The Pot Czar Is Worried About You
Can Mark Kleiman thwart the rise of Big Cannabis?
Maybe its appeal is phonetic. Two monosyllables—pot and czar—the first popping off the lips like a schoolyard kiss, the second, with its lone z, lapping the palate with a satisfying vibration. Or is it the semantic juxtaposition? A formerly illicit drug and an echo of Old World oligarchy: pot, czar. Like sweet and sour. War and peace. Marilyn and Manson.
Whatever the reason, Mark Kleiman’s unofficial job title has stuck, deployed in headlines and on cable news in reference to the man hired to helm the advisory team guiding Washington state in the coming legal marijuana market, a man who, moniker aside, has no legal power.
Kleiman’s appearance can’t help. Hirsute in the way only a public intellectual could pull off without receiving spare change from strangers—a beard shot with streaks of silver, so thick and wiry one suspects long nights of high-minded strategizing punctuated by a twirl of the whiskers—the 62-year-old UCLA professor resembles Ginsberg but deadpans like Galifianakis. “Look, I’ve got lots of opinions, but the last time I checked I didn’t get elected to anything,” Kleiman says. “I’m perfectly happy to get the publicity, I’m not going to pretend. But ‘pot czar’ is silly. I’m an adviser. Anyway, I prefer hemperor.”
The state Liquor Control Board selected Kleiman and his firm Botec Analysis Corporation—which beat 94 other proposals—to lend expertise on the implementation of marijuana legalization Initiative 502, which Washingtonians voted into law in November 2012. Kleiman and team will advise the board on four key areas: marijuana industry and product knowledge, testing and quality, usage and consumption validation, and product regulation. Kleiman, along with Botec colleagues, is a coauthor of Marijuana Legalization: What Everyone Needs to Know. He also wrote Marijuana: Costs of Abuse, Costs of Control, and Against Excess: Drug Policy for Results.
He’s a scholar—not a cop—something the so-called drug war probably could have used more of all along. But for any Washington cannabis user—and at least 300,000 of us can be called that—who thought we were getting in Kleiman a libertine eager to spread ganja in the streets like confetti, the next few sentences will be disappointing.
Mark Kleiman is not what you’d call “pro-pot.” A decade ago he wasn’t even for legalizing marijuana, as Bill Keller pointed out in a New York Times op-ed in May. And while his take on its legality has changed—“A law that people don’t obey is a bad law,” he told Keller—his attitude toward the drug itself has not. Compared to alcohol or tobacco, marijuana is harmless, Kleiman concedes, but there’s a fraction of users who use it too much for their own good.
On one end of the spectrum there’s the casual pot smoker, who maybe enjoys a joint on weekends, and on the other end the perma-baked user who hits the bong every morning. Kleiman fears that the latter will become prey. “I’m worried about smart people trying to figure out how much money they can make off other people’s drug problems.”
Unchecked, those smart people could hatch a kind of Big Cannabis (or “Big Canna,” as he puts it), a juggernaut of advertising and lobbying dollars that hijacks public health policy just as Big Alcohol and Big Tobacco did before it.
Kleiman won’t comment on any of the hundred-odd Washingtonians applying for three types of licenses—for growers, processors (those who package it, bake it into brownies, alchemize it into tinctures), and retailers. He’s not involved in determining who does and doesn’t receive one, but you get the sense that Shy Sadis, a 40-year-old real estate tycoon turned pot purveyor, is among the smart people who has Kleiman fidgeting his beard at night.
A self-described multimillionaire, Sadis owns the Joint Cooperative, a medical marijuana dispensary in the U District, and he has big plans. “I want a Joint in every state in the nation,” he says. Until those other states legalize marijuana, he’ll settle for every county in Washington state. Sadis is confident he’ll be at the front of the line when licenses are handed out. “All those other places”—referring to competing dispensaries—“they don’t know how to market. We have a great logo, great customer service, great brand identity. People come in sometimes just to buy our T-shirts and stickers…. I hired the lobbyist who got liquor into Costco. If I don’t get a license, I’ll be really surprised.”
Less brash but just as ambitious is Privateer Holdings, a private equity firm cofounded by Yale MBA Michael Blue. Its first acquisition, Leafly, is a Yelplike website that rates and educates visitors on dispensaries and marijuana strains, from Granddaddy Purple to Green Crack. Blue is quick to point out that Privateer Holdings won’t be holding. “We aren’t dealing with the actual product,” he says. Their focus has been on tech- and info-based companies, including a potential potcentric news site.
“Before the passage of I-502,” says Blue, “all our calls were outbound, trying to get investors on board. But immediately after the initiative passed, and ever since, we’re the ones answering calls.” Investors include physicians, cattlemen, and Wall Street financiers.
