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2:53 pm
Tue November 13, 2012

Legalizing And Regulating Pot: A Growth Industry

When reporter Tony Dokoupil was a teenager, he found out that his father had sold marijuana, but he just thought his parents "were hippies." A few years ago, while working on a story about his father's drug dealer past, he discovered that actually, in the 1970s and '80s, his father, Anthony Dokoupil, had been a big-time marijuana smuggler.

"He was arrested in the early '90s on a job selling 17 tons of marijuana," Dokoupil tells Fresh Air's Terry Gross, "which was enough at the time to roll a joint for every college kid in the U.S."

Dokoupil is now writing a book about the controversial plant, and is the author of the recent Newsweek cover story "The New Pot Barons," about the group of entrepreneurs who are growing medical marijuana in Colorado and hoping to cash in on the plant's recent legalization there for recreational use. On Election Day, Colorado and Washington became the first states to greenlight marijuana for recreational use, which is big news for the expanding marijuana industry.

If legalization is here to stay, Dokoupil says Colorado's tightly regulated for-profit medical marijuana market will likely be the basis for the legalized recreational markets in other states as well. In Colorado, more than 1 million square feet of warehouse space outside of Denver are dedicated to growing marijuana, and hundreds of dispensaries sell it. To manage this growing business, the state has 200-plus pages of regulation to explain what is legal and isn't. Marijuana grown in the state, says Dokoupil, is tracked from "the time it blooms to final sale — every single ounce is accounted for."


Interview Highlights:

On the initial "Green Rush"

"After Eric Holder and the Obama administration suggested that they weren't going to crack down on medical marijuana, everybody and their brother grabbed a trash bag full of weed out of their backyard and were like, 'All right, medical marijuana here for sale!' ... Then Colorado was really interesting ... because there's a core of young, educated, politically connected and well-financed guys who said, 'Whoa, whoa, whoa. We can't have former black market drug dealers and bikini girls as the face of our industry, because the community's not going to accept it.

"So they partnered with law enforcement. They partnered with state legislators. They hired incredibly high-level political consultants and lobbyists who have worked nationally. And they are the inside force that led to the creation of Colorado's regulated medical marijuana industry, which is unlike any in the country and which will be the basis for the legalized, regulated market. And so in response to the craziness that we saw in 2009 ... a movement toward controlled, regulated, not-in-your-face, nonconfrontational pot culture has begun."

On Colorado's tightly regulated, commercial medical marijuana growing market

"So in Colorado, the medical marijuana growers have to have 24-hour video of their operations, and that video is accessible by the state at any time — they can tap into it. And they all have these badges, and they had to go through background checks to get these badges. So there's an attempt to keep black market money out of it ... in Colorado, you're unlikely to see a situation where a dispensary is, in fact, just a front for a Mexican cartel. And then they had this additional rule, which is pretty revolutionary — it's called a 70-30 rule, where 70 percent of all the marijuana that each store sells, they have to grow themselves. ... That goes a long way to eliminating the introduction of black market weed. ... Stores aren't just buying all their weed from Mexican cartels and marking it up. ...

"That's a huge reason why the feds have focused on California. California doesn't have tight regulations on who grows marijuana, where it comes from. So the feds move in, and what they claim is that these med marijuana businesses are fronts for what are in fact just old-school black market drug dealers. And they're not growing medical marijuana in small batches for patients. They're growing it in Mexico, or they're growing it in the hills, and they're just bringing it in, and it suddenly, magically becomes legal once it gets in the store. But in fact, it's based on illegality. Colorado doesn't have that."

On the commercial pot-growing houses in Colorado

"I hope that in the future there are tours of marijuana warehouses in the same way that there are tours of breweries today, because it's really incredible. By law, you have to grow indoors in Colorado. And to do that, these rooms are rigged with lights that mimic the effects of sunlight to grow the plant, and different rooms have different seasons. And there's a perpetual grow, and different plants require different kinds of sunlight. So you walk into these warehouses, and at first you don't see anything because the actual plants are inside smaller rooms within rooms. And all you hear is the buzz of electricity. It's damp — you expect a forklift to come in from a side door. And you get a little deeper in and you open one of these doors, which are about the size of, like, Winnebagos where the actual plants are, and your eyes just recognize, 'Oh my god — it's summer sunshine.' It's like you want lemonade.

"And then you see a field of plants waving gently because they're stirred by fans, and there will be classical music playing, or there will be hard rock depending on what the grower says the plant likes. And then you go to another room and you open the door, and it will have, like, a honey-coated light, and you'll be like, 'Oh fall! I want a pumpkin latte — how beautiful.' And there will be workers in there, too. And the workers are like the Keebler Elves of cannabis. They live among the plants. They sleep there. They're caring for the plants constantly. They're deeply, devoutly about the plant, and they're usually shirtless or walking around barefoot."

On the threat of big marijuana business

"We've seen legalization in two states — that's the first step toward legalization in other states. That's a step toward legalization nationally. So you have a third vice industry like tobacco and like alcohol. The problem with that is that 80 percent of the profits tobacco companies and alcohol companies make comes from heavy users. The business model is based on people consuming more than they should. And so there's a strong economic incentive for big marijuana companies to create as much addiction as possible. And yeah, sure, marijuana is less harmful than Jack Daniels, but it's not the same thing as safe or helpful in the home or helpful in the workplace, or good.

