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This presidential candidate hopes to cash in on the pot boom

Rick Newman
Senior Columnist

Gary Johnson has a backup plan. If the Libertarian candidate for president doesn’t win the White House in 2016, he hopes to profit handsomely from a timely investment in the marijuana business. In fact, he might enjoy that profit even if he does win the White House.

Johnson is the former governor of New Mexico (from 1995 to 2003) who ran for president as the Libertarian candidate in 2012. He’s also a successful businessman who built one of the largest construction firms in his state before running for governor. If he wins his party’s nomination at a convention in May, he’ll mostly likely appear as a third-party presidential candidate in all 50 states.

But Johnson is no full-time candidate. In between the last presidential election and this one, he helped run a marijuana branding company called Cannabis Sativa, Inc. (CBDS), which hopes to sell pot products under its “Hi” brand. “I do think the United States is going to legalize marijuana,” Johnson says in the video above. “In the future, it’s going to be a really big business.

Does Johnson inhale himself? “I occasionally partake,” he says. “We’ve got all sorts of politicians who use marijuana and don’t admit to it. I’m the only one who’s going to say what I just said.”

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Johnson thinks California—the first state to approve the use of medical marijuana—will approve a ballot measure legalizing pot for recreational use on Nov. 8, the same day Americans will select their next president. If that happens, California would join Alaska, Colorado, the District of Columbia, Oregon and Washington in allowing pot. Johnson thinks legalization in California would be a turning point, prompting another 20 states or so to follow.

Marijuana use is still a violation of federal law, which, of course, trumps state law. But the Obama administration has basically looked the other way, refusing to challenge the legalization of pot. That could change once a new sheriff moves into the White House next January, though the prospect of federal agents chasing potheads around would probably be so unpopular no president would dare.

Legal pot is already a $3 billion business, and some analysts agree with Johnson that it could grow by multiples of that. If pot becomes big business, one thing will be missing: Branded products with the same quality everywhere, similar to Coca-Cola or Cheez-Its. Regulations in the weed-friendly states generally require the product to be grown and packaged in the state, by people who are residents. That might give local regulators control over the market and keep the economic benefits inside state borders, but it can also lead to inconsistent standards, opaque pricing and occasional customer confusion.

Cannabis Sativa (the company) plans to change that, by establishing the Hi brand of pot products. It opened its first branded dispensary in Portland, Ore., last fall, and hopes to expand by operating as a kind of franchiser that will help local producers ramp up business by following a corporate marketing plan, standardizing operating procedures and adopting recommended quality controls.

Other startups have the same idea, so Hi will hardly have the field to itself. High Times, for instance, hopes to transform itself from a weed magazine into the Consumer Reports of the legal marijuana industry. There are already legal pot trade shows, and Silicon Valley entrepreneurs are even jumping into the space. If legalization spreads, the market for commercial pot could be large -- 58% of Americans favor legalization, according to Gallup.

Johnson, who was CEO of Cannabis Sativa in 2014 and 2015, resigned to run for president. But he still owns about 515,0000 shares in the company, worth about $300,000. The company is hardly a Wall Street darling. The stock trades over the counter -- like many pot stocks -- in the range of 50 cents per share, and has plunged from a high of nearly $14 in early 2014. The 96% decline reflects a slew of competitors rushing into the business and investor skepticism of the legitimacy of small-fry firms.

Still, if Johnson’s right about the future of the pot business, his company might be poised to rebound. And any exposure he gets as a candidate can’t hurt. Who knows, given the widening acceptance of marijuana, his pro-pot views might even help boost his popularity as a politician.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.