Hollywood Celebs Cashing in on the Pot Business Despite Legal Risks

How Hollywood Is Cashing in on the Pot Business - Getty - H 2016
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A growing number of stars — from Whoopi Goldberg to Melissa Etheridge — are investing big money in the "green rush" as legalization initiatives hit nine state ballots in the fall and California's industry is projected to be worth $6.6 billion by 2020.

The cannabis "green rush" often has been compared to the early days of the tech boom but, until recently, the pot industry hasn't exactly been awash with Hollywood endorsements.

That's because marijuana is still a federally illegal substance and stars with growing interest in pot businesses face legal and financial hurdles that early investors in tech didn’t.

"We wonder whether the exposure from having a celebrity name involved is effectively a neon 'look here' sign for any prosecutor who's looking to become the next congressman or senator," says a source who has advised multiple stars with pot-related ventures. Despite the risk, business managers tell THR it's getting harder to dissuade clients as California voters may legalize recreational pot use in November and California's marijuana industry is projected to hit $6.6 billion in 2020, according to research firm The Arcview Group. 

While you might not be surprised that Snoop Dogg and Tommy Chong are in the canna-business, there are a couple of unexpected celebs championing the drug’s medicinal properties because of first-hand experience.

Emmy-winning TV host Montel Williams relies on medical marijuana to help with the symptoms of multiple sclerosis. But given the risk and stigma surrounding dispensaries, he chose an alternative business plan when launching Lenitiv Labs. The company will license Williams’ proprietary formulas, which are essentially recipes that target specific medical needs. “We see an opportunity to provide to sick people high-quality medicine that is tailored to them,” says Jonathan Franks, the company's government relations director. “We’re trying to do more than just sell pot. We want to make it a vehicle for advocacy.”

Singer Melissa Etheridge also wants to be a voice for change — in fact, she wants to be the face of medical marijuana because it helped her through chemotherapy. “Twelve years ago there were no lovely places you could go to,” she says. “The dispensaries were in bad neighborhoods behind bars. You felt like a criminal.”

So her Etheridge Farms offers a much more pleasant option: a cannabis-laced wine that doesn’t have psychotropic effects. “We have to call it a wine tincture,” she says, adding that because it contains alcohol she faces dual sets of regulations. “It’s kind of in this gray world.”

Marijuana brands are quickly becoming the new liquor brands, according to medical marijuana consultant to the stars Dina Browner, dubbed “Dr. Dina” by longtime client and friend Snoop Dogg. “Everyone wants a piece of the game,” she says. Whoopi Goldberg, for example, this spring launched a line of cannabis-infused bath products to relieve menstrual cramps, and comedian Margaret Cho has her own marijuana strain called Cho-G.

With the potential upside come serious risks, so Dr. Dina says any celeb entering the business should hope for the best — but prepare for the worst. “The first $100,000 you make, give it to your lawyer because you’re going to need it to fight your case if the DEA comes after you.” 

Dr. Dina operates the oldest medical cannabis dispensary in Southern California, Alternative Herbal Health Services. She regularly counsels celebs on the best fit for them within the business.

"If you’re scared of touching the plant, you can make ashtrays," she says. "People will buy them."

The estate of Bob Marley blazed the trail for celebrities to license their names and likenesses to pot and paraphernalia when it launched Marley Natural earlier this year in Colorado. Greenberg Glusker partner Bonnie Eskenazi says being the first to navigate the legal challenges was both exciting and daunting. "It was a little bit like the Wild West," she says. "There were no cases at all."

Even in Colorado, where recreational pot is legal, there are still some basic things Marley Natural can't do under federal law.

"One of the most difficult areas for celebrities that are licensing their names in connection with a brand is marketing," Eskenazi says. "Generally speaking, it is illegal to market or advertise a cannabis product that has THC in it, so you need to be very careful about what you're saying with respect to the cannabis that bears your name."

Eskenazi says the marijuana industry is in its infancy. As it draws more legitimate business people, like Marley Natural's Yale-MBA-graduate partners at Privateer Holdings, she expects more politicians to get on board with legalization. 

The DEA in August announced its decision to not reschedule (decriminalize) marijuana, finding "it does not meet the criteria for currently accepted medical use in treatment in the United States, there is a lack of accepted safety for its use under medical supervision, and it has a high potential for abuse." 

The agency did open the door for further research, though. Until recently, only one entity was authorized to produce the marijuana that researchers needed for testing. Now, the DEA is allowing additional entities to apply to become registered to grow and distribute marijuana for FDA-authorized research.

The legal environment could change dramatically on Nov. 8, depending on how voters decide on marijuana initiatives in nine states and, of course, on whom they elect president of the United States. In California, the Adult Use of Marijuana Act (Proposition 64) would legalize recreational pot for people 21 and older. 

The California GOP officially opposes Prop 64, but Republican Congressman Dana Rohrabacher has been advocating for marijuana legalization for 20 years.

"Billions of dollars are being wasted trying to prevent distribution or personal use," he says. "That is absurd. I also am a patriot and I don’t believe our founding fathers had in mind a country in which the federal government had paramilitary forces aimed at controlling the social and personal behavior of the American people."

Rohrabacher has recently begun using medical marijuana himself to alleviate arthritic pain caused by a lifetime of surfing — and has admitted as much on Capitol Hill. 

"I tried it and it was the first good sleep I got in about two years," he says. "The biggest obstacles are the people, especially mothers, who are deathly afraid of any drug. You can’t require the police to protect us from ourselves."

Rep. Rohrabacher says too many people are currently in jail for nonviolent pot-related offenses and President Obama should do something about it before he leaves the White House. 

"He could and should deschedule marijuana as an executive order," Rep. Rohrabacher says. "Anybody who’s in jail for personal use of marijuana, … they need to be pardoned by the president."

A version of this story first appeared in the Oct. 14 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.