THE NEW WAR ON DRUGS
The week of February 15, 2015

When will we see a legal Silk Road?

By Patrick Howell O'Neill

Imagine going online to take advantage of a 420 sale, picking up an ounce of Northern Lights indica for $125 and a decadent spread of pot brownies and treats for $100. After completing the checkout, the loot would be delivered straight to your mailbox.

“That’s something we’d ideally like to see,” Erik Altieri, the communications director for NORML (the National Organization for the Reform of Marijuana Laws), told the Kernel. “That’s very new territory even when it comes to liquor sales. Wine is finally starting to get into it with direct-to-consumer sales [and hit over $1 billion in sales last year]. They’re testing the water for us.”

This isn’t a scenario of the distant future—it’s one of the not-too-recent past.

For three years, Silk Road allowed anyone to buy drugs anonymously online and have them shipped to their door. Drugs had been available online for decades, but the privacy, professionalism, and scale of Silk Road made it utterly unlike anything that had come before. On the Silk Road, marijuana was just as easy to buy as rare psychedelics.

As a the legal marijuana industry builds in the U.S., there are questions about when if ever federal reform will remove the threat of arrest from day-to-day lives of sellers and customers—and what would come next.

The momentum behind this massive cultural shift can be traced back decades, but Silk Road captured the essence of an increasingly normal idea: What if the world of drugs was smarter, easier, and safer than the chaos we’re all to used to?

“We need more states to come online, and we need the federal government to treat marijuana like alcohol.”

What if Silk Road could operate legally like Amazon instead of just being compared to it?

The Napster effect

When he first began advertising the website in January 2011, Silk Road creator Ross Ulbricht himself compared his budding enterprise to Amazon.

An even better comparison would be Napster.

Napster, the iconic scourge of the record industry, fundamentally changed the way the world looked at the Internet. Radio and record stores were suddenly diagnosed with terminal irrelevance as tens of millions learned how to illegally download entire catalogs by artists.  The landscape had irrevocably changed.

“I remember thinking, even though it’s just audio, there’s such a crazy amount of emotion. The fact that you could share emotion over the Internet, it was really wild to think that something so important to you could be traded so freely,”  Napster creator Shawn Fanning said in the documentary Downloaded. “It’s hard to quantify how important it was.”

Under a glaring media spotlight, Napster went through years of massive legal battles and was eventually shut down in 2001, but its impact was permanent. Young people couldn’t shake the notion of paying $20 at Tower Records for a CD with one good song, and Napster’s lineage led directly to Spotify, the music streaming company said to be worth over $10 billion today.

“[The music industry] saying, copyright is going to be fixed by some combination of enforcement and education,” John Perry Barlow, cofounder of the Electronic Frontier Foundation, said. “Well I was saying, this sounds a lot like the war on drugs. I don’t think this is going to work. That certainly didn’t.”

Whereas Napster changed the way we think about music and movies, Silk Road changed how we think about drugs.

Whereas Napster changed the way we think about music and movies, Silk Road changed how we think about drugs. But the narrative is playing out very differently for Ulbricht, who was recently found guilty on seven felony charges in New York, including drug trafficking, continuing a criminal enterprise, and money laundering. He faces the possibility of life in prison, plus a murder-for-hire charge that may pile on the years.

With all due respect to Hollywood’s war on Napster, drugs are a far bigger business—and so is policing it.

On both sides of the drug economy, there are huge entrenched interests with an enormous amount to lose. Silk Road has further pushed an idea along a path that may lead to fundamental shifts not only in the ways we get high but also in how we’re all policed.

Between a rock and a hard place

Just a few years after the emergence of Silk Road, Americans are voting to end the war on drugs in increasing numbers. In 1989, 16 percent of Americans supported legalization. Today, that number is above 52 percent.

Marijuana legalization initiatives have passed in four states, including Washington, D.C. Across the country, polls show support for America’s infamously harsh and punitive drug policies is eroding quickly in favor of treatment and an end to mandatory sentences for nonviolent drug offenders.

So why doesn’t someone just build the Amazon of pot?

The answer, of course, is that marijuana is still prohibited on the federal level, which puts businesses firmly between a rock and a hard place.

