Don’t Invest in Medical Marijuana Public Companies Just Yet

Nineteen states plus Washington DC have legalized medical marijuana with legislation pending in six more states. Washington and Colorado have even legalized the sale of marijuana for recreational purposes. In the wake of this trend, I was hired by a consortium of successful California medical marijuana growers to explore how they could create a public company, attract investors and sell shares; perhaps making their pot stock the next Apple.

After extensive research, which included retaining the top marijuana defense attorneys in California, the results were not encouraging.

The growers wanted to go public for a variety of reasons, but mainly to eliminate Federal, state and local raids and arrests, and destruction and confiscation of their property. Every grower I had met had spent time in jail.

Legalizing marijuana and welcoming it into the mainstream makes too much sense not to happen, but it is not going to happen today. First off, the anti-marijuana establishment has too much at stake. The Drug Enforcement Agency employs over 10,000 people and has an annual budget of $3 billion. The U.S. has spent over $1 trillion fighting the Drug War with over half of Federal inmates in jail on drug related charges. In 2009 alone, 1.66 million people were arrested on drug charges in the U.S., with 4 out of 5 merely for possession.

According to MarijuanaBusinessNews.com, based upon information from the Drug Enforcement Agency and other published sources, the domestic marijuana market is about $100 billion annually. This is about the same size as the domestic market for distilled alcohol – an industry that is regulated and pays lots of taxes. In 2012, federal tax revenues for alcohol were $10 billion, and there was an additional $6 billion per year in state & local tax revenues from the sale of alcohol. A 2008 study by a Harvard economist indicated that full legalization of drugs in the U.S. would result in a $44.1 billion savings from law enforcement costs. Considering both the tax revenues that would result from legalization and the costs of keeping drugs prohibited, legalization is inevitable.

 

Read full article @ Huffington Post