Inside America's Almost Legal Marijuana Industry

Trish Regan says she has never smoked pot in her life, but as anchor of the CNBC documentaries "Marijuana, Inc." and "Marijuana USA," she's become one of the nation's leading reporters on the buds beat.

She's collated her experiences and insights into a new book,Joint Ventures: Inside America's Almost Legal Marijuana Industry. Starting with visits to growers and medical-dispensary owners on the new frontier of Colorado and the old-school turf of California's Emerald Triangle, the book moves on to economics, law, and the Portuguese experience with decriminalizing all drugs in 2001.

Regan's eye leans toward the unexpectedly conventional side of America's pot culture. Her favorite subjects seem to be growers and dispensary operators who don't fit the hippie/stoner stereotypes -- clean-cut couples with MBAs, pursuing the "American Dream" through cannabis entrepreneurship.

A business-oriented approach permeates the book. Regan's indica-industry people have to balance the high profits sustained by the herb's illegality with the risks of robbery and arrest. Although the semi-legitimate status of medical marijuana in the states that allow it has prompted a "green rush," she notes, the high costs of garden infrastructure, electricity, and taxes mean that growing really isn't all that lucrative, especially given the intensive labor required to tend plants. The surer way to make money, she says, is in related services, such as law, real estate, and quality testing--or, when marijuana becomes legal, selling your operation to a corporation.

Though a non-stoner, Regan catches some pot-culture quirks, such as the belief that calling the herb "cannabis" instead of "marijuana" will magically dispel the phobias that keep it illegal. But she omits some key historical details, such as US v. Oakland Cannabis Buyers Cooperative, the 2001 case in which the Supreme Court ruled that as federal law said marijuana had no recognized medical use, "medical necessity" could not be a valid defense for breaking the law. She says she found the constitutional issues more interesting in Gonzales v. Raich, the 2005 case in which the Court held that even giving away homegrown could be outlawed because of its potential effect on interstate commerce.

She does not understand that the presence of THC metabolites in the body does not necessarily indicate intoxication, and this leads her to be sympathetic to Wal-Mart for firing a Michigan cancer patient for using medical marijuana. Wal-Mart contested the man's right to collect unemployment, which Regan presumes was because it "is concerned that it will be liable for unemployment benefits for any employee it terminates for drug use." However, she says her main point here is pragmatic: that "the law is unclear, and because of that, employers will take the simplest path to reduce their exposure to liability--which in the case of marijuana users is often to terminate them."

Still, few outsiders have covered the United States' marijuana world with as much objectivity and depth. I interviewed Regan on the eve of her book launch:

You say you've never used marijuana. What drew you to the subject?

As a small child, I remember going out on a field reporting expedition with my mother (who was also a journalist) in which she interviewed a woman who was dying from lung cancer and needed marijuana to help her cope with her chemotherapy treatments. It is a memory that is still vivid in my mind. At the time, my mother was working on a story for The Boston Globe about efforts to legalize medical marijuana in our home state of New Hampshire. What's amazing to me is that her story could have just as easily been written today. Meanwhile, as a journalist who has spent a lot of time covering the economy and the markets, I knew this would be a fascinating investigation into an underground trade. Regardless of the law, millions of people use marijuana-and thousands are making huge profits off the drug.

What surprised you the most in your ventures into the marijuana world?

I was amazed that so many people were willing to essentially risk it all for their chance to be on the front lines of this industry. I met mothers of young children, fathers, people with MBAs, former military officers, former and current Wall Street professionals, schoolteachers--basically, a large cross-section of well-educated, family-oriented, traditional people that were operating marijuana grow facilities. If caught by the Feds, all of these individuals could face time in prison. It seems to be a combination of political beliefs surrounding marijuana use and the promise of making large sums of money that inspires so many to take these huge risks. One entrepreneur, a former banker who made his fortune selling his research firm during the Internet heyday of 1999, believes the marijuana industry will prove to be the equivalent of the next tech boom. Whether or not the government will legalize pot on a national level is still up for debate, but otherwise law-abiding citizens are convinced there's an opportunity, and they're risking their freedom to work in this trade.

What impressed you the most?

I was impressed by the dedication and discipline of some of the growers and dispensary operators. I met one husband-and-wife team in Colorado that runs one of the state's largest dispensaries. It's a division of labor--the wife runs the business while the husband manages the growing. It's like any other small business, but with a whole lot more headaches. They're both up at the crack of dawn (she's rushing the kids to school while he tends to his plants). They work long days, and despite all the obstacles they've run into along the way (the inability to find a bank, for example, or the stress of having to make sure they've kept up with the state's constantly changing regulations, fees, and paperwork) they're still committed to their venture.

What appalled you the most?

I was in a pot dispensary in Oakland, California, and there was a little boy, no more than 4 or 5 years old, waiting at the counter, drinking some fruit juice, while his father purchased some marijuana in the back. That bothered me.