"And so the long-term worry is that you have sophisticated marketing programs in place, distribution programs in place, that create a double or tripling of the current level of marijuana usage. And ... by the way, Americans [already] use marijuana at triple the global average. So we're talking about a tripling of a tripling, and that's a big deal. It's something to think about, which is why many people are in favor of — or I believe will become more in favor of as they realize the risks — of severe limitations on the size of marijuana businesses and the advertising that they can undertake."

On the cult of marijuana smugglers like his father, in the '70s and '80s

"The people who were defying President Reagan and before that, Nixon, are not typical characters. So the golden era of marijuana is considered to be the '70s and early '80s, and the swashbuckling hero types who brought in marijuana at a time when the government was trying to crush marijuana culture — those people are not, they're just not normal people. They don't have normal egos. They don't have normal connections to substances themselves. They see themselves as larger than life. They're entitled to whatever comedowns they should want in exchange for the fantastic good they've done, flooding the market with good marijuana.

"And by the way, this is not them just saying that this is how they're seen. This is the way how people in the '70s and '80s saw marijuana smugglers — they saw them as heroes. There's a very, very interesting article written by Timothy Leary, the acid-dropping Harvard professor, called 'The Dope Dealer as Robin Hood,' and it makes the case that the folk hero of the '70s is the marijuana smuggler — as important as rock stars and underground artists. And this was an influential article — it was reprinted in High Times. And then even more recently when my article came out, I had people write to me and say, 'Oh, your father is the Rosa Parks of legalization.' I was like, 'Oh my God. What?' "

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Transcript

TERRY GROSS, HOST:

This is FRESH AIR. I'm Terry Gross. Legal marijuana, for recreational use? Whoever thought we'd see that happen? But last Tuesday, voters in Colorado and the state of Washington passed ballot initiatives to legalize, tax and regulate marijuana. Oregon voted down legalization.

Also last Tuesday, Massachusetts voted to legalize medical marijuana. Seventeen states, including Colorado and Oregon, as well as Washington, D.C., had already done so. My guest, Tony Dokoupil, has been writing about the changing legal status, business and culture of marijuana for the Daily Beast. He wrote the recent Newsweek cover story "The New Pot Barons" about how the marijuana entrepreneurs have been preparing for legalization. And he's writing a new book about marijuana that's part history and part memoir about his father, who was a big-time marijuana smuggler in the '70s and '80s. More on that later.

Tony Dokoupil, welcome to FRESH AIR. So let's just start with an overview of what changed legally during this election regarding marijuana.

TONY DOKOUPIL: Well, it's been a profound change. In two states, marijuana has not only been legalized for personal consumption and possession, but over the next year, it will see the creation of a regulated retail model, which is something that doesn't exist anywhere in the world. And that process is going to be contentious, it's going to be fascinating to watch, and if it's not interrupted by the government, it's going to be historic - by the federal government I mean.

GROSS: And what are some of the other states that had marijuana changes in their law?

DOKOUPIL: We've seen the march of medical marijuana legalization from 1996 to today, and it's been accelerating, and that's an important part of acceptance around legalization. I mean, I think medical marijuana's acceptance is what explains the rapid acceptance and approval of legalization in Colorado and in Washington.

GROSS: So if Colorado will soon have a regulated retail model for marijuana, what does that mean?

DOKOUPIL: It means marijuana in Colorado would be available, much like alcohol and beer is available in Colorado. You'd go to the store, there'd be brands. You pick it up off the shelf, walk to the counter and exchange money - show your ID, exchange money and walk out, do what you want with it except for give it to kids. So, identical.

GROSS: So you can smoke marijuana in Amsterdam. What's the difference between that model and what's emerging in Colorado?

DOKOUPIL: So Amsterdam is - you can buy small amounts over the counter, and you can - but you can't actually possess it. And crucially, and this is the big distinction, there's not a regulated commercial growing model. So what you do in a coffee shop, quote-unquote, in Amsterdam, buy marijuana is acceptable, but that - the owner of that coffee shop is committing a crime every time they go back to their stash house and pick up a new supply.

In Colorado, that would not be the case. Everything would be regulated.

GROSS: So let's focus on Colorado some more. How did this pass? I mean, I'm still kind of shocked. Maybe I shouldn't be. But I just didn't - I didn't expect legalization to be on the ballot and to get passed. So who was behind it passing? Like how did they manage to win?

DOKOUPIL: Well, they got major backing from the Marijuana Policy Project in Washington, D.C., which is a big organization run by a former member of NORML, which is the old grandfather organization or marijuana legalization. And it's a very well-funded, savvy organization. In the past, it's received money from George Soros and from Peter Lewis, the founder of Progressive Insurance.

And they were the legal - the leading donor of the marijuana initiative in Colorado. And they also got a lot of smart help in-state. There's a guy named Brian Vicente, who moved to Colorado a decade ago to be a snowboarder, ended up going to law school and then became a really effective advocate for marijuana legalization.

He led a failed campaign for legalization in 2006, stuck with it and was victorious in 2012.

GROSS: Now the idea is that marijuana sales will be taxed. Did that help sell the idea of legalizing it?

DOKOUPIL: I'm sure the fact that the economy is not doing well, and, you know, many cities and municipalities are struggling to pay their police forces to, you know, get new fire trucks, you know, the fact that you could have tax revenue that would fix these budgetary problems from marijuana, that certainly helped the legalization case.

