Small Colorado Mom-and-Pop stores are at the vanguard of the nation’s newest marijuana businesses, but, while the weed marketplace might look quaint from the Rocky Mountains, Silicon Valley billionaires are preparing to swoop down and take advantage of weed’s “green rush.”
The entry of billionaires who mainly seek profits has sparked deep anger among long-term activists who have toiled for legalization in the name of personal freedom, civil rights and racial justice.
An internal split became public recently when Dan Riffle, a highly regarded federal policy staffer at the Marijuana Policy Project, publicly quit over the organization’s decision to court big corporate money.
Billionaires profiteering over marijuana doesn’t sit well with long-time activists.
“If you’re an old time Hippy, this is terrible and shocking,” Keith Humphreys, a Stanford Medical Center psychiatrist and behavioral scientist, told the Daily Caller News Foundation. Humphreys was a member of the “blue ribbon” marijuana commission led by California’s pro-legalization Lt. GovernorGavin Newsom.
“I’m not surprised about big money,” Humphreys said. “I was saying this would happen for a long time.”
Wall Street is waking up to the potential profits in legal weed. Last month, the Wall Street investment firm Merrill Lynch issued a bullish report about tantalizing marijuana profits that could help the bottom line for Big Pharma, biotech and even food chains.
“Given the growing acceptability of cannabis among the general public and lawmakers, cannabis has the potential to become a new venue of growth,” Merrill Lynch report said.
“There are all these grassroots, hippy-dippy groups out there and they’re now being taken over by corporate interests,” Dr. Stanton Glantz, a professor of medicine at University of California in San Francisco who has advised pro-marijuana reformers, noted dryly in an interview with TheDCNF.
“These are people here who are in there solely to make dough. It’s about making money, a lot of money off of people getting high,” Glantz said.
“If people are going toward legalization, they should do it with their eyes open and realize that it’s not going to be a cottage industry,” warned Jeffrey Zinsmeister, executive vice president of the anti-legalization advocacy group called Smart Approaches to Marijuana.
“Legalization means big, big multinational businesses. It’s not going to be the corner store down the street with a hippie behind the counter,” Zinsmeister told TheDCNF.
Rachel Barry, a tobacco and public health researcher at the University of California in San Francisco, said she was shocked at the dramatic transformation underway within the marijuana movement when she went to Chicago’s marijuana Expo last May.
“I saw entrepreneurs everywhere. It is not the Mom-and-Pop shop operation that is portrayed in the media,” she told TheDCNF.
Marijuana advocates are pushing back. Riffle stunned the pot legalization world when last month he stepped down after six years at MPP. That was the same day MPP announced a new corporate fundraising campaign asking “industry leaders” to “donate” .420 percent of their gross revenue to the group.
Riffle told his colleagues in an email, “industry is taking over the legalization movement and I’m not interested in the industry,” according to Ganjapreneur.
The activist told the International Business Times that he rejected MPP’s chase for big corporate money. “I think it is a pretty stark example of the kinds of things I was concerned about and that were the reasons why I left,” he said.
A libertarian, Riffle believes the goals of big corporations are at odds with the movement.
“The industry’s goal is to make money, but from a public health perspective, we might have other goals that are at odds with the industry’s goal” he told IBT.
At the top of MPP Foundation is chairman Joby Pritzker. Pritzker is an heir to the Hyatt Hotel fortune and also owns Tao Capital Partners that invests in a marijuana tracking company called MJ Freeway.
Also on the MPP board is Troy Dayton, owner of the marijuana angel venture capital investment group ArcView, which claims it has 500 “accredited investors.” Each investor must contribute a minimum of $500,000. The firm claims to have $61 million available for marijuana start-ups.
MPP did not reply to repeated requests from TheDCNF for comment.
Billionaires George Soros and the late Peter Lewis, chairman of Progressive Insurance, have given millions but are now being eclipsed by new investors motivated primarily by what they see as big potential profits.
Exhibit “A” for them was last year’s failed Ohio constitutional amendment. The amendment would have carved out a marijuana growing monopoly for 10 named people in Ohio, including local celebrities, and forced the state to sell marijuana that was only grown on their land.
Humphreys told TheDCNF that, had the law had passed, it would have established the nation’s first “marijuana oligopoly.”
“The perfect case is Ohio,” he said. “None of those people had any historical connection to marijuana legalization. It was a dollar-and-sense decision of ‘boy, if we could get an exclusive oligopoly, we can make a hell of a lot of money.’” Ohio voters rejected the measure, however, on a 63 to 36 percent vote.
This year California ia ground zero for pot legalization. Silicon Valley billionaire Sean Parker is the biggest backer of his own initiative, which he bankrolled with at least $75 million.
Parker founded the music upstart Napster, a music site that was eventually forced to cease operations because it infringed on copyrights. Parker later became president of Facebook but reportedly was forced out following charges of cocaine possession.
Barry told TheDCNF the Parker Initiative favors big business at the expense of public health.
“The Parker Initiative is supposed to be based on the state’s blue ribbon commission recommendations,” she told TheDCNF. “But the biggest thing that’s missing is a comprehensive public health education campaign for the general population.”
John Mosher, a public health attorney who favors legalization, told TheDCNF that he considers Parker’s role a conflict of interest because he wrote rules that benefited himself and other investors.
“I think the problem here is having a rich person decide,” Mosher said, especially because Parker “has a stake in the industry.“
“Because he’s a multi-billionaire that he can do this and figure, ‘I have enough money and can fool the voters,” Mosher to TheDCNF. He also complained that the Parker process “was all done behind closed doors.”
Barry says Parker’s measure will allow companies to control every phase of marijuana production.
“So they can even have a corporation owning both retail license,” she said. “They can also grow it, they can sell it and they can also manufacture it,” Barry noted.
Zinsmeister charges Parker is “seen as taking personal advantage of the initiative for personal gain, fame and fortune, most likely eyeing future investments in the industry.”
Parker did not reply to TheDCNF request for comment.
Massachusetts is another state headed for a 2016 vote. Steve Epstein, a legalization leader of a measure called “Bay State Repeal” denounced the winning ballot measure, calling it “bad law” and “crony capitalism.”
Other billionaire promoters includes Paypal founder Peter Thiel who is an institutional investor in Brendan Kennedy’s Privateer Holdings, a private equity firm that owns three marijuana-related companies called Tilray, Leafy and “Marley Natural,” namaed after the Jamaica pot celebrity Bob Marley.
Kennedy himself predicts that marijuana industry could deliver $50 billion in annual revenues.
As money flows toward pot, federal officials also warn investors to be wary of con artists .
In May 2014 the Securities and Exchange Commissioner suspended five companies, announcing, “The SEC has seen an increase in the number of investor complaints regarding marijuana-related investments.
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