How has your opinion changed since you began reporting on it in detail?

I came to this project with little sympathy for marijuana and little understanding of the prevalence of marijuana use in our society. There are certainly people who abuse marijuana and substance abuse of any kind is a problem--but, it's clear that marijuana is subjected to a moral standard that alcohol and tobacco have somehow managed to escape. The intention of this book isn't to glorify the abuse of marijuana, but I hope it does raise awareness to the fact that attitudes toward marijuana are changing at an amazing rate, and that state and federal policies are often in direct conflict. These confusing and conflicting laws are needlessly putting many people in danger, and that's a problem.

Do you support legalizing marijuana? Why or why not?

I support the legalization of marijuana for medical purposes. Why should the government prohibit an ill person from seeking the relief they need? As for full legalization, I'm a big believer in individual choice and responsibility. If someone wants to smoke, drink, or use marijuana (a drug that's proven to be less addictive than alcohol and nicotine) in the privacy of their own home, it doesn't bother me. More importantly, studies show that legalization would enable law enforcement to better police the distribution and sale of marijuana, resulting in a decrease in crime.

It's important to understand, however, that responsibility requires consequences for inappropriate or unlawful use. I am a firm believer in very harsh consequences for drunk driving, especially in situations that result in accidents. Similarly, if use of marijuana contributes to an accident or another societal harm (e.g., sales to kids), I think society should punish the person severely.

If marijuana were to be legalized, what model or structure for sales and regulation do you think would work best?

I'd like to see enforced age limits, similar to alcohol. I'd also recommend regulations on both the production and sales sides of the business. One problem with current marijuana production is that there are no enforced standards, because it is all illegal. It's important they have those standards, especially for people who are ill.

You praise the Portuguese experience with decriminalization of drugs--yet decriminalization leaves the illegal market intact. (In fact, one could argue that alcohol was "decriminalized" under Prohibition in the U.S., because personal use was legal.) What are the advantages and disadvantages of this approach?

Portugal has taken the first step. But to truly diminish the crime rate associated with drugs, the actual production chain would need to be legal. The reason drug cartels are in business is because of the illegality surrounding the substances they traffic in. If Philip Morris (Altria) were manufacturing marijuana cigarettes, the company would put the cartels out of business overnight. Crime seeps into an economy when normal businesses cannot partake in the marketplace. Think about the mob's role in bootlegging. Once prohibition was repealed, the mob needed to find a new line of work. It's important to consider the crime factor when thinking about legalization.

One of the conflicts surrounding medical marijuana is that in states with more liberal laws, it's often used as a way to enable people with medical problems to obtain a recreational supply legally, but in states with more restrictive laws, you practically have to be terminally ill before you can get any. How would you resolve this?

I don't entirely think you can resolve this. We have to make a decision, as a society, as to whether we're okay with recreational use. We need to decide if our tax dollars are currently being wisely spent policing marijuana. Perhaps we spend fewer taxpayer dollars and devote our money to substance-abuse prevention and treatment programs instead.

What do you think the political prospects for change are? In your book, you say that public perceptions have shifted as the generations that grew up with cannabis became the majority. On the other hand, Barack Obama, Bill Clinton, Clarence Thomas, Newt Gingrich, Al Gore, and Michael Bloomberg are all former potheads who have supported and enforced prohibition.

It may take years for the federal government to catch up to the states--but that's nothing new. Often, states are the first to experiment with policy. I anticipate that in the coming years, more and more states will vote for the legalization of marijuana for medical purposes, and we may even see several that okay the use of limited recreational marijuana. Eventually, the federal government will catch up with the rest of the country.

Why do you think the pace of change has been so slow? Even before the 2010 election, there were more "birthers" in Congress than supporters of marijuana legalization.

There's a sense out there that things are bad enough in society, why let one more genie out of the bottle? There's some strength to that argument.

I think there is a bias against marijuana because it has been an illegal drug for such a long time. As a result, it's viewed as having a moral element to it that prevents people (and politicians) from being open to the idea of legalization. It's not viewed like alcohol, even though alcohol is scientifically proven to be more addictive. Still, I guess the most obvious answer is that politicians believe they'll get more votes being against it, than for it, but at some point, that will change.

When you weigh it against the financial burden of policing marijuana and when you consider that we're simply putting money into the hands of Mexican drug cartels, who derive 60% of their revenue from marijuana sales, you have to ask whether we're doing the right thing. People who want to smoke marijuana will do so no matter what the law is. It's critical that society consider who the illegal drug trade is actually supporting.

What do you predict is likely to happen in the next few years? Do you think any states will try to legalize it--and what would be the response?

I have no doubt that more and more states will vote for legalization, at least for medical use, in the coming years. As the demographics of the country change, we've seen that people are growing increasingly tolerant of marijuana use. I think the economics will continue to push many states toward legalization--and eventually, the federal government.