But it's not a slam dunk. I think people should realize that these really fabulous projections of tax revenue are not a guarantee because in Colorado and Washington State, they're proposing really steep taxes, you know, 15 to 25 percent. And if you consider that an ounce of marijuana is $250, about, today, you're talking about $30 to $60 of tax.

And, you know, people evade cigarette taxes for much less at stake than that. So this tax revenue is entirely dependent on people paying the tax and not finding ways around it, which they've done to a great extent with cigarettes.

GROSS: So you think there might still be a black market, in spite of the legalization.

DOKOUPIL: Well yes, there could easily be a black market despite legalization. There could be a black market to evade taxes. There could be a black market to transport the legally grown Colorado marijuana to other states. So that's another, you know, economic question mark here. A lot of people say oh, legalization is going to save so much money because law enforcement won't have to bust pot smokers anymore, but yeah, law enforcement's going to have to be doing other things now around marijuana.

They're still going to have to guard the state borders and make sure people aren't trucking the stuff out of state or buying too much in an attempt to then resell it to people who don't want to pay 15 or 25 percent in sales tax.

GROSS: What's very confusing about this, and I think everybody's confused about this, is that Colorado and in the state of Washington, it's legal now to buy, to sell and buy marijuana for recreational use. But marijuana is still a controlled substance under the federal law.

So the federal law and these two state laws are at odds. So what does the Justice Department plan on doing? Have they said anything about that yet?

DOKOUPIL: The Justice Department hasn't said anything about - other than that they're reviewing the situation. There's speculation that a federal injunction will be issued, preventing the legislatures in each of these states, Colorado and Washington state, from moving forward with what the voters have asked for until it's sorted out legally. And that's what everyone expects.

GROSS: Colorado's Governor, John Hickenlooper, opposes legalization, and after the law was passed, he said federal law still says marijuana is an illegal drug, so don't break out the Cheetos or Goldfish too quickly, a quote that has since become quite famous.

DOKOUPIL: Right.

GROSS: And Colorado's attorney general, who opposes legalization, says that the amendment didn't comply with required language under the Taxpayers' Bill of Rights, and therefore the tax can't be imposed. So, even on the state level, there seems like there's going to be potential obstacles going forward.

DOKOUPIL: Yeah absolutely. I'm actually surprised that the - Colorado's attorney general has not said he will defend the will of the voters because we saw a big historic development in Oakland earlier this year, where the federal government is trying to seize assets from the biggest medical marijuana dispensary there, and the city of Oakland for the first time ever has said no, we're going to represent these people, you know, the city attorney generals are defending local business against federal law.

And I'm surprised that that's not happening in Colorado because of the duty of the attorney general there is in fact to defend the will of the people against anything that would curb what they desire at this point.

GROSS: How has the Obama administration dealt with medical marijuana, and does that offer any clues as to how it might deal with legalization?

DOKOUPIL: The Obama administration has been really aggressive on medical marijuana, and he's taking - you know, the administration has taken a lot of heat for this. There have been raids on dispensaries in California, mostly in California, and, you know, people criticize the Obama administration for being worse than Bush on this subject, but what Bush didn't have to deal with is the explosion in the medical marijuana business, the number of dispensaries.

So when Eric Holder came in 2009, said, you know, the Justice Department is no longer going to focus on medical marijuana, on busting medical marijuana users, that led to an up tick in the number of people selling in states where it was legal, and then there was this now famous memo called the Ogden Memo, where - saying that, you know, if local sellers of medical marijuana are in clear, unambiguous compliance with state law, then the Justice Department should not use its resources to stop them.

And that set off what everyone refers to as the Green Rush, where you had just, like hundreds and hundreds of dispensaries. And then in response to that explosion yes, the Obama administration started doing things. But that's a very different thing than this legalization question.

I think in California, that explosion had to be answered by the feds because there is in fact no local enforcement that was able to respond to medical marijuana. This is probably getting a little bit in the weeds, but, you know, California has medical marijuana, but it has - it never bothered to regulate it with specifications that you would expect. There's only a few pages on the books saying this is what's legal, and this is what's not, and these are the bright red lines.

So no one really knows what's legal, and when local law enforcement finds something that they're not (technical difficulties) and the feds come in, and they bust people. You haven't seen the same sort of busts in Colorado because they have this huge book, this 200-and-something-page regulatory structure that says what's legal and what's not.

So, you know, so to answer your question, I don't think what the Obama administration has been doing in response to medical marijuana is an indicator of what it will do in response to legalized marijuana. I think they're totally separate questions.

GROSS: So if you're just joining us, my guest is journalist Tony Dokoupil, and he's been writing about marijuana. He has a book on marijuana that he's writing right now. He had the recent Newsweek cover story on Colorado and "The New Pot Barons," and of course Colorado and Washington, state of Washington, just legalized marijuana last Tuesday in the election. Let's take a short break here. Then we'll talk some more. This is FRESH AIR.

(SOUNDBITE OF MUSIC)

GROSS: If you're just joining us, my guest is journalist Tony Dokoupil. He is writing a book about marijuana, and he wrote the recent Newsweek cover story on Colorado and "The New Pot Barons." Colorado is one of two states that legalized marijuana last week in the election.

Colorado already has a for-profit marijuana market. Can you describe what that market is like now?

DOKOUPIL: Colorado is an amazing state because it has the world's, the industrialized world's only regulated, for-profit cannabis market of any kind. It happens to be medical, but it's going to be the basis for the legal market, as well. It's an amazing system.