As far as many banks are concerned, the legal marijuana businesses of America are about as welcome as Silk Road. “By facilitating customers’ credit card payments, the institution would be aiding and abetting the distribution of marijuana,” University of Alabama law professor Julie Andersen Hill wrote in a 2014 paper. “And by knowingly accepting deposits consisting of revenue from the sale of marijuana, the institution may be acting as an accessory after the fact.”

On both sides of the drug economy, there are huge entrenched interests with an enormous amount to lose.

Even operating as a cash-only business is risky for both parties. Due to the Bank Secrecy Act (BSA) of 1970, banks must report “suspicious” transactions pro-actively, and every transaction over $10,000—or even a series of transactions that add up to that much—must be reported as well. Moving cash in smaller numbers to hide it, or not reporting it, could lead bank employees and directors could be charged with money laundering. According to John Gilmore, a cofounder of the Electronic Frontier Foundation and drug reform activist, banks are required “to photocopy every check over $50 and provide those images to any fed or cop who asks, without a warrant.”

While the law is clear, financial institutions are getting mixed messages from the federal government.

The Department of Justice’s 2009 Ogden memo directed prosecutors to stand back from medical marijuana, as President Obama’s promised on his 2008 campaign trail. But for no discernable reason, the 2011 Cole memo reversed course and essentially disavowed previous positions, as police raids on dispensaries in California and elsewhere continued. Since then, cloudy proclamations and ineffectual half-reforms have left the president’s position on pot a guessing game with significant consequences.

“The biggest challenge in our industry is banking, by far,” Dylan Donaldson, owner of the Karing Kind dispensary in Colorado, recently told the New York Times. “We grow old thinking about how safe our money is. It’s a nightmare and we live it every day.”

Banking isn’t the only challenge the industry faces on the federal level in building an Internet presence.

Silk Road surreptitiously used logistics networks to ship its products. Legal marijuana businesses are forbidden from using the United Postal Service, U.S. Mail, or Fedex. The alternative option—building your own delivery fleet—is beyond the means of the industry and is of deeply questionable legal standing in and of itself.

In 1989, 16 percent of Americans supported legalization. Today, that number is above 52 percent.

That’s not to say enterprising drug dealers aren’t using technology to change the industry. All over the country, weed delivery services—particularly in medical-legal states—relying on the the Internet have existed on and off again for the past several years. The only people who love delivery services more than the customers are the media.

But are they legal?

“Delivery exists in a very gray area,” Altieri said. “California has had delivery for quite a while but they’ve never been explicitly allowed or forbidden in a good portion of the states. It’s due to an overabundance of caution from state regulators writing legal codes, particularly in Colorado. But as we can see, this doesn’t turn into a marijuana free for all. The sky doesn’t fall.”

Challenging public perception

Silk Road began when Ross Ulbricht grew 10 pounds of shrooms in a cabin near Austin, Texas. He sold them online safely and cheaply, and the rest is history.

If we’re really asking when we might see a legal Silk Road, we have to look beyond marijuana. After all, MDMA was likely the most popular drug on the entire site, according to federal prosecutors and multiple media reports. Is it possible that drugs like MDMA, cocaine and heroin  could ever be sold like alcohol?

The biggest obstacle to the wider legalization of drugs is public perception, an attitude that has been built by a century of bad science, fear mongering, racism, and perverted profit incentives that have made men rich by fighting a global war on drugs costing tens of billions of dollars every year.

While the law is clear, financial institutions are getting mixed messages from the federal government.

“We’ve been told a story for a hundred years that is so deep in our culture that we just take it for granted,” Johann Hari, author of Chasing the Scream: The First and Last Days of the War of Drugs, said recently on Democracy Now. “We basically think if we all took heroin for 20 days, by day 21, because there are chemical hooks in heroin, our bodies would physically need the heroin, and we would be heroin addicts. That’s what we think heroin addiction is.”

That story has glaring holes.

