Ohio investor: Legal marijuana could be $100B industry, big issue in 2016

Updated Aug. 13: On Wednesday, Ohio's elections chief confirmed that ResponsibleOhio's marijuana legalization measure will be on the November ballot, according to The Center for Public Integrity. But state lawmakers have offered a competing ballot measure that would make it tougher to amend the state Constitution with a ballot initiative that would economically benefit a select group or create a monopoly.

COLUMBUS, Ohio – In this perennial swing state, a fascinating political experiment is unfolding this year.

A group of wealthy investors is betting tens of millions of dollars on a ballot initiative that could net them billions if Buckeye State voters decide this November to legalize marijuana – in a very particular way.

Along with The Center for Public Integrity, America Tonight tracked the story of Ohio's unique marijuana ballot initiative from its Capitol to its cornfields to see if voters are aware of the fine print and if they care.

Across the state, blue-shirted workers for the ResponsibleOhio political action committee have been collecting voters' signatures – gathering more than 550,000 so far – in hopes of qualifying their medical and recreational legalization effort for the November ballot.

"ResponsibleOhio argues that they are not establishing a monopoly because their 10 grow facilities will have to 'compete with each other on price and quality, which is the exact opposite of a monopoly. There is no coordination between them, they will be trying to make money by selling the best goods at the best prices to stores, dispensaries and manufacturers,'" Gettman wrote. "The proper description, then, is oligopoly – the control of a closed market by a few firms, commonly referred to as a cartel."

A March poll by Quinnipiac University found that more than 8 in 10 Ohio voters support medicinal marijuana while a small majority favors allowing people to possess a small amount of the drug for personal use.

To get a better understanding of the potential market for legalized pot in Ohio, America Tonight spoke with Alan Mooney, a Columbus-based financial adviser, who is a major stakeholder in one LLC supporting ResponsibleOhio with the hopes of developing a booming wholesale marijuana business. He said he thinks the marijuana industry could surpass the automotive industry in Ohio and create at least 15,000 new jobs. Answers have been edited for brevity and clarity.

Lisa Fletcher: How did you get involved in the effort to legalize marijuana in Ohio?

Alan Mooney: I was involved with Children's Hospital 20 years ago with children who had epilepsy. The families approached me a little bit over a year ago and said, "We think it's going to get legalized at a certain point in the future, could you represent our interests?" And I went, "Oh, no, this is a subject I don't want anything to do with. It's controversial, it's not positive. I don't even approve." After several weeks of meeting families and listening to the stories and doctors, I went, "OK, I'll help you."

I am a capitalist. I am a Wall Streeter – a Republican. All those things say I am not for marijuana.

Under this umbrella of ResponsibleOhio, there are 10 groups that have decided that they are essentially going to pool a portion of their money to put this before voters to produce a robust and compelling advertising campaign that's going to get people to pass this. So there's collaboration between those groups?

If you talk to any of the other investors, they are going to be adamantly and totally against everything I think I'm going to do in my growth. They're going to want to brand their lines, they're going to want to have their retail outlets, they're going to be doing their capitalization and we're in competition.

Is it fair to say you're not in competition yet?

Yet. The only thing we have in common, really, is going to be ResponsibleOhio, which is a political PAC group that each put money into to take it through the legal process.

So let me play devil's advocate here. You're a brilliant businessman, obviously, and you're one of the most widely respected financial guys in the state, if not the most respected, and you said that no financial dummies are involved at this point. So you got all these really smart financial people together who say, "We're going to be in competition eventually, but right now, we are going to amass our brilliant minds and figure out how to get this passed, so we can be in a position to then compete with each other"?

It's like bringing fighters together to put together a fight in a ring. And the putting together and promoting it, yes, we're in some level of collusion to do that. But when we get in the ring? Oh, no. This is going to be tough business all the way.

You said you got to the point where you were about 50 percent there. What was the trigger that got you all in?

I started going to California and Colorado, states that were legalizing it, and I had a hard time finding real businesspeople; I found a lot of great entrepreneurs, but most entrepreneurs are bootstrap, "I'll start a business because I think it's a good idea," no research, no analysis, no mathematical understanding of what they're doing.

I've come from the totally different side of the world. I look at 2,000 investments a year, narrow it down to 200, bring it down to 36 and each month, bring in a team that looks over three and maybe we do two a year.

What kind of revenue or profit are you projecting in the first year or so?

I've talked to the top six growers in [Colorado] and even that's arguable. Who are they? Everybody's in competition. But I did find the Rosetta Stone while I was up there, a key factor that I could use to start running the real mathematical equations on this.

One of the biggest factors that nobody seems to even understand is the taxation of all this. Right now, it's a Level One federal drug. That means at beginning rate, a 50 percent flat tax with no write-offs off the top. And then, in our proposal, you have on the growers, a 15 percent [flat] state tax, no write offs. That's like having a 70 percent tax on your overhead without any write off. Nobody would go in business doing that.

Unless there's a profit incentive that is so astronomical that it doesn't matter.

But you don't know what that number is again. You're all guessing at it.

But a lot of really, really smart financial guys are doing the guessing.

Well, I can handle that. I have the financial capital. I watched all the groups in Ohio and went and interviewed most of them and looked at it as an analyst. I was asked, "What's the probability of any of them getting this done?" For 17 years, lots of people, tens of thousands of people in Ohio tried to change the law.

I sit down and estimate that early on, it would probably take me at least $3 million to $4 million to get it on the ballot. That number was so understated, that was so unrealistic of me. We want to go in and fully capitalize, because we can't run back to a bank and say, "Oh, we need some more capital." This subject's taboo right now in the banking world.

What happens when you bring on the world's largest grower, Ohio? This isn't some farmer with a [moonshine] still in his back 40 in the early '20s. This is talking about Maker's Mark or Chivas or major corporations that now manufacture commercially. This industry is going to go through a time warp like that at a speed that we've never seen any industry in the world happen.

Do you see this as important or as large as the auto industry or oil?

The wildest estimates I've heard so far was Ohio might be a billion-dollar industry. I don't think that's even close. I think it's going to be over $10 billion in Ohio, so I think it's going to be bigger than GM and the automotive industry is in this state. I think in the United States, I've got a proposal in front of me right now that their estimation's over $100 billion industry.

Billion with a "B"?

B. Wall Street still hasn't woke up and begun to realize the magnitude of what we're talking about. This is beyond anything I've ever seen in my life. We're moving a $100 billion business that's been underground, not taxed in America, above ground and taxed at a level that no other business can survive being taxed and people are still willing to put their money into it? Oh my gosh, that's because they sensed what you're talking about.