It was created by this career lawman named Matt Cook, who was director of enforcement at the state level, and he took - he constructed this regulatory system using a little bit from used car sales laws and a little bit from casinos and a little bit from gambling. And he - it's extremely tight. He says he can regulate anything.

And so what you have there is commercial grows, you know, more than a million square feet of warehouse space outside of Denver dedicated to growing marijuana, and then you have hundreds of dispensaries dedicated to selling it. And the marijuana grown there is tracked from the time it's put into - not the ground because they're growing it indoors, but by the time it blooms to final sale, every single ounce is accounted for.

It's an incredible system, and, you know, legalization will likely borrow from it heavily in the next year or so.

GROSS: You toured several pot warehouses. Would you describe the rooms in which the marijuana plants are grown?

DOKOUPIL: Absolutely. I hope that in the future, there are tours of marijuana warehouses in the same way that there are tours of breweries today because it's really incredible. By law, you have to grow indoors in Colorado, and to do that, these rooms are rigged with lights that mimic the effects of sunlight to grow the plant. And, you know, different rooms have different seasons in them, and there's a perpetual grow, and different plants require different kinds of sunlight.

So you walk into these warehouses, and at first you don't see anything because the actual plants are in smaller rooms within rooms, and all you hear is, like, the buzz of electricity. It's damp. You know, you expect a forklift to come in from a side door. And then you get a little bit deeper in, and you open one of these doors, which are about the size of, like, Winnebagos, where the actual plants are.

And your eyes just recognize oh my God, summer sunshine. It's like you want lemonade. And then you see a field of plants waving gently because they're stirred by fans. And there'll be classical music playing, or there'll be hard rock, depending on what the grower says the plant likes. And then you'll go to another room, and you open the door, and it'll have, like, a honey-coated light, and you'll be like oh fall, I want a pumpkin latte, how beautiful.

And then there'll be workers in there, too, and the workers, they're like the Keebler Elves of cannabis. They live among the plants, they sleep there. They're caring for the plants constantly. They're deeply, devoutly about the plant. And they're usually shirtless or walking around barefoot, and it's like you - it's like Willy Wonka's chocolate factory except for cannabis. Like they're these people who are so committed and so interesting. It's so unlike who you would see at, like, the Coca-Cola factory that it's just a phenomenon experience. It's a feast for, you know, all of the senses.

GROSS: So this legal marijuana is grown with such kind of care and love, under such controlled circumstances, indoors. Compare that to the product that comes in, say, illegally from Mexico.

DOKOUPIL: It's not even - it's not comparable. You know, Mexico historically grew its marijuana, you know, in these hilly - in ravines growing out with mule piss and, like, whatever fertilizer they could find. It was like it wasn't grown in ideal circumstances. No one cared about the quality in the '60s and '70s. People weren't educated about marijuana to the extent they are today.

So traditionally, Mexican marijuana is grown outdoors and sold to, you know, the gringos, who will smoke anything. It's been transported illegally, so it's crushed in transit. In the old days, at least, it used to, you know, smell like gasoline or like seawater or whatever - however it was brought into the country. And it was not attractive to look at.

You can look at High Times magazine, sort of the Playboy of pot, from the '70s, and the centerfolds, which, you know, are women in Playboy but are marijuana buds in High Times...

(LAUGHTER)

DOKOUPIL: This is true. This is true. It's not an attractive thing. It looks like something you chewed at dinner and then put on the corner of your plate. It's like a root vegetable, like broccoli you couldn't digest. It's - that's what the marijuana leaves used to look like.

And now it's like a - it's a perfect, furry little acorn, like a green corn on the cob with just fur and these - and then you hold it up to the light, and the crystals shine. You know, the THC, the stuff that gets you high, comes - you know, it's a crystal on the plant. And the layers are so thick on marijuana that's grown today that it's like a little chandelier. It's nothing like what you used to see.

GROSS: And when it's sold, it's already, like, dried and crushed, and there's no stems or seeds or twigs in it.

DOKOUPIL: No, no stems, no seeds, no twigs, no tarantulas, no bugs.

GROSS: Tarantulas, great.

(LAUGHTER)

DOKOUPIL: No really, like smugglers in the old days used to, you know, get their weed from Colombia, and they'd put it on a sailboat - or Jamaica - and then they'd - you know, they'd pack the sailboat as much as possible and sleep on the bales and make the sea journey. And they'd wake up, and, you know, a spider on their chest because, you know, all kinds of things live in these plants. I mean, it's organic matter that's being grown out in nature. So all kinds of creepy-crawlies, but, you know, none of that here, none of it.

GROSS: You describe how, initially, the marketing of the medical marijuana was very tacky. So describe how it was initially sold.

DOKOUPIL: Sure, this is somewhat of a long answer because marijuana began under Prohibition, of course, so there was a lot of - you know, it was confrontational, sort of smoke-in-your-face culture, protest culture, anti-government culture, counterculture. And so, you know, strains of marijuana have names like Polio and, you know, Green Grenade and, you know, things that you don't traditionally associate with medicine.

And then they had - there were these big marijuana festivals where, you know, just you can buy plastic bags already full of smoke and just inhale the plastic bags. You can eat any number of marijuana food products. And then of course there were the annual smoke-ins, where people go to some public place and commit mass civil disobedience. You're disobeying the federal law against marijuana.