“If one of us steps out here today and we get hit by a car, right, God forbid, and we break our hip, we’ll be taken to hospital,” Hari explained. “There’s a very good chance we’ll be given a lot of diamorphine. Diamorphine is heroin. It’s much better heroin than you’ll score on the streets, because it’s 100-percent pure as opposed to, you know, massively contaminated. You’ll be given it for quite a long period of time. That is happening in every hospital in the United States. All over the developed world, people are being given lots of heroin for long periods of time. You will have noticed something odd about that: Your grandmother was not turned into a junkie by her hip operation. If what we thought about addiction was right, those people should be leaving hospital as addicts. In fact, they’re not.”

Instead, the hypothesis posed is that addiction is mostly not a moral failing or even a hijacked brain. It’s largely “an adaptation to environment,” a idea that profoundly contradicts the ideas at the foundation of the war on drugs. If this is true, just about the worst thing you can do to an addict is put them in prison and remove their hope for the future.

The drug war, a century-long conflict in which victory was never really possible, stymied science and repeatedly told the public the answer to drugs was militancy. As attitudes change, the law is allowing modern science to catch up. As new knowledge chips away at the old cliches—”Just Say No”—public perception is prone to change.

Canada, Australia, and Colombia have all seen recent serious propositions to legalize MDMA. The chief medical officer of British Columbia said in 2012 that MDMA should be legalized and sold like alcohol because the dangers of ecstasy come from ingredients added by street dealers and sold to unknowing customers. Legalization and regulation prevents such lethal problems.

The biggest obstacle to the wider legalization of drugs is public perception.

In the U.S., clinical trials with MDMA and shrooms are taking place that could result in the drugs being legalized for prescriptions to assist psychotherapy for patients with issues like post-traumatic stress disorder, though that’s still a long shot at this point. The clinical trials are expected to finish in about 2022.

If the FDA approves MDMA and shrooms for a valid medical purpose, the Department of Justice is legally required to move the substances out of schedule 1. Prescription approval “would not legalize the most popular recreational uses of the drugs but would be a foot in the door of prohibition,” Gilmore said.

“And hundreds of thousands of people could legally get relief from psychological illnesses. The psychedelics work against psychological illnesses where nothing else works. Virtually all psychological drugs merely treat symptoms, not causes. Talk therapy seeks to root out causes but is very very slow, expensive, and uncertain. Talk therapy combined with psychedelics is much quicker and more certain.”

Tearing down the wall

While marijuana legalization has made solid advances in recent years, progress at the federal level has been minimal.

The biggest changes necessary have to come in the form of reform at the Treasury Department and, specifically, FinCEN (the Financial Crimes Enforcement Network)—the agency called “the NSA of financial transactions” by Gilmore for its close surveillance of virtually all American money.

“There’s a desire to stick with the status quo by lawmakers,” NORML’s Altieri said, “and a trepidation from politicians to wade into this water, particularly if they’re from conservative states.”

“There’s a desire to stick with the status quo by lawmakers.”

NORML, one of the country’s biggest pro-marijuana reform organizations, has prioritized brick-and-mortar institutions that can already legally sell in states like Colorado. In lieu of complete federal reform, NORML celebrates small victories. The Marijuana Business Access to Banking Act of 2013 gained bipartisan support in the House of Representatives, Altieri boasted—in truth, a meager three Republicans joined 29 Democrats in sponsoring the bill before it died—and NORML has enlisted a few notable conservatives, like Grover Norquist.

In lieu of complete federal reform, NORML celebrates small victories. The Marijuana Business Access to Banking Act of 2013 gained bipartisan support in the House of Representatives, Altieri boasted—in truth, a meager three Republicans joined 29 Democrats in sponsoring the bill before it died—and NORML has enlisted a few notable conservatives, like Grover Norquist.

When asked how long until we see marijuana online commerce, Altieri offered the educated guess of one decade, but he hopes to half half the states legal in the next five years.

“We’re just entering the realm where we have any legal recreational market at all,” Altieri said. “We need more states to come online, and we need the federal government to treat marijuana like alcohol.”

Gilmore, just as strong a legalization advocate, seemed less sure of how long we’ll have to wait for SilkRoad.com.

“No one can predict when the federal Berlin Wall will be torn down,” Gilmore said.  “When it happens, it will probably be a surprise, then three days later it will seem like the obvious thing.”

Illustration by J. Longo