By any metric, 2014 was a monumental year for the legalization of cannabis. Colorado became the first state in the U.S. to allow recreational use and the overwhelmingly positive impact on the state’s economy, school funding, and crime rates helped to spark the nationwide domino effect we’re seeing today as more and more states look to consider legalization. Colorado saw nearly $700 million in marijuana sales last year, generating over $63 million in tax revenue.
Brian Vicente of Vicente Sederberg LLC was a key advocate and campaigner for Amendment 64, which called to regulate marijuana like alcohol. As one of the primary authors of the bill, Vicente was instrumental in creating the framework and effective messaging that resonated with voters. He has been called the “the industry’s de facto spokesperson” by The Guardian (UK) and his practice dubbed “the country’s first powerhouse marijuana law firm” by RollingStone.
As part of our Future of Cannabis coverage, Equities.com caught up with Vicente to discuss the next phase of the cannabis industry, what states he thinks are next, and what went wrong in Ohio.
EQ: You were one of the primary authors of Amendment 64, which led to the monumental legalization of cannabis for recreational use in Colorado. It’s been nearly two years since that came into effect. Reflecting on the framework and its implementation, how have things progressed based on your initial expectations?
Vicente: I think they've really been positive from both an economic and social standpoint. With most major cultural shifts, traditionally you don’t see an opportunity for commerce. But with marijuana legalization, we really have seen that. There’s this intersection of social change. We’ve changed this policy that was illegal for 80 years, and with that, simultaneously there's this opportunity for commerce.
We’ve see a ton of exuberance from investors looking to enter this field. We have a lot of creative ideas percolating. Colorado feels sort of like the Silicon Valley of marijuana. You've got 10,000-plus new jobs created since marijuana was made legal directly in the marijuana industry and probably another 10,000 ancillary jobs that are supporting that industry just in our state. Really, for what is considered as a generally down economy nationally this has really worked out quite well for Colorado.
EQ: Looking back at the original framework of Amendment 64, were there any unintended consequences or surprises that exceeded your expectations and initial assumptions?
Vicente: Our idea with that original framework on Amendment 64 was to create a skeleton for marijuana, which had been illegal for 80 years, and how we think it should be legalized. We wanted to create a basic framework and within that to legalize personal possession, setting up a regulatory framework, legalizing hemp and so on. We left a lot of the finer details up to State Department of Revenue, who of course has a history of regulating anything from gaming to alcohol, and we felt they would be well-suited to address this.
As such, we realized that as we're creating this new legal framework we're not going to get everything perfect the first time around. So we wanted to give the State room to tweak as this moves forward, and thankfully they have done so. They’ve been very thoughtful in establishing work groups and getting input from both community members and also industry members on how we can better shape these laws.
It’s been an ongoing, dynamic discussion but most people recognize we're really dealing with the smaller details now. A lot of the big-picture stuff has worked out quite well. Now, [the discussions are] about finding ways to fine-tune seed-to-sell tracking or better ways to educate the public on the potency of edibles. That’s what we're doing now as opposed to the sort of existential questions of whether or not marijuana users should be thrown in jail. That is sort of decided. Now we're dealing with the finer details.
EQ: When that existential discussion was being had, some people thought that the world would end with legalization. Obviously that didn’t happen. Has that helped to sway more of the early opposition and their perception to more of an accepting attitude?
Vicente: I think it has. The American public is widely against drugs, and I think what we've shown them is that, at least for marijuana, there is a way to regulate this product to actually produce revenue and it's not going to lead to large societal problems. I think Colorado has really been very thoughtful about how we've regulated this product and worked hard to keep it out of the hands of teens while producing revenue and jobs for the state. We’ve been an example and as such, you've seen poll numbers in our state that support legalization and these are the people that live with it every day. They’ve gone up considerably since they first voted on this in 2012. We’ve also seen polling on this issue reach a national high in terms of support in the last couple of weeks.
I really think people around the country, and in some ways, around the globe are really saying, “Hey, we lived with marijuana prohibition for a long time and now it seems like there's this viable option out there and it's not a hypothetical anymore. This is something that is happening in Colorado and it looks like Colorado is really benefiting from it.”
EQ: There have been a number of other states that have or are in the process of potentially legalizing recreational marijuana. Does Colorado serve as a foundation for their own framework?
Vicente: I think Colorado does stand as a good framework on how to do this. Our whole idea all along was to regulate this like alcohol. When you talk about the word legalization people want to know what that really means. Can kids have it? Is it grown on the streets? It sounds like a free-for-all but it’s not. What we're really focused on is regulating it like alcohol. That crystalized in people's minds. They thought okay, alcohol. You have to be 21 or over. You can’t drive under the influence. It’s a taxed product. It’s done with government oversight so you know the final product is not going to make you sick.
I think that has created a framework that other states have adopted. Alaska is very similar to Colorado. Oregon and Washington are fairly similar as well. Massachusetts will vote to legalize marijuana next year. Their campaign is called the Massachusetts Campaign to Regulate Marijuana Like Alcohol. I think it has sort of caught on and this is a good framework.