So marijuana culture grew up out of that prohibition, and now there's - you know, under medical marijuana has been an attempt to get away from that, to shift from the culture of protest to a medicinal culture. And that's been a bit of an awkward pivot because, you know, if you have cancer, and you say, you've got cancer, you know, you know what would be really great while you're undergoing chemotherapy, you should smoke marijuana.

Oh really? Let me try some. What's it called? Try this, it's called Polio, or it's called Green Crack.

(LAUGHTER)

DOKOUPIL: It's a bit jarring. Oh, you've got glaucoma, have this Green Crack. That will help. And, you know, that doesn't mean it doesn't help, but it just, there's a - it's incredibly awkward.

GROSS: And you were also describing in your article a time when, like, girls in bikinis would be selling five dollar joints, and, you know, guys in sandwich boards would be advertising...

DOKOUPIL: Oh yeah, so after Eric Holder and the Obama administration suggested that they weren't going to crack down on medical marijuana, everybody and their brother dragged a trash bag full of weed out of their backyard and were like all right, medical marijuana here for sale.

(LAUGHTER)

DOKOUPIL: And, you know, doctors popped up and were selling instant - you know, you needed a doctor's recommendation, but this became a complete scam, right. A doctor, for like $35, I'll give you a recommendation. You know, it's not a prescription, you're not violating any code that you've - you know, no AMA code.

So yeah, there would be guys in sandwich boards. There would be doctors on-site, in stores, just sort of signing prescriptions, and pot smoking was happening like crazy. And then Colorado is really interesting, and this is the focus of my cover story, in fact, because there's a core of young, educated, politically connected and well-financed guys who said whoa, whoa, whoa, we can't have former black-market drug dealers and bikini girls as the face of our industry because the community is not going to accept it.

So they partnered with - they partnered with law enforcement, they partnered with the state legislature. They hired incredibly high-level political consultants and lobbyists who work nationally, and they are the inside force that led to the creation of Colorado's regulate medical marijuana industry, which is unlike any in the country and which will be the basis for the legal regulated market.

And so in response to the craziness that we saw in 2009, which still exists in Washington state, by the way, and in California to some extent, you know, something more subdued, a movement toward control of regulated, you know, not in your face, non-confrontational pot culture has begun.

GROSS: Tony Dokoupil will be back in the second half of the show. He's been writing about changing marijuana law, business and culture for Newsweek and the Daily Beast and is at work on a book about marijuana. I'm Terry Gross, and this is FRESH AIR.

(SOUNDBITE OF MUSIC)

GROSS: This is FRESH AIR. I'm Terry Gross, back with journalist Tony Dokoupil, who has been writing for Newsweek and The Daily Beast about the changing legal status, culture and business of marijuana. Last Tuesday, Washington and Colorado became the first states to legalize marijuana for recreational use. They already had legalized medical marijuana. Dokoupil is at work on a book about marijuana that's part history and part memoir, about his father who was a big-time marijuana smuggler in the '70s and '80s.

When we left off, we were talking about Colorado's regulated medical marijuana industry, which Dokoupil says will be the basis for the new regulated legal market.

And Colorado passed a bill to create a framework for controlling the industry, a sales framework.

DOKOUPIL: That's right, a very stringent sales framework. So, in Colorado, the medical marijuana growers have to have 24-hour operations, and that video is accessible by the state at any time. They can tap into it. And they all have these badges, and they had to go through background checks to get these badges. So there's an attempt to keep black-market money out of it.

So, in Colorado, you're not going to see a situation - or you're unlikely to see a situation where, you know, a dispensary is, in fact, just a front for a Mexican cartel. And then they had this additional rule, which is pretty revolutionary, where there's a 70 - it's called a 70/30 rule, where 70 percent of all the marijuana that each store sells, they have to grow themselves. So that goes a long way to eliminating the introduction of black market weed. So stores aren't just buying all of their weed from Mexican cartels and then marking it up.

And that's a huge reason why the Feds have focused on California. California doesn't have tight regulations on who grows marijuana, where it comes from. So the Feds move in, and what they claim is that, you know, these are fronts, these businesses, these medical marijuana businesses are fronts for what are, in fact, just old-school like market drug dealers. And they're not growing medical marijuana in small batches for patients, their growing it in Mexico or their growing it in, you know, in the hills and they're just bringing it in and it's suddenly, magically becomes legal once it gets in the store, but in fact, it's based on illegality. Colorado doesn't have that.

So getting back to Colorado, in Colorado, there is a licensing fee that's, like, thousands of dollars. And who needs a license? What is the license?

Right. So if you want to grow or sell medical marijuana in Colorado, you need a license. And the licensing process is this really stringent process that includes the background check I just talked about, and it's very pricey. So if you're, like, just a hippie spiritualist, unfortunately - and this is controversial - you may struggle to survive, to have the capital to survive in the current medical marijuana business in Colorado.

And, in fact, there was this amazing day, incredible day in Colorado, when all the applications had to be in. So in 2009, there was this explosion, the green rush, hundreds of marijuana stores. Suddenly there were more than Starbucks in Colorado. And then a year later, the new regulations come online and everyone has to apply for a license. And there's a grace period and all the rest, but everyone has to apply.

And then on deadline day, there's, like, a mad rush of people trying to get their applications in. And these applications are like, some of them are more than 1,000 pages. That's what ends up - people end up turning in, like, pushcarts full of paperwork for their applications. But other people who were less organized are there with, like, you know, graffiti style markers, filling them up and filling out the applications as they walk in.

