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Entrepreneurs, Investors Continue to Gamble in Marijuana Industry

by Glen Luke Flanagan, published

marijuana industry mikeledray /

From police dogs being trained to ignore pot to a push from the medical community to package the drug in child-proof containers, marijuana has been moving steadily toward legitimacy, at least at a state level. But, how much protection do would-be entrepreneurs have on a federal level?

None, according to Mason Tvert, communications director at the Marijuana Policy Project.

"Despite a majority of Americans agreeing that marijuana should be legal, it still remains entirely prohibited under federal law," he said. "Even those who comply with state and local laws and regulations are at risk of being arrested and prosecuted."

Keith Stroup, legal counsel for the National Organization for the Reform of Marijuana Laws, agreed:

"So long as marijuana remains illegal under federal law, growers and sellers who operate in legalization states remain vulnerable to a federal arrest and prosecution."

Until some kind of reform happens on a federal level, entrepreneurs who enter the budding market are taking a chance.

"Anyone who enters the marijuana business in a state that has legalized marijuana, either for medical purposes or for all adults, is gambling that the feds will just ignore them," Stroup said. "That also pertains to investors who elect to invest money in establishing these businesses, as well as those who actually run the operation. It is a risky venture, not for the faint of heart."

Despite that, state legalization is a big step toward protecting distributors.

"Probably 97 percent of marijuana arrests are made at a state level, not at a federal level," he pointed out. Thanks to Washington state's recent legalization, "most of the 12,000 annual marijuana arrests that have occurred in that state each year will disappear."

But, enterprising business folks should be careful about thrusting themselves into the public eye.

"While the feds simply do not have the manpower to prosecute each and every individual involved in the marijuana industry -- growers and dispensaries -- they do have the resources to pick off those who become too large to ignore, or who otherwise thumb their nose at the feds in some public manner," Stroup said.

So what does the future hold for those who want to sell marijuana without ending up in trouble with the law? Tvert seemed hopeful that a balance could be found between state legalization and federal policy.

"The Department of Justice has demonstrated that it is thoughtfully considered the measures adopted by voters in Colorado and Washington and keeping lines of communication open with state officials," he said. "At this point in time, it appears very possible that a system could be developed that respects the will of voters in these states without frustrating legitimate federal interests."

Public opinion does seem to be steadily swinging toward supporting legalization, according to a 2013 Pew report that showed 52 percent of Americans in favor and 45 percent opposed. That's an 11 point increase from 2010, according to Pew data.

Whether public opinion will eventually translate to legal action and protection remains to be seen. Stroup struck a hopeful note, comparing the current situation to the end of alcohol prohibition.

"We are at a tipping point today with marijuana prohibition, with the states leading the way," he said. "In our country, all significant change begins at the state, not the federal level."

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