Having said that it's important to identify that each state is different and has different needs. What works at Utah may not work in Colorado. I think most states are moving towards a more liberalized model of Marijuana Law. They’re going to do it their own way, but probably within the basic framework that we have laid out.
EQ: Up until this point, it seemed like this movement was unstoppable. The momentum was incredible but just recently we saw that Ohio's initiative failed. That seemed to be the first true roadblock that this movement has seen. What were the issues with that campaign? How does it affect the broader movement?
Vicente: The Ohio initiative was over before it began. There are certain rules of running successful legalization campaigns and it violated every single one of them. I know this because I ran Colorado's campaign and worked on this for a decade. Basically, they screwed up a couple of fundamental things. One, they just put this measure on the wrong ballot. It should have been on an even year instead of an odd year like 2015. An even year, particularly an even year in presidential races, you get a much more diverse voting block that turns out and the more young people, the more people of color, the more disenfranchised voters that come out the more that they support marijuana reform. For 2015 in Ohio you just dont get any of those people.
Secondly, the drafting of this law in Ohio Law was pretty poor. It created this sort of state-mandated oligopoly, which would be forever enshrined in their constitution the control of all the cultivation of marijuana for the entire state of Ohio to 10 people. I think that sat really poorly with voters that might have otherwise supported marijuana reform.
Then finally, some of their campaign tactics were just juvenile. I mean they had this “Buddy” mascot that they paraded out. That is just sending the wrong message about how marijuana should be responsibly regulated. I was not surprised that it failed. I’m actually from Ohio, so I was hoping it would pass just so they would stop arresting people there but I think a better-written measure will pass in 2016 in Ohio.
EQ: As one of the leading figures of this legalization movement, do you feel that poorly run campaigns and efforts like this could threaten what most people are trying to achieve in a better way?
Vicente: I tend to think the momentum on the side of marijuana reform will not be slowed down by these sort of poorly ran campaigns. I’ve always thought that the more you talk about marijuana legalization, the more support you will end up getting ultimately. That doesn’t mean that you'll win someone over that day but over time as people learn more about what is going on in Colorado, the economy or how Washington is not arresting people anymore, whatever it is, it will influence people to change policies locally.
The voters that turned out in Ohio for that campaign just never would have voted to legalize marijuana no matter what. Those people dont turn out to legalize marijuana in Ohio in 2015. But in 2016, you have a lot of people that are predisposed that want to legalize. Again, you put it on the right ballot with another year of public education under your belt, I think you win.
EQ: One of the interesting financial aspects here is that it’s predominantly small businesses. If and when big business comes in, things will change. What do you think the potential impact of that will be? Is this market fertile for big businesses to enter?
Vicente: I have thought about that and I will say I have been advising people in this space for over a decade. The folks that I’m advising now are much more sophisticated and are from more traditional business backgrounds versus five or 10 years ago. You’re seeing more mainstream folks enter this and I think that trend will continue. Having said that, I think a lot of the institutional money and the bigger companies are starting to nibble at the edges, but are not that interested in entering this space until marijuana becomes legal at the federal level. We’re still a couple of years out from that but I think the larger companies basically feel like they have too much to lose because this is still illegal federally. So they’re not looking to enter right away but they're certainly starting to sniff around at the opportunity.
EQ: The Schedule 1 designation has been a real problem for this market. Has anything changed in terms of the federal attitude towards that?
Vicente: In terms of marijuana being a Schedule 1 Controlled Substance, you see most, if not all of the presidential front runners say it should not be Schedule 1. Hillary Clinton came out recently and said it should be Schedule 2. There’s a pretty damn good chance that she's going to be the next president but even on the Republican side, almost all major frontrunners say this is a state’s rights issue. That is a massive change from four to 12 years ago where every mainstream candidate basically said that marijuana is bad. So we've seen a real sea change and what that says to me is that within four years or less we'll see marijuana legal at the federal level.
EQ: Vicente Sederberg’s profile has rapidly increased and expanded as an influential firm in all of this. You’re actually consulting on an international level to a certain extent. From that standpoint, as one of the leaders at the forefront, what is the biggest story right now that deserves more attention?
Vicente: I guess there are two things. One is which state, which municipality, which country is next? We have folks from across the globe that come to our office weekly; elected officials from inside and outside of the country that want to learn about what is going on in Colorado and how can they replicate this in their state. So that is always of interest to me as a campaign guy. Which is state is next to do this?
The other piece that I think is interesting is, what is next culturally? In Colorado now, you can possess marijuana, you can consume it at your home, you can grow it yourself, you can buy it from a store but what is next from cultural front? And I think that is probably social use.
How are we going to establish clubs or coffeehouses? How is that going to look like down the road? Of course there's an opportunity for commerce there, but I also think it's a unique moment where we can shape the future of this new legal marijuana culture. How is that going to look five to 10 years from now? Will it be bars in the same way that there are bars for alcohol? Or would it be more coffee shops like Amsterdam? Those are the interesting issues for me.
You can read more from our special program The Future of Cannabis here. To find out why Equities.com and Viridian Capital Advisors launched this program, be sure to read What is The Future of Cannabis? This program was made possible by the support of our sponsors. Click here for a full list of our sponsors.
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