And when you talk to people in Colorado, you could tell - they could tell, on that day, who was going to be a player one year later and who was, you know, on, you know, in day one of bankruptcy.

GROSS: So it's very controversial, whether the business guys or the hippie guys should be - should have a right to the business.

DOKOUPIL: Well, yeah, because there are people who believe that marijuana is God's plant and the government doesn't have any business regulating it. People have no business selling it, making a profit off of it, that this is medicine and it's obscene to try to profit off of it. I mean, that is a significant subculture within the marijuana - the wider marijuana culture.

But, you know, the other - this is the other - the other background that's important is because of federal prohibition, the medical marijuana industry is not an industry that has traditional bank loans. You can't walk into Bank of America and say, I have a small business. I have, like, a million dollars, and here's my projections.

And, you know, you can't even - because the banks are afraid that they're going to be complicit in a crime if they give you money. So that creates a kind of elite, especially in Colorado. You have to have access to private capital. That means you either have rich family or rich friends or, you know, some other creative means of getting cash, because you're not getting it through traditional channels.

GROSS: So, you know, if you're in business, there's a lot of, you know, like business tax deductions that you can claim, and that's, you know, that's always very helpful if you're in business. But, you know, in terms of, like, IRS tax deductions, you know, growing and selling marijuana is still illegal with federal law. It's a controlled substance. So you can't - I assume you can't, you know, deduct your business expenses in your federal returns.

DOKOUPIL: Sort of. You kind of can, right? This is a very, very interesting contradiction that the federal government has. So, while the Justice Department raids medical marijuana dispensaries and threatens others, the IRS is happy to accept taxes on the millions of dollars in sales that they generate. With - and the taxes that the IRS takes are huge, much bigger than the average business, because they do not allow deductions related to the sale - to employees, to health insurance, to the sale of the marijuana.

Confusingly, they do allow you to deduct the cost of growing the plant. So the result of that - well, there are two readings on that. You know, one reading is, hey, that's a conscious decision. Clearly, the government is - you know, somebody in the government is in our corner, because if all deductions were removed - which could happen. I mean, there's no reason why it hasn't happened, except for this approval - if all the deductions were removed, no medical marijuana industry - business or marijuana at-large business could survive without IRS deductions. So some people see it as a wink-wink from the government.

GROSS: So a lot of people have been speculating that, you know, when marijuana becomes legal in states, and especially when it becomes legal in more states or if there's a federal law making it legal, that big tobacco's going to move in and take over the industry. What kind of speculation have you heard about that, and have you done any investigation into the possibility of that?

DOKOUPIL: I have. I think it's very likely that the acceptance of marijuana will lead to big players moving in. That could be big tobacco. It could also be a big commercial food company like Kraft Foods. I mean, that's not going to happen tomorrow, but that's the long-term trajectory.

And I actually recently talked to Peter Bourne, who was the chief drug policy officer, the drug czar, under Jimmy Carter in the late '70s, and at that point there was serious discussion of legalizing, or decriminalizing marijuana. And Peter Bourne told me, yeah, absolutely. The tobacco companies, they had plans in place. They were ready to flip the switch if we decriminalize or legalized. They absolutely had contingency plans, he called them, in place.

So, you know, the tobacco companies, when you call them up and you say: Do you have plans? They say, no. We don't have plans. But they'd be stupid not to have plans. And the people who were in the position to know, like Peter Bourne, say yes, they have plans.

GROSS: What are the concerns about what it would mean if the tobacco industry took over the marijuana business?

DOKOUPIL: Well, you know, we've seen legalization in two states. That's the first step towards legalization in other states. That's a step towards legalization nationally. So you have a third vice industry, like tobacco and like alcohol.

The problem with that is that 80 percent of the profits of tobacco companies and alcohol companies may come from heavy users. The business model is based on people consuming more than they should. And so there's a strong economic incentive for big marijuana companies to create as much addiction as possible.

And yeah, sure, marijuana is less harmful than Jack Daniels, but it's not the same thing as safe or helpful in the home or helpful in the workplace or good. And so the long-term worry is that you have sophisticated marketing programs in place, distribution programs in place that create a doubling or tripling of the current level of marijuana usage.

And we're already, by the way, we, you know, Americans use marijuana at triple the global average. So we're talking about a tripling of a tripling, and that's a big deal. I mean, it's something to think about, which is why, you know, many people are in favor of - or I believe will become more in favor of, as they realize the risks - of severe limitations on the size of marijuana businesses and the advertising that they can undertake.

GROSS: When you were in Colorado reporting on the medical marijuana legal market, what are some of the forms that you found marijuana being marketed in?

DOKOUPIL: Marijuana is in anything you want. I mean, it comes in the original plant product and vegetable product, and it comes in hot dogs. I recently toured a marijuana products company, the biggest in Colorado. It's called Dixie Elixirs, and it's soon to be the biggest nationally, because it has a distribution network in place. And they make fizzy sodas with THC and - a lot of THC, 120 milligrams, which, you know, a joint has five milligrams. So we're talking about a serious dosage.

They also make truffles which have won awards. And these truffles, the one I saw has 300 milligrams of THC. That's a powerful hit of marijuana. And they also sell more medicinal-looking items, like pills and this, like, a droplet of THC that you put beneath your tongue. It has, like, a berry flavor, very medicinal. But, yeah, marijuana is in everything. It can be put in anything.

