paulschmidt.JPG

Paul Schmidt, who until 2010 served as the highest-ranking DEA agent in Oregon, now works as a medical marijuana business consultant.

(Bruce Ely/The Oregonian)

Patrick Moen built an impressive reputation as a federal agent, busting big drug rings that peddled everything from meth to ecstasy on the streets of Oregon.

Moen's decade-long career with the U.S. Drug Enforcement Administration ended last month when he took a job with Privateer Holdings, a Seattle-based private equity firm that invests in the fledgling, but lucrative marijuana industry.

Instead of listening to wiretaps and tracking illegal drug money, Moen now vets potential marijuana-related ventures as investment opportunities for the Yale-educated backers of enterprises like Leafly.com, a website offering reviews of marijuana strains.



It's a radical departure for a 36-year-old lawyer who once toyed with the idea of becoming a federal prosecutor.

"It wasn't an easy decision," said Moen, who is in the process of relocating from Portland to Seattle. "It's not one I took lightly. I talked with friends, family and coworkers. I sought out opinions. When it comes down to it, this is an incredible opportunity for me professionally and personally."

The switch from law-and-order agent to marijuana industry booster raised eyebrows among Moen's colleagues. Police generally take a dim view of marijuana; the DEA's own "threat assessment" calls it "the most widely available and commonly abused illicit drug in the United States." In Oregon, federal authorities have aggressively pursued large-scale marijuana producers and traffickers.

Patrick Moen

John Deits, an assistant U.S. attorney who oversaw federal drug prosecutions in Oregon until his recent retirement, said Moen was a sharp-eyed agent who "understood the mission" of federal law enforcement when it came to illegal drugs. Though marijuana is legal for recreational use in Washington and Colorado and medical marijuana is allowed in 20 states and Washington, D.C, it's illegal under federal law.

"I think it was surprising to me that Pat would want to do what he is doing," Deits said. "I think it was surprising to a lot of people within his own agency.

"But obviously they are the ones that know a lot about the laws and a lot about marijuana," Deits said.

Moen is the second DEA agent with Oregon ties to make the move to the marijuana industry. Paul Schmidt, who until 2010 served as the highest-ranking DEA agent in Oregon, now works as a medical marijuana business consultant.

Hiring government regulators and enforcement officials is a common strategy among American corporations, said Pete Tashman, an assistant professor of management at Portland State University's School of Business Administration. The pharmaceutical industry, for example, is famous for hiring former government regulators, he said.

"It's a revolving-door strategy," Tashman said.

Former government officials offer businesses an insider's view of how to navigate regulations and shape future ones, he said.

"Folks that have experience on the legal end of it will help their employers lobby for the right kinds of policies that might emerge in the future," Tashman said.

***

Schmidt, 54, acknowledged that some former colleagues consider advising the medical marijuana industry a move to the "dark side."

"A lot of people say, 'How could you be so against it Monday and then on Tuesday you are all for it?" said Schmidt, who worked in law enforcement for more than three decades and lives in Canby.

Schmidt has long been interested in the drug's botanical background and its medicinal potential, he said. And though as a federal drug agent, he testified in marijuana cases in Oregon, Washington, Colorado and Wyoming, he said he viewed the drug as less harmful than heroin, meth and cocaine.

"It was the least of the evils," he said.

Many officers, particularly younger ones, agree with him, he said.

"If you go to the newer law enforcement – somewhere 45 years and younger – and you talk to them about cannabis, they are just like, 'Man, why isn't it legal? I have got other things to do.'"

After Schmidt retired from the DEA, he worked for the Colorado Department of Revenue, the agency charged with ensuring medical marijuana dispensaries comply with state regulations. He returned to Oregon and this year sat on the panel that drafted rules for the state's medical marijuana retail industry.

Next month Schmidt will hold a series of seminars around the state advising prospective medical marijuana retailers about Oregon's new dispensary law. The $95 per-person seminars will include "fresh perspectives on the developing cannabis market," according to the flier.

Steve Fox, a Washington, D.C.-based marijuana lobbyist who helped coordinate Colorado's successful cannabis legalization campaign, said bringing DEA agents into the industry is "politically savvy" and likely intended to put investors and political officials at ease. Hiring a former drug cop also may help foster a company's reputation as mainstream, he said.

But Fox doesn't see the move as a necessarily positive one in general.

"This industry now is about producing and marketing a product and the people who work for the DEA have experience in a different industry, which is arresting and prosecuting people for marijuana," he said.

***

Moen, who started his career as a beat cop in upstate New York, where he grew up, joined the DEA in 2003 and spent eight years in the gritty city of Bridgeport, Conn. He earned a degree from the University of Connecticut School of Law.

About two years ago, Moen, who developed an expertise in wiretaps, was promoted and posted to the agency's Portland district office, where he had a hand in the region's biggest drug investigations as a task force supervisor. Those cases uncovered major meth, oxycodone and ecstasy rings and marijuana, too.

Moen said marijuana ranked "pretty low" among the DEA's priorities. And while marijuana cases weren't routine, his work gave him a close-up view of how drug traffickers exploit Oregon's medical marijuana law, which he said "needs a complete overhaul."

"The system is just widely abused," he said. "It's set up in theory as a nonprofit situation, but there are tons of people making a living off the system and enforcement of compliance is left up to law enforcement."

Moen, whose salary as an agent was about $130,000, said he recently began considering job options beyond the DEA. Budget woes and congressional gridlock took a toll on the agency, resulting in "a bit of a brain drain," he said.

"Really, really talented people were leaving," Moen said.

Over the summer he heard Privateer Holdings CEO Brendan Kennedy talking on NPR about the company's mission: investing in the nascent marijuana industry. Impressed, the veteran cop gave Kennedy a call and the pair met at a Portland area Starbucks in late summer.

The agent slid an envelope across the table.

"I am not ashamed to say I was a bit nervous at that point," Kennedy said. "I wasn't sure what was going to be in the envelope. Ultimately, it was his resume."

Kennedy, who has a background in venture capital, said Moen helps the company manage risk associated with the cannabis industry.

"Patrick's role is to help us navigate a very complicated environment, to help us be in compliance with all of the local, state and federal regulations," said Kennedy, whose company gets about five pitches daily for marijuana-related businesses.

Marijuana's legal ambiguity isn't clouding its business potential. One recent estimate puts the value for the legal marijuana market nationwide at $1.44 billion. The State of Legal Marijuana Markets, a publication produced by Arcview Market Research, estimates that market will grow 64 percent by 2014.

Moen said the challenges of getting the marijuana industry off the ground and helping create mainstream brands appealed to him, but he wasn't sure how the news would go over with his DEA colleagues.

"Nobody hung up on me," he said. "That was good."

It's been about a month since he quit the DEA. Moen said he's been surprised to learn how many people he knows consume marijuana.

"Now that people can open up," he said, "I realize this is a product that someone's parents use, someone's friend uses. People that are professional and that have families and that they all view it as an acceptable, better than acceptable, as a better alternative than other options: That was an eye opener."

-- Noelle Crombie