HEDGE FUND EXEC: MARIJUANA BUSINESS A BRAND NEW INDUSTRY
October 20, 2009
By Suzanne Zionts For Fox Business News.com


All this week FOX Business is investigating the medicinal pot business and national debate on legalization in a special report called High Noon.

At the root of the legalize-marijuana debate – or more specifically, the seed – is one question: Is there money to be made?

Ben Holmes says yes. Holmes has worked for a hedge fund for 22 years, and is also a seed grower in Lafayette, Colorado. Holmes calls the marijuana-seed harvesting business a “brand new industry,” and he compares the potential growth in this business to the Internet boom of the '90s.

Q: Why are you going into the seed business now?
Holmes: I think that if we are going to take the whole industry seriously and everybody wants to regulate and tax medicinal marijuana, we need to get a handle on potency. All of the U.S. seed makers were blown out in prohibition, and we are at the mercy of foreign seed suppliers.

Q: How big is the seed business on a national and global scale?
Holmes: You can go to any of the trade magazines and you can get an idea there are a small number (of seed harvesters) in Holland and British Columbia. Those companies sell their seeds to intermediaries who then ship them to buyers in the U.S. The quality and authenticity of the seeds are totally in question. We don’t even know what consumers are buying. There are a small number of countries that have gotten the jump on us technologically (in this area). If you look at the USDA bulletins, the scientific research of marijuana harvesting stopped when prohibition began.

Q: What is the more risky business right now, the hedge fund business or the marijuana seed business?
Holmes: I don’t make comparisons between the two businesses. One is more satisfying to my soul than the other. I spent 22 years benefiting a very small number of wealthy people, and at the end of the day, you have to ask yourself, would you do that again. I am at that point where I can do something that matters, or I can keep doing the same thing I’ve done for 22 years.

Q: Where do you see the legalization process for marijuana in this country and how can this be compared to prohibition?
Holmes: It is pretty clear if you look at history in the same way in which the alcohol prohibition was unwound, it is almost step-by-step [in line with] the way we are going through this now.
When Prohibition ended … medicinal liquor licenses [were issued]. The licenses allowed people to qualify. The government registered the seller and the buyer. They were getting their hands around the revenue fees.
[Marijuana reform] currently is in the process of unwinding one of our most embarrassing public policies. The people who understand what the plant represents were young people in the 60’ and 70’s. This generation gets it. There is no dogma. There is no reefer madness. We don’t even know why this was made illegal but the point is that its time to fix this.

Q: How can the average investor join in?
Holmes: That is going to take time as the industry is formed. The model everyone understands is grow and sell, but beyond that you have to look at the entire relationship. Who is going to inspect this stuff for mold and pet hair? I have walked into dispensaries and thought that a Golden Retriever lived in that grove. I’ve seen mold in products.

We need to start to look at the regulation process and train people on how to inspect marijuana and train people in how to grow it. The first opportunities to arise will be in job creation.

Q: How quickly do you expect marijuana harvesting will be seen as a legitimate business?
Holmes: I think this opportunity resembles the Internet. There are tens of millions of casual or regular consumers of marijuana. It was a legal thing. Now, it is an economic thing. I hope that this is just the beginning … This is a brand new industry. It has been held back for 70 years.