I talked to a woman whose family is involved in the restaurant business, and Wanda James is her name. She's got - her husband runs a couple restaurants in Denver, and she used to run a dispensary, but now she's preparing for opening what she hopes to be the first legal marijuana shop, and she envisions it to be like Whole Foods, but everything will have weed in it.

And there's no reason to believe - I mean, she's someone who you - who is a credible creator of a Whole Foods of marijuana, as she describes it. You know, her husband has very good restaurants. They know how to cook marijuana products. They have warehouse space for the grow. And, so yeah, medical marijuana is currently available in everything you could imagine in Colorado, any food product. And you'll see the same thing in a legal market.

GROSS: My guest is journalist Tony Dokoupil. He's been writing about changing marijuana law, business and culture for Newsweek and The Daily Beast.

We'll talk more after a break. This is FRESH AIR.

(SOUNDBITE OF MUSIC)

GROSS: If you're just joining us, my guest is Tony Dokoupil, and he's writing a book about marijuana. He recently had a Newsweek cover story on Colorado and "The New Pot Barons." Colorado just legalized marijuana for recreational purposes last week, as did the state of Washington.

You wrote an article about the case against legalization. Would you explain some of the main points in that case?

DOKOUPIL: Yes. I will talk about the case against legalization, although I do so warily, knowing that my - I could be getting emails right this second from people angry at me for bringing up any of the downsides. You know, the push to legalize marijuana is a political campaign, and you don't win political campaigns by saying maybe, could be a good idea, possibly. You know, so you, a lot of the claims are fantastic. They're the outer edge of truth, or way past truth.

And, you know, a couple of them, for example, some people say that legalizing marijuana is going to put the Mexican cartels out of business. Well, no. The cartels have diversified. Some people say that everyone who wants marijuana already has it, so we're not point to see any change. You know, legalization will just mean cops have more time and people won't be going to jail.

But that's not true. Prohibition does have an effect. The fact that marijuana is illegal today means, you know, approximately a third fewer people use it. And additionally, the marijuana that's on the market is weaker, because it's generally the Mexican stuff.

And so the case against legalization is, look, we want to discourage the use of this. We don't want our markets flooded with cheap, strong weed, and we don't want to be on the road to the creation of a vice industry. And by the way, you know, if we do legalize, all these supposed benefits - like huge tax revenue or reduction in violence - those are not guaranteed. They're not guaranteed at all.

GROSS: You have a personal connection to this story about marijuana, which is that your father was a marijuana smuggler in the '70s and '80s. Did you know that when you were growing up?

DOKOUPIL: I didn't know that. I did not know what my father's occupation was. I didn't find it out until I was in my teens, and in my teens, my understanding of it was just that my parents were hippies and they sold a little marijuana. And then a few years ago, I wrote a Newsweek story in which I actually investigated my father's connection to the drug business, and I got his federal records.

And surprise, surprise, he was arrested in the early '90s on a job selling 17 tons of marijuana, which was enough, at the time, to roll a joint for every college-age kid in America. So, in retrospect, I've learned that he had no other occupation for 20 years other than marijuana smuggler and dealer, you know, starting small and growing to multi-ton shipments for years.

And, you know, marijuana taught me to read, because marijuana paid for my private school. You know, it bought my baseball gloves. It put presents under the tree at Christmas. So I'm very much a product of marijuana.

GROSS: How - for how many of the years that your father was a drug dealer were you actually living with him? Because your parents divorced. I don't know how old you were when they did.

DOKOUPIL: Well, they were never married. Which was...

GROSS: Oh, OK. Yeah.

DOKOUPIL: As part of the, wink-wink-nod-nod, honey, I know you make your money smuggling marijuana, but I want to have some plausible deniability when the feds come. They were never married. And so my father was in my life until I was 10, which is right at the period where he was busted. You know, he was already in the midst of a personal decline, even before the feds came knocking.

And, in fact, they couldn't find him. You dig through these records, and there are these memos in which law enforcement are saying we've located everybody except for Anthony Dokoupil. And the reason they couldn't locate him is because he was sleeping on Miami Beach at the time, at the tail end of a terrible bender.

So, yeah, he was in my life until I was 10. But, you know, the private school thing is really fascinating, because I was in Miami and my classmates were the grandchildren of Vice President George W. Bush - H. W. Bush. So we had a situation where - and this is not only my father, but many fathers in the school were involved in the drug business. And then you had other family members involved in the anti-drug business. And the forces of good and evil were clashing on just that campus every day at pickup time.

GROSS: Now, if I understand your story correctly, after your parents separated, your mother married someone who had been one of your father's partners in the drug smuggling business.

DOKOUPIL: Right. So my stepfather was - you know, marijuana rings are generally divided between the people on the boats and the people in the tall weeds accepting the product off the boats. And my father was in the tall weeds with the lantern and my stepfather was in the boat. And so when eventually things fell apart and one of the Reagan-created drug task forces collared a different member of the ring who then rolled on the stepfather, the stepfather then rolled on my father.

And the whole kit and caboodle came apart. But, yeah. That was something interesting that I discovered in reporting the article and that I've now learned more about as I work on the book is just how complicit my stepfather was in my father's undoing legally.

GROSS: How odd that must be.