In late May another group boldly announced big plans for legal weed: Former Microsoftie Jamen Shively, whose new company Diego Pellicer buys ownership rights to medical marijuana dispensaries, held a press conference on the 40th floor of the Columbia Tower. Next to him sat former president of Mexico and repentant drug warrior Vicente Fox, who applauded Shively’s goal for a national marijuana chain, one Shively hopes will include 1,000 employees in his Seattle headquarters within five years.
Is the big-moneyed green gold rush surrounding legal weed a recipe for drug abuse? Pointing to alcohol consumption as an example, Kleiman notes that 80 percent of the booze in the U.S. is consumed by 20 percent of drinkers. “Put another way, 46 percent of all drinks consumed in the U.S. are consumed during binge drinking, defined as five drinks in a row for men, four or more for women.” The biz, he says, makes its profit off those heavy users; it needs binge drinkers for its survival and it markets to them, and that same 80-20 ratio applies to current marijuana users.
If Kleiman had his way, the state would have total monopoly on the marijuana market (production, processing, retail), which would cut out the profit motive that encourages purveyors to turn clients into hardcore potheads. But that’s not how I-502 was written. Instead the initiative allows for for-profit producers, distributors, and retailers. And while the law states that if you grow it or process it, you cannot also sell it directly to the consumer—which will help curtail the immediate rise of a Big Canna—there is still every enticement to make as much money as possible within those three categories.
Possible solutions, says Kleiman, include substantial taxation (to keep pot costly enough to discourage heavy use) and limits on marketing and advertising.
But the initiative suggests legal weed will generate “new state and local tax revenue for education, health care, research, and substance abuse prevention.” So the state has an incentive to make coin off marijuana taxes and licensing in order to help meet the costs for those programs. “I don’t want the Liquor Control Board held accountable for meeting a revenue target,” says Kleiman. “Because if somebody at the state says, ‘Oh my god, we’re going to balance our budget this way,’ then we’re in trouble. But my impression, when I talk to people in Olympia, is that they’re not yet thinking that way.”
Kleiman, who cut his teeth analyzing drug polices for the Department of Justice under Presidents Carter and Reagan, offers one scenario, one the board is not presently looking into but could, once the market has matured, keep recreational pot use responsible:
“I would say to everybody, ‘If you want to buy cannabis, you’re welcome. Let’s see your driver’s license.’ ” Customers, whose names would join a registry of marijuana buyers, would consult with a retailer about how much marijuana they intend to purchase in a month. If the buyers say they want to buy two grams of THC in a month, the retailer will hold them to that. “Or if you want to set your limit at four grams, be my guest. You know, it’s your brain. But do you really want to do that?” He believes this would curb the impulse buying that can lead to abuse. If the buyer maxes out his or her self-allotted amount for the month and wants more, “then the store’s going to politely say, ‘Sorry, you’ll have to wait until the first. You’ve used up the quota you set for yourself. Now, would you like to set yourself a different quota? You can do that, two months from now.’ ”
Such meticulous thinking is what makes Kleiman a respected theorist on nearly every side of the marijuana debate, but it also makes a guy like Shy Sadis emit an exacerbated sigh. The Joint owner and pot pitchman calls all the hand-wringing over weed “fear.” Fear of the unknown. He compares that fear to attitudes toward no-holds-barred fighting and mixed martial arts—in which he has a sideline as a fight promoter. Two decades ago ultimate fighting and MMA were essentially illegal. “Now they’re among the most profitable sports in the country. People watched it, learned about it, and loved what they saw. The same goes for pot.”
In May, the Liquor Control Board released a draft of rules for licensing, among them the stipulation that there be one license per retail location, with a maximum number of licenses issued, which could put the kibosh on Sadis’s a-Joint-in-every-county dream. Public hearings on those rules are scheduled for July, and licenses will be issued by December, which means Sadis could at least be selling you an eighth of Purple Kush over the counter of his U District shop by January 2014.
Again, Kleiman won’t comment on retailers and says his position as project lead is less about his personal views and more about helping the Liquor Control Board make the law work. And there’s a lot of money at stake: “If we succeed in moving the entire market into the I-502 channel, the state could make at least a third of the $900 million-a-year cannabis market in Washington, and $300 million is nothing to sneeze at.”
Wiping out the illicit market means more law enforcement, he says, not less, contrary to what many I-502 backers initially argued—at least in the short term. Today there isn’t much of a black market for, say, vodka. “But you didn’t get there without busting up some stills.”
But the new, state-sanctioned market will eventually swallow the illicit market, he insists. And speaking like a man who knows his audience is a city where Lenin is feted in bronze, a city that has embraced him and his oligarchical sobriquet, the czar adds, “As Mao said, ‘Even a paper tiger doesn’t fall over unless you push it.’ I think I-502 makes this market”—the illicit marijuana market—“a paper tiger. But you have to push.”
Published: July 2013