Meet the Former US Officials That Are Helping Weed Go Legit

At 84 years old, Mike Gravel is just getting his start in the marijuana business.

“I really thought it over. At my age, this isn’t all that easy,” he remarked to VICE News of taking his new job as CEO of Kush, a Nevada firm specializing in the extraction of oils from cannabis. “I figure if I can get three or four good years out of this body, I can make a contribution.”

Gravel, who represented Alaska in the United States Senate from 1969 to 1981 and ran for the Democratic nomination for president in 2008, described his task as “getting ourselves properly organized, functioning as if we’re as significant as General Motors, so we’re there for the long haul.”

He is just one of various former politicians and regulators now working in the weed trade. For a nascent industry finding its way through the rapidly shifting ground of US drug law, these experienced political hands bring an understanding of how the business looks from the government’s perspective. The presence of a former elected official or Drug Enforcement Administration agent in the executive suite also sends a reassuring signal to investors that entrepreneurs are in business to succeed.

‘The goal is to brand, under the trademark Hi, the best marijuana products in the world — to be an icon like Coca-Cola or Apple that survives 100 or 150 years from now.’

Not that marijuana’s new political class lacks a sense of mission. Gary Johnson, the former two-term Republican governor of New Mexico and 2012 Libertarian Party presidential candidate, has since last year been the CEO of Cannabis Sativa, Inc., which markets marijuana products under the brand name Hi and owns Kush, Gravel’s company, as an independent subsidiary. As far back as 1999, Johnson proudly portrayed himself as “the highest-ranking elected official in the US to advocate the legalization of marijuana.”

“What I bring to the table is, I’m that voice,” he told VICE News.

As a successful businessman who ran a multi-million dollar contracting firm before entering politics, Johnson sees huge opportunities for the enterprise that successfully establishes the first iconic marijuana brand.

“The goal is to brand, under the trademark Hi, the best marijuana products in the world — to be an icon like Coca-Cola or Apple that survives 100 or 150 years from now,” he said. In Hi’s case, Johnson believes that future lies in edibles and infusions rather than smokable buds.

“I think Colorado gives us some real insight,” he went on. “Now, sales are about 70 percent edible and 30 percent smoke on the recreational side, and on the medical side, for the first time, you have more edibles being sold than smoke. I personally have an aversion to smoking, and I think that with the ability to extract THC, it’s a much better form of ingestion. It provides more consistency, quality.”

Pediatricians change stance on medical benefits of marijuana for kids. Read more here.

Though Johnson works for an official salary of $1 per year, his helming of the business is not an act of charity: “I have equity. If the company performs, I make money.” But when it comes to potential competition from home-growers, Johnson the libertarian wins out over Johnson the CEO.

“I completely believe in people being able to grow their own, if for nothing else than that it keeps the market in check,” he said. “I was in Washington State mid-summer, and marijuana was selling for $65 a gram. That’s $29,000 a pound. Come on! Grow your own and snub your nose at that baloney.”

Gravel’s record of advocacy goes all the way back to 1970, when he opposed the Senate’s passage of the Controlled Substances Act, which classified marijuana alongside heroin as a Schedule I illegal drug, with no accepted medical application and a high potential for abuse.

“Marijuana has been a political football since the 1960s, and it’s time we stopped playing this silly and destructive game,” he wrote in his 2008 book, Citizen Power.

Paul Schmidt, on the other hand, doesn’t think of himself as a crusader. After a 20-year career as a DEA agent, pursuing cases around the world and even growing a crop of marijuana himself during an undercover operation, he retired and moved to Colorado to care for his ailing parents — which is how he happened to be living there when the state passed its revised medical marijuana law in 2010.

“The Department of Revenue in Colorado got my name from the DEA, who said, ‘If you’re going to institute a program, he’s one of our best people — most knowledgeable in every facet, has grown cannabis in undercover operations, everything,’ ” Schmidt recalled to VICE News. He was recruited to help Colorado roll out their medical marijuana system as assistant special agent of enforcement operations.

DEA accused of obstructing research on marijuana benefits. Read more here.

Now Schmidt serves as a consultant to marijuana businesses in his home state of Oregon, primarily in the medical market. His toughest job is convincing the more activist-oriented entrepreneurs to see their business through the law’s eyes. A medical dispensary that lists strains by THC and CBD content will elicit more benefit of the doubt from regulators than the dispensary hawking Alaskan Thunderfuck.

“It’s getting out of the street vernacular and that stupidity into a professional market,” he explained. “It just drives me crazy when people pay me, and I sit there and explain it to them, and they want to argue me on the point. ‘Oh no, everybody knows it as Luscious Lucy’s Lemons.’ Because they’re still stuck in the dark ages when everything was illegal, and they just can’t make that conversion over to the light side under regulation.”

The most likely to succeed in the legal pot economy, according to Schmidt, are those who are “not personally involved, where they think marijuana is God’s plant and gift to the world. They are businesspeople who look at it just like a pharmacy or anything else.”

Over the course of his DEA career, Schmidt came to truly believe that the medical application of cannabis is valid — but he never let that belief get in the way of doing his job.

“A lot of laws I believed in personally, a lot of laws I didn’t,” he remarked. “My job was to enforce the law that was on the books. I definitely have my personal opinions. But when it came to work, my work was based on what the law said I needed to be enforcing.”

