Here & Now's Peter O'Dowd reports there is no relief in sight for California farmers and wildlife ravaged by drought.
One industry group says that the legal marijuana business will increase 64 percent this year and top $10 billion within five years.
Investors were watching closely this week as lines stretched around the corner at marijuana dispensaries in Colorado, the first state in the nation to legalize recreational marijuana use. Washington will follow shortly.
Meanwhile, marijuana and related products have become hot investments, complete with gatherings where marijuana start-ups make pitches to people interested in putting serious money into the industry.
The medical marijuana business conference had its second meeting this fall in Seattle, and 30 exhibitors paid as much as $16,000 each to attend.
However, because marijuana is still illegal at the federal level, banks are loathe to provide funding. So why would investors take such a gamble on an illegal product?
“This is a risky business, and any business has risks and benefits, and where there are risks, there are often rewards,” Troy Dayton, co-founder and CEO of The Arcview Group, told Here & Now’s Meghna Chakrabarti. “The writing is on the wall. Marijuana prohibition is very likely to end over the next five to seven years. If you’re an investor, and your game in the investment game is to get ahead of what’s going to happen, then this is often a good bet.”
Dayton’s organization is part of an accredited cannabis investment network.
But the growing industry has critics, who use the analogy of alcohol, which has been legal for 80 years. The critics say that 20 percent of of drinkers account for 90 percent of all alcohol consumption.
Critics say that these are industries that profit from the addict or the near-addict and worry that that is the model for marijuana.
“One of the key things to keep in mind here is that we’re not talking about a new substance, and there’s no panacea, there is no way to solve all the challenges of a particular substance,” Dayton said. “But one thing’s for sure, a regulated environment with legal businesses is going to do a much better job of handling this product than the current criminal market.”
MEGHNA CHAKRABARTI, HOST:
Lines stretched around the corners at marijuana shops all over Colorado this week as the state became the first in the U.S. to legalize sales of recreational marijuana. One group watching with quiet, but intense interest: investors. Yes, investors, because marijuana and related products could be a boom industry. It's being called the green rush, complete with gatherings, where cannabis startups pitch to investors interested in putting seed money, as it were, into the industry.
In Washington, which has also legalized pot, the Medical Marijuana Business Conference had its second meeting this fall in Seattle, where 30 exhibitors paid serious money to attend. The Arcview Group is an accredited cannabis investment network, which also researches the marijuana industry, and it says in a new report that the legal marijuana business will increase 64 percent this year alone.
Troy Dayton is cofounder and CEO of The Arcview Group, and he joins us from the studios of the Berkeley School of Journalism. Troy, welcome.
TROY DAYTON: Thanks for having me.
CHAKRABARTI: So, first of all, tell us how you got into this industry and this business.
DAYTON: Well, I've been working to end marijuana prohibition since I was about 18. And my last job, before I started the Arcview Group, was I was the lead fundraiser for the Marijuana Policy Project, which works to change the marijuana laws.
CHAKRABARTI: So we should note that the Marijuana Policy Project is actually probably one of the leading groups in the country that's trying to push for legalization at the federal level. For as long as there's this gap between state and federal law when it comes to marijuana, there are also a lot of problems when it comes to doing business in cannabis.
I mean, for example, banks are staying out of this entirely, because they don't want - they can't, and don't want to take the money on that comes from the marijuana industry. So what do you tell your investors about that?
DAYTON: This is a risky business, and any business has risks and benefits. And where there's risks, there's often rewards. And so, you know, this is an industry that, when people get into it, they often get into it because they see it as an opportunity to take a stand in the world and an opportunity to stand up for what they believe is right. And in some cases, that means some civil disobedience.
CHAKRABARTI: When you say civil disobedience, in this context, what exactly do you mean?
DAYTON: Well, you know, cannabis is illegal in the country. And so anybody, even these - the stores that we see on television that are selling cannabis in Colorado, under regulation and have a state license and everything, I mean, they still are violating federal law.
ROBIN YOUNG, HOST:
Well, to that point, I mean, I can't imagine that high-net-worth individuals - investors, funds, anyone who wants to get into this potential high-growth industry - likes talk of civil disobedience. I mean, aren't - isn't the big money waiting for federal legalization? And for as long as that doesn't happen, what do you tell them?
DAYTON: They're not waiting. I mean, many of them are spending time researching, figuring out how they can play. And the writing is on the wall. Marijuana prohibition is very likely to end over the next five to seven years. If you're an investor, and your game in the investment game is to get ahead of what's going to happen, then this is often a good bet.
CHAKRABARTI: Now, Troy, if I may, I want to read you a quote from a recent article in the New Yorker, and that has to do with the fact that if indeed federal legalization does come about, that marijuana could become a larger industry in the United States than even tobacco. And this author in the New Yorker sort of talked about vice industries as a whole: gambling, alcohol, et cetera.
And he writes that 20 percent of the Americans who drink account for almost 90 percent of all alcohol consumption, and it cannot be news to beer and liquor companies that their key demographic is the problem drinker. The same thing goes for gambling. And that is exactly the worry that a lot of people have regarding marijuana, that if indeed all this money - you know, I'm seeing numbers that it could be $150 billion business if federal legalization happens - is going to come because you basically have to have a new generation of really heavy pot users. And the social cost of that is really high. Is that even a discussion with your investors at all?
DAYTON: Absolutely. I think one of the key things to keep in mind here is that we're not talking about a new substance, and we're - there's no panacea. There's no way to solve all the challenges of a particular substance. But one thing's for sure: a regulated environment with, you know, legal businesses is going to do a much better job of handling this product than the current criminal market. That's the first thought,
The second thought is I think we have a unique opportunity with the cannabis industry to not make the same mistakes that the pharmaceutical industry or the alcohol industry or the tobacco industry has made, because we haven't had a new industry like this really be birthed in the U.S. in a long time, and it's pretty rare for an industry to be like the cannabis industry, which, frankly, is begging to be regulated.
CHAKRABARTI: Looking into the future, Troy, do you see the marijuana or cannabis industry as one that becomes like coffee or like beer? Because a lot of people are talking about, hey, eventually someone is going to be the Anheuser-Busch of marijuana or the Starbucks of cannabis, that it will become a corporatized, commercial product in the United States.
DAYTON: Yeah. I think that really depends on consumer desires, and at least currently, the consumer desires - for the most part, when it comes to cannabis - are really built around a connoisseur culture. And that really does not lend itself to massive production and big national brands.
I think there's going to be people that try that. One of the silver linings to the fact that this is going to change slowly over a number of years is that it gives the little guy a chance, before the big multinationals come in and try to take over the industry. And they're going to have a really hard time doing that because they will have - yeah.
CHAKRABARTI: One would've said the same thing for mom-and-pop coffee shops before Starbucks comes in.
DAYTON: Sure. Sure, but...
CHAKRABARTI: And I have to say, though, the connoisseur culture that you're talking about, while true, doesn't also match, for example, all the young, teenage pot smokers who are out there, unless they, too, are connoisseurs.
DAYTON: Right. I think a key question to ask: Is would we rather have Starbucks, or would we rather have cartels and people slinging coffee on the side of the street and shooting each other over it?
CHAKRABARTI: Good question. Well, Troy Dayton is co-founder and CEO of The Arcview Group. He joined us today from Berkeley, California. Troy, thank you so much.
DAYTON: Thanks for having me.
CHAKRABARTI: You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.