When the Smoke Clears

Ask Niley Dorit ’76 why he’s spent much of the past year learning everything he can about the new legal cannabis industry in California, and he’ll start by stressing the factors that did not motivate his research.

Dorit is not a regular pot smoker—he partakes only occasionally, for help sleeping. Nor is he considering parking his nest egg in the fledgling industry. Dorit, an investment fanatic since his days at Swarthmore, follows a conservative approach favored by Warren Buffett that avoids risky bets and focuses on snapping up can’t-miss stocks when they are artificially undervalued. For now, despite full state-level legalization on Jan. 1, 2018, the California cannabis industry’s future remains deeply uncertain.

Instead, Dorit insists that his cannabis-research hobby comes out of simple, deeply felt curiosity.

“In my lifetime, I’ve seen industries emerge over many years, like the tech industry in Silicon Valley,” Dorit says. “But in California, the cannabis industry literally emerged overnight. I don’t think I’ll ever have the chance to see that kind of revolution in an industry in my lifetime again, and I wanted to see it up close.”

A high-end San Francisco personal-injury lawyer by day, Dorit started his journey into the weeds of cannabis law last fall by attending a seminar on legalization. He was so impressed by the range of attendees, which included financiers, biotech companies, and marketers, that he ended up reaching out to dispensaries, growers, and other industry players.

“I could see that the business was about to mature in an explosive way,” he says, “from being a bunch of stoners to having the respectability of the business and financial world.”

To be blunt, Dorit sees two key hurdles for the industry. One is banking: Since all banks are governed by federal laws, cannabis businesses have difficulty opening accounts. This leads to shoddy, cash-based accounting systems, which can create expensive security problems for small-business owners. Tax collectors also take a hit.

The second hurdle, dosing: Typically, pharmaceuticals are packaged in consistent dosages, but if marijuana is sold in plant form or as a baked good with plant ingredients, dosage is unpredictable—there’s no standard.

That will change, he believes, as cannabis research begins to spark new discoveries. Dorit, who grows a few plants of his own each year as gifts to friends, is particularly excited about research advances that will help him tend his own garden better.

“There are very fundamental questions about growing that nobody has an answer to,” he says.

Still, Dorit cautions that the regulatory system governing marijuana in California is so new and unusual that no one can claim real expertise yet—himself included.

“Any of this can be stopped by the federal government at a moment’s notice, but it’s undeniable that the population is interested in getting access to cannabis—which I view as harmless and, in many cases, beneficial,” he says. “Hopefully, the stigma will be eliminated in time. It’s already happening more quickly in California than I thought.”