DOKOUPIL: It's very strange. You know, my stepfather's perspective is that - and it's hard for me to know how true this is, that if, you know, he had not cooperated then the government would've taken our house and taken - you know, my mother would've gone to jail and it would've created more misery than him marrying my mother and creating a firewall between the federal government and me.

So it's a legal technicality, but people, watchers of "Breaking Bad" will realize that you can't be compelled to testify against...

(LAUGHTER)

DOKOUPIL: You can't be compelled to testify against your spouse. So, you know, he proposed to my mother rather spontaneously and they were married and then the feds came calling. And they said, cooperate now or we're prepared to go through the front door. And he cooperated.

GROSS: My guest is journalist Tony Dokoupil. He's writing a book about marijuana that's part history and part memoir about his father. We'll talk more after a break. This is FRESH AIR.

(SOUNDBITE OF MUSIC)

GROSS: If you're just joining us, my guest is Tony Dokoupil and he's been writing about marijuana for the Daily Beast and Newsweek. He had a recent Newsweek cover story on Colorado and the new pot barons. And of course Colorado last week legalized marijuana.

And Dokoupil's father was actually a marijuana smuggler in the '70s and '80s. So if your father had been arrested one year later than he was, he would've been subject to mandatory minimum sentencing. And so what was the sentence he got compared to the sentence he would've gotten with mandatory minimum?

DOKOUPIL: Right. So he was arrested in the early '90s but it was actually one week before the statute of limitations was up. The job they pinned him on was a job in '86. And as he was completing the job, President Reagan was giving a speech in which he said, you know, we're going to create mandatory minimum sentences. And those sentences went into effect in November of '87.

So one year later his weight - the weight of marijuana that he brought in would've given him 10 years to life. But because he came in before that, and because he benefited from being busted in the '90s when, you know, the war in marijuana, you know, it was receding, he got a judge who was like, you know, you obviously have bigger problems than selling marijuana right now. So we'll give you a year, six months of it in a halfway house.

GROSS: Part of his bigger problems was addiction to heroin and cocaine?

DOKOUPIL: Yeah. You know, the people who were defying President Reagan - and before that, you know, Nixon - are not typical characters. And so, the golden era of marijuana is considered to be the '70s and the early '80s. And the swashbuckling hero-types who brought in marijuana at a time when, you know, the government was trying to crush marijuana culture, those people are not - they just are not normal.

Like, they don't have normal egos. They don't have normal connections to the substances themselves. You know, they see themselves as larger-than-life. They're entitled to whatever comedowns they should want in exchange for the fantastic good they've done flooding the market with good marijuana.

And, by the way, this is not, you know, this is not them just saying that this is how they're seen. This is the way people in the '70s and '80s saw marijuana smugglers. They saw them as heroes. There's a very, very interesting article written by Timothy Leary, the acid-dropping Harvard professor, called "The Dope Dealer as Robin Hood," and it makes the case that the folk hero of the '70s is the marijuana smuggler, bigger than - as important as rock stars and underground artists

And this was an influential article. It was reprinted in High Times. And then even more recently, when my article came out, I had people write to me and say, oh, your father is the Rosa Parks of legalization.

(LAUGHTER)

DOKOUPIL: And I was like, oh, my God. What? Well, I mean, more recently I wrote a piece, I wrote a profile of Keith Stroup, who was a contemporary of my father's, who was a founder of NORML, which is this very old organization that has been lobbying for 40 years to legalize marijuana.

And he wrote me this really sweet note, and he was like, you know, I just want to say I've got nothing but respect for people like your father because they kept marijuana culture alive when, you know, without them it would've been dead. So, you know, this is the great - legalization, you know, confirms the life choices and confirms the hero status of people like my dad in the view of the Keith Stroups of the world.

GROSS: Oh, how very confusing that must be for you. How has your father's storied career as a major marijuana smuggler in the '70s and '80s influenced your work as a journalist covering marijuana, and now all the new legal issues surrounding it?

DOKOUPIL: It's hard to say. You know? I don't think that my background - I can imagine someone being like, oh, you know, he's only mentioning the downsides of legalization because he's angry at his dad. And I don't think that's the case at all. I'm still in touch with my dad. He comes to see the grandkids. You know, he and I are fine.

So I hope that doesn't come across. I think it certainly helps me in covering this issue, the fact that I have a family connection to it and that as soon as legalization passed I got text messages from my mother and from my father's friends saying, like, we're going to Colorado, yay! Exclamation point.

(LAUGHTER)

DOKOUPIL: Like all that definitely helps me in covering this journalistically because I have instant credibility with people who are in the business. And in fact, I'm never shy about mentioning my family connection to sources because they understand immediately that, oh, I have a long-view perspective of this. I'm not somebody who covers the region and is now dropping in on this issue. I'm someone who knows the issue.

GROSS: Well, Tony Dokoupil, I want to thank you so much for talking with us and I wish you good luck with the book that you're writing now.

DOKOUPIL: Thank you very much.

GROSS: Tony Dokoupil has been writing about changing marijuana law, business and culture for Newsweek and the Daily Beast. He's at work on a book on marijuana that's part history, part memoir about his father. You can find links to several of his articles about marijuana, including ones about his father and the new pot barons on our website freshair.npr.org, where you can also download podcasts of our show. And you can follow us on Twitter @nprfreshair and on Tumblr at nprfreshair.tumblr.com. Transcript provided by NPR, Copyright NPR.

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