentages, a savvy politician would be wise to support legalization at the Federal level.

    I think the Feds will let the two states proceed as an experiment. If there is a noticeable increase in economic growth, tax revenues and lowering of crime levels as compared to the other 48 states, they will vote for LM after a few more states legalize it.

    While Colorado and Washington took the first steps, the Mendocino area of California is a far more likely area to be the ‘Napa Valley’ of LM.

    There is a caveat; we have seen an accelerating number of wineries succeeding well outside the Napa area due to improved horticultural understanding.

    Marijuana is basically a weed that grows in nearly any environment. I’m sure there are conditions that produce higher yields and there might be different conditions that produce higher densities of THC. But anyone can grow it nearly anywhere. This would indicate to me that there will actually never be a ‘Napa’ of LM.

    Since LM is a plant that can be easily grown in a wide variety of conditions, and not produced as alcohol is, regulation and testing will be difficult to enforce. The department of Health will have to add LM to their restaurant checklist, but it’s unclear what they would check.

    I seriously doubt there will be a huge spike in LM use. The vast majority of those who want to use it already do. We already have, and have had for decades, chainsaw wielding and heavy equipment operating people high on marijuana. As Colorado has already done (or working on), an additional consideration of impairment needs to be written into the law; a limit on the level of THC blood content.

    We certainly are on the cusp of a new industry moving from the shadows to Main Street. It will be interesting to see how it unfolds as well as the winners and loosers.

  3. admin


    Some great comments. However, if Colorado defines the rules, creates testing laboratories, builds processing plants and product manufacturing centers, starts training classes and maybe even has a college that offers a BA in marijuana agronomy, the State will begin to develop a cluster of industry experts that is difficult for other areas to replicate. Its far less about the best growing conditions and far more about the aggregation of talent.

    But at this point we can only speculate because there are far too many variables still in play.


  4. One aspect I’d love to hear more on is the industry of handling the finances of these distributors. Because of the Federal laws, Banks refuse to do business with anyone associated with this industry because of the possibility of the funds being seized. So, how do they safely handle, store and transport and even invest money in a cash industry?

  5. I thought of one more thing… This leads to an entirely new set of issues for HR personnel. The lumberjack is one example. This is now entering the realm of companies that refuse to hire cigarette smokers and subject suspected employees to testing. Is it the person’s right to partake in a legal substance at home if, at work, they show no signs of usage and it isn’t interfering with their work? What they do at night is not the company’s business mentality is sure to arise.

  6. EZ

    Indeed, High Times did an investigation into marijuana quality and determined that Colorado grows the best. We have attracted growers who focus more on quality than quantity. So that, in addition to being one of the first states to legalize, will, in my opinion, make Colorado a go-to state for marijuana tourism.

    Great article, Tom.

  7. What about for those of us who have already done the legwork on “gadgets”. Are there entities out there in position to develop projects like our indoor gardening system in preparation for the near future?

  8. Riche

    The cash/money issue can be gotten around with digital currencies based overseas with cash cards to spend the virtual balance. Then crypto currencies like bitcoin will further obfuscate any paper trail. Pot smokers can be resourceful, with enough incentive 😉

  9. What impact do you think this will have for the hemp industry? Once marijuana is legalized it seems likely that restrictions on hemp production (based on the financial incentives to long-dead billionaires) will be removed as well. This could significantly impact numerous industries.

    Thomas- I certainly hope that you’re right about freeing those imprisoned for non-violent marijuana possession. Millions of families in the U.S. are deeply affected by these unnecessary arrests and prison sentences!

  10. Collegues,
    When alcohol beverages became legal again after prohibition, taxes were attached, state by state.
    I voted yes on Colorado marijuana for two reasons:
    >> Cut the rate of and costs of putting people in jail,
    >> and the taxes that should be taken from any store.
    In other words, reduce costs and increase revenues.
    The future of pot is not about pot, but about how our state and nation choose to create taxable wealth.
    Best to all.

  11. admin

    Here are two petitions very pertinent to this issue and Colorado:

    Asking the President to honor the will of the people in Colorado and Washington State:

    Asking that marijuana be removed from the Federal Controlled Substance Act, allowing states to make their own determination about its status:

  12. ZZman

    A couple of observations:
    1) Stoners on the slopes in CO will be of no concern. There hasn’t been a sober boarder since the sport was founded.
    2) Medical MJ dispensaries will cease to exist. Why go through all the bureaucratic red-tape when you could walk into a pot shop and just get regular pot? 99% of the 20-something “medical” patients weren’t actually there for pain.
    3) A big issue that you didn’t mention is the decision regarding legal limits for driving. Most pot heads think they aren’t impaired while using pot, so there will be a huge fight around this.
    4) If the feds allow CO and WA to have their own laws regarding MJ, this will be seen by most of the country that the States should be able to call their own shots regarding other federal issues – like illegal immigration enforcement. Watch for it…

  13. bill

    This was very helpful!

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