Leading anti-marijuana academics are paid by painkiller drug companies. Read more here.

Some of his old law-enforcement colleagues were shocked at his job change, and he’s been the target of harassment.

“I’ve had hate mail, hate emails, hate phone calls, hate voicemails, as much from law enforcement as from the industry, he said. ” ‘Paul, how can you look at yourself in the morning? You put people in jail for the cultivation of marijuana, you should be tried as a war criminal, you’re nothing more than a Nazi.’ You know, all the craziness.”

Another former Oregon-based DEA agent, Patrick Moen, left his job pursuing heroin and methamphetamine traffickers last year to join Privateer Holdings. The Seattle cannabis investment firm owns Leafly, the closest thing to a Yelp for potheads, among other industry ventures. As managing director of compliance and the company’s in-house lawyer, Moen’s job is to keep Privateer on the right side of the law that he used to enforce.

The Justice Department under President Barack Obama has allowed state-level experiments to unfold with the legal equivalent of a wink and a nod. But that could change at any moment.

Legal acumen is essential given that US marijuana law is literally all over the map. The four states that have legalized recreational cannabis are imposing different systems for regulating it. Colorado’s program seems to be working reasonably well, while this is less true of Washington. But heavy regulatory and tax requirements are a given.

“There’s more control over marijuana in Colorado than there is control over fissionable nuclear materials,” Gravel said. “It’s unbelievable.”

Johnson, a free-market libertarian who was known for cutting taxes as governor, noted that the price distortion of heavy state-level taxation and regulation will make it difficult for legal weed to compete with the black market.

“It’s the worst case,” he explained. “You legalize it and it’s so expensive because of the regulation and the taxes that people stick with the black markets. And that’s exactly what’s happened in Washington State.”

Legal weed in Washington State has been completely screwed up. Read more here.

But what about the oft-cited argument that marijuana should be legal to raise tax revenues for states and cities?

“I think a reasonable amount of taxation is something that we all expect,” Johnson said, though he stressed that legalization makes fiscal sense even if it doesn’t generate tax revenue, because of all the money authorities will save not arresting and imprisoning marijuana offenders. “Policymakers can tax it at zero and come out way ahead in the coffers because of those savings.”

Similar regulatory chaos prevails in the 23 states that permit some form of medical marijuana. Of course, marijuana remains illegal in any form in 27 states and under federal law. The Justice Department under President Barack Obama has allowed state-level experiments to unfold with the legal equivalent of a wink and a nod. But that could change at any moment with a new administration, a Supreme Court ruling on a lawsuit between states, or simply with a shift in the government’s mood.

Political connections are no guarantee of smooth sailing in these rough regulatory seas — especially when those connections carry a whiff of corruption. After leaving office, former Massachussetts Rep. William Delahunt, a Democrat who served from 1997 to 2011, went to work as a lobbyist for several organizations that had benefited from earmarks Delahunt had arranged.

One of those clients was the Mashpee Wampanoag tribe, whose previous lobbyist was convicted fraudster Jack Abramoff, who was also a major Delahunt campaign contributor. Another was the town of Hull, Massachusetts, which proposed to hire Delahunt to consult on a federally-funded wind-farm project, with 90 percent of his $15,000 monthly fee paid from a pot of federal money he himself had created. Earmarking experts cited by the New York Times said that they “could not recall a case in which a former lawmaker stood to benefit so directly from an earmark he had authorized.” Delahunt called off the deal with Hull in early 2012 while waiting for a state ethics ruling.

In 2014, Delahunt, as president of the nonprofit company Medical Marijuana of Massachusetts, applied to open three dispensaries under that state’s 2012 medical-marijuana law. The state Department of Public Health balked at the $10.6 million fee that MMM proposed to pay Delahunt and two other managers, and rejected the application. The state also cited misleading statements in the application that MMM had the support of another politician, Massachusetts State Senate President Therese Murray. After initiating a lawsuit against the state, Delahunt left Medical Marijuana of Massachusetts in September.

Native American tribe in California announces plan to grow medical marijuana. Read more here.

Perhaps Delahunt’s checkered recent past didn’t make a difference to the application, but it couldn’t have helped. There’s no such cloud of suspicion around the political careers of Johnson or Gravel. But as more politicians and regulators get involved in the cannabis business, the Delahunt story is an example of the perils of political partnerships for an industry struggling to bring itself out of the shadows of a legal gray area.

Meanwhile, companies like Cannabis Sativa and Kush are betting on widespread legalization.

“When California votes at the ballot to legalize marijuana, literally 20 state legislatures, overnight, will bring it about,” Johnson said. “No more ballot boxes — legislatures are going to get the fact that 60 percent of Americans support this right now, and they’re just going to pass it legislatively. They may as well be in front of it, as opposed to getting run over by it.”

Gravel agrees.

“Ferrying your way through this myriad of controls from state-to-state is not for the faint of heart,” he said. “Many of the bureaucrats involved are intent on thwarting the will of the people who want to use marijuana recreationally or as medicine. But if that’s the will of the people, I’ll predict it: we’ll eventually get a federal law that will clean all this up.”

Legal pot in the US is crippling Mexican cartels. Read more here.

Follow Jason Toon on Twitter: @jasontoon
Photo via Flickr