Forget Big Tobacco; Big Marijuana wants to be part of the .bong boom

Would you trust this guy for your premium weed needs?

There has been a persistent rumor, dating back to the 1960s and 1970s, that cigarette companies have been plotting to take over the marijuana industry, were it ever legalized. It’s still around and probably holds on because it doesn’t seem that unreasonable — if they can grow and sell tobacco, they can grow and sell pot, right?

“They’ve copyrighted Panama Red.” “They already have warehouses ready to roll.”  “They’re buying farmland already.” I have heard all these and more over the decades.

A fascinating post on the website Legends and Rumours explains the possible origins of this legend, dating back to a 1969 Business Week article that Rolling Stone commented on. Business Week’s sources were more than dubious — the editor of an underground newspaper in Atlanta and a University of Wisconsin graduate in fine arts who said, “I’ve heard that the names Acapulco Gold and Tijuana Gold have already been copyrighted.”

Rolling Stone’s comment on the article, for many readers, amounted to a tacit endorsement of the information, and the rumor took hold. The magazine later printed a letter with quotes from CEOs of the largest cigarette companies saying they had no plans to enter the marijuana market, if it were ever to exist, to no avail. The magazine never did find any trademarked pot names for tobacco companies, either.

The hearsay is still with us. When I mention it to friends, some have said they heard the same stories and most believe it. Domain Name Wire reported in 2009 that Altria, the parent company of Phillip Morris USA, filed to contest the domain names and Was the company preparing to sell pot? As it turns out, Altria filed an arbitration hearing against the owners of those domains, who had filled them with advertisements and information against Big Tobacco. (Neither comes up in an Internet search today.) 

Cigarette companies have always insisted that they are in business to sell tobacco products only. I know what you’re thinking — who would believe anything a cigarette company says? — but the companies’ denial is as adamant today as ever, and it does not appear that Big Tobacco, at least so far, is planning a move into the pot industry.

That’s not to say that there aren’t thoughts of Big Marijuana dancing in entrepreneurs’ heads. Enter Jamen Shively, a former Microsoft corporate executive based in Seattle, who announced plans last week to open national marijuana stores under the Diego Pellicer brand and become for pot what Starbucks has become for coffee.

In interviews since Washington and Colorado legalized marijuana for adults, Shively, who seems to be positioning himself as a junior Bill Gates, has been spouting off about his aspirations to control 40 percent of what could become a multi-billion dollar annual business. His brand, Diego Pellicer, is conveniently named after a man who Shively claims was his great-grandfather and a major Spanish marijuana grower during the Spanish-American War. It will be, he says, like fine cigars or liqueurs. Premium.

This is pretty bold stuff. Marijuana is still considered illegal by the federal government, and though President Obama said that prosecuting people who smoke marijuana in the two states where it’s legal is a low priority, the Justice Department has had no problem with raiding medical marijuana operations when it feels the urge, especially large operations. What caught my eye were some accounts that mentioned Shively is in negotiations with dispensaries in Colorado.

That approach would seem to be in conflict with the new Colorado law. I asked Boulder attorneys Leonard Frieling and Jeff Gard, both of whom said that there would be many hurdles for an outsider to surmount before he could create a large marijuana operation here. First and foremost is the very clear regulation that an owner of any marijuana business has to be a resident of Colorado for at least two years. There is no indication Shively has even been to Colorado, let alone was part of the medical marijuana businesses that have been operating here since 2009.

Gard said that Shively might be able to invest in companies in Colorado, but he couldn’t be part of the ownership. Amendment 64 is structured in a way that allows those already in the medical cannabis business to have a head start, and gives resident innovators and trailblazers the chance to succeed. As Frieling notes, there’s nothing wrong with large companies like Starbucks, but the spirit of the amendment is to favor the “local microbrew” approach over the “big business” model.

I applaud anyone ballsy enough to come up with such a bold plan for market share, but in this case I’m left to wonder whether Diego Pellicer is, like Big Tobacco’s takeover plan, nothing more than a headline-grabbing, well-hyped pipe dream.