Turning legal pot into legit business

Recreational use of cannabis becomes legal in California on Jan. 1, but it could be a risky New Year for pot sellers and businesspeople looking to reap billions of dollars from what is still a crime under federal drug law. I predict the transition to legal cannabis will be violent and perhaps bloody, with assaults from two fronts: the criminals who do not want to surrender their lucrative turf and the federal government unwilling to forego its drug-enforcement authority. California is likely to become the primary testing ground for legal cannabis, and I don't think the state has any idea what it's facing. On Thursday, the state's Bureau of Cannabis Control finally released its 276-page set of proposed emergency licensing regulations for commercial medicinal and adult-use cannabis.

Selling pot -- illegally, medicinally and now recreationally -- is a cash business because federal law prohibits FDIC banks from accepting deposits from illegal businesses. With legalization for adult use, the California cannabis business is expected to boom. Estimates range from $1.6 billion to $10.8 billion in 2018, growing to anywhere from $6.5 billion to $21.8 billion by 2020. California's 2017 Budget Act predicted legal pot will result in $684 million in excise taxes in 2018 and soar to $1 billion by 2021.

As a safety measure for the state's portion of those revenues, California treasurer John Chiang issued warning on Nov. 7, remarking that legally licensed cannabis business owners might need armored cars to reduce the risks of transporting cash to local and state tax agencies. But the dollar signs appear to be getting in the way of common sense. Few, if any, state and local government officials have any experience converting an industry run almost entirely by gangs and thugs into what the state and some local governments appear to believe can be mom-and-pop businesses co-existing peacefully in strip malls beside 7-Elevens and tax preparers.

Criminals will still compete with legal dispensaries for pot sales. Not concerned with paying taxes, they may sell it cheaper to undercut law-abiding sellers. Law enforcement will still be forced to contain the criminal element. Legal pot does nothing to remove the burden on law enforcement, freeing it to focus on other drug crimes.

Driving under the influence of cannabis will abound. It's foolish to believe that a more relaxed attitude of use won't also lead to more relaxed attitude about getting behind the wheel after "just a few hits." Tourists from other states where cannabis use is still illegal and countries with harsh penalties will travel to the state with the intent to try cannabis here. People under the influence make foolish choices, which can again burden law enforcement and public safety agencies.

The lure of stockpiles of cash and a readily sellable product is beacon for armed robbery. Dispensaries will need to protect their cash, their merchandise, their customers and their employees perhaps 24-hours a day. It's not too farfetched to find frightened licensed dealers being forced to employ domestic mercenaries and mobile security teams, possibly staffed with members of local gangs or former military operatives, to retaliate for robberies and violence at pot outlets. Legal cannabis stores owners might feel compelled to employ organized crime tactics to defeat disorganized marauders.

At the very least, dispensaries should deploy trained security personnel and cameras to safeguard employees and customers. Staff should operate behind the bulletproof glass shields used to protect bank and gas station workers, not mere sales counters.

One effective way to protect customers and employees is to construct a two-tiered entry system similar to that employed by other businesses selling expensive or highly sought-after merchandise. Customers enter through a cocoon-like set of bulletproofed glass double doors. Upon entry, the front door locks behind the customer (or robber) and a rear door opens, letting the occupant into the dealership's inner sanctum.

In the event of a robbery, the exit door locks behind them, as does the front door ahead of them, trapping thieves inside a bulletproofed glass cocoon. Such entry systems have been successfully used in American and European banks to reduce robberies in high crime areas.

Chiang's suggestion that licensed pot shops hire armored trucking services should only be the first step in a modern, multi-pronged security plan to protect what is rapidly expected to become a highly lucrative legal industry. Too many potential pot poachers lie in wait for naïve businesspeople like ones featured in Cheech and Chong movies, only this time nobody will be laughing if they fail.

Still, even if California's legal pot industry can implement the safety aspects their particular situation demands, the federal government may never give it a chance. The Drug Enforcement Agency vigorously enforces federal laws outlawing cannabis trafficking. The federal government has not even authorized cannabis for medicinal use, and still classifies it as one of the most highly addictive Schedule I drugs with no medicinal purpose. The present administration has given no indication that will soon change, and what may appear to be inaction, could easily be calm before the storm. I can easily imagine a scenario in which the DEA and Department of Justice is waiting for just the right moment to execute a strategic plan. It is highly unlikely the federal government will allow California to become the cannabis entry point for this country.