How Jamen Shively’s Big Marijuana Boast Went South

The absolutely true story of a wannabe recreational-pot entrepreneur.

In late May, former Microsoft manager Jamen Shively called a press conference on the 40th floor of the Columbia Tower. It was six months after the passage of Initiative 502, which legalized recreational marijuana. And Shively, who with partners had founded a pot company called Diego Pellicer, said he had big news.

Shively’s Microsoft credentials guaranteed major press coverage. Big business has discovered marijuana! went the storyline, which was aided immeasurably by the hype Shively was spouting for his company, named after a great-grandfather who had been a 19th-century vice governor and hemp farmer in the Philippines. “We are going to mint more millionaires than Microsoft with this business,” he told The Seattle Times the day before the press conference.

It was the “dot-bong” era, he proclaimed earlier to Fox Business. And in an interview with KING-5 TV, he enthused about “a hundred-billion-dollar industry in search of a brand.” He went on: “Never in the history of capitalism—forget American, in the world—has such a giant vacuum existed.” He said Diego would be that brand, one that offered a “premium” pot product akin to luxury cigars.

As if all that wasn’t sensational enough, Shively brought a megawatt star to his press conference: Vicente Fox, the former president of Mexico, a critic of the drug war who said he hoped that the developments in Washington state would serve as an example to his home country. Shively got to know Fox when the entrepreneur was running a chain of cybercafes and computer centers in Mexico prior to his work at Microsoft. During the press conference, Shively, looking sharp in a dark jacket and striped dress shirt, beaming confidence and congeniality, wrapped his arm around the former president’s back.

The room was packed. Reporters and camera crews turned out in droves. Not only Fox but a dozen or so activists, lawyers, and businesspeople involved with marijuana flanked Shively, as did State Rep. Roger Goodman, a legalization advocate. Well-dressed figures, some speaking Spanish, made chitchat and traded business cards.

Shively opened the affair by quoting the illustrious astronomer Carl Sagan on the outrageousness of marijuana prohibition, then got to the business at hand. “We are moving forward with plans to build a national and eventually international network of cannabis businesses,” he declared.

Yet all the ambition and glamour did not obscure some pressing questions about Shively’s plans. Despite I-502, distribution of marijuana is still a federal crime. Was Shively brazenly announcing he intended to launch an interstate conspiracy? reporters asked.

“We are actually conspiring to obey the law,” Shively responded, but he didn’t explain the seeming contradiction. Similarly, he said Diego had come up with a “risk-mitigated investment vehicle” that would allow the company to raise $10 million, yet declined to provide specifics of how investors in what the feds considered a criminal enterprise could possibly avoid risk. Indeed, he declined to provide many specifics at all about his business plan. The event was a strange mixture of attention-grabbing and secretiveness.

It set off not only a frenzy of media coverage around the country, but a backlash among figures including I-502’s backers, government officials, and longtime marijuana activists. Critics attacked Shively for provoking the feds, for muscling into an industry he didn’t understand, even for insufficient experience being stoned.

Perhaps the most stinging criticism came from Mark Kleiman, the UCLA public-policy professor hired last spring to serve as the state’s top consultant on I-502 implementation. On his blog The Reality-Based Community, Kleiman used Shively as an example of “insensate greedheads” flocking to the marijuana industry. What’s more, Kleiman said, Shively had “now painted a target on his shirt-front.”

Kleiman came to harbor even darker thoughts. You’d have to be “completely crazy” to hold a giant press conference announcing you were selling pot, he told Seattle Weekly recently. So he has a hunch that’s not the Diego gang’s actual intention at all. “My real suspicion is that they intend to fleece investors,” he says.

“You get a lot of money, you pay yourself a lot in salaries—and then you announce that the business has failed. You saw The Producers,” Kleiman says, referring to the movie/musical in which two Broadway producers raise lots of money for a flop.

His hunch has particular resonance given the track record of Diego co-founder Douglas Anderson, who has, at least until recently, been handling the company’s fundraising. In the early aughts, Anderson sold investments in a tax shelter scheme connected with a horse-breeding farm in Kentucky. A federal judge found the scheme to be a swindle in 2011, and one of its principals later went to federal prison on charges of tax fraud.

Anderson was not charged, but was found in a related civil judgment to have engaged in some unsavory practices. “I was the victim,” he says nevertheless. He filed for bankruptcy in 2010.

In recent weeks, Anderson’s role at Diego has become murky. Indeed, the company has gone through a series of shakeups. Most strikingly, Shively has stepped down as CEO, although he says he will continue being the company’s “face” and “visionary.”

Like the original Gold Rush, the frenzy for marijuana riches is turning out to be an arduous affair, attracting a wide array of schemers and dreamers. Failure—even for a man Dope Magazine suggested might be the “Bill Gates of cannabis”—is entirely possible, especially given the complex legalities involving marijuana. Shively set himself on a path that will require navigating a fluid and restrictive set of state rules, a tricky financial climate in which banks are largely out of the picture, possible federal interference, and, to top it all off, the mores of the marijuana subculture.

“A lot of people who don’t know what they’re doing are rushing in,” says Henry Wykowski, a San Francisco attorney who represents the country’s largest medical-marijuana dispensary, Oakland’s Harborside Health Center. “It’s bad for them and it’s bad for the industry.”

In mid-August, Shively shows up at a West Seattle medical-marijuana dispensary that is one of two owned by the Northwest Patient Resource Center (NWPRC), with which Diego has a close alliance. The sleek-looking dispensary is one of the most established in town. Its lobby, with a suite of leather furniture and flat-screen TV, resembles any professional waiting room—except for the ATM, a symbol of the cash-only nature of marijuana businesses, and the products attractively displayed on shelves behind glass windows. Bottled in jars, the goods carry names like “Lemon Kush,” “Magic Moments,” and “Island Sweet Skunk,” all strains of marijuana. Also on sale: pot-infused sodas, gummies, and “white chocolate bon bons.”

The 45-year-old Shively is dressed casually in cargo shorts, a long-sleeved shirt, and loafers. A backpack completes the ensemble, which gives him a slightly nerdy air. An early Diego business plan describes Shively as retaining “an endearing childlike wonder,” and there’s something apt about that, even as the entrepreneur spins tales of marijuana millions. With neatly clipped blond hair and a ready smile, there’s a boyish quality to his zeal.

Taking a seat in a corner of the room where press clippings about the Diego press conference are tacked to the wall, he explains that he was originally a student of civil engineering at Berkeley and MIT until the book The 22 Immutable Laws of Marketing changed his life.

What he learned, he says, is that “you create value by creating a whole new category and then dominating.” And if you can’t do that, if you’re not the “first to mind” in a given category, then you have to go in the opposite direction to make a name for yourself.

Which brings us to his work at Microsoft, where Shively started in 2003. He says he served as a corporate strategy manager whose job was to come up with new categories of products and services. “What can we do to leapfrog Google?” was the question that he says preoccupied him.

He took note of Google’s dominance in the field of connecting businesses to consumers, and decided that Microsoft could find its “opposite direction” by connecting businesses to other businesses. Specifically, he says he wanted to create an online trading marketplace.

Micrososft wasn’t interested. “It was a huge disappointment,” he says.

Alex Gounares, a former corporate vice president and chief technology officer at Microsoft who was once Shively’s boss, confirms that his underling worked on a project that didn’t pan out, but says he is not at liberty to discuss details. “He definitely was an idea guy—creative, optimistic, and entrepreneurial,” Gounares says.

So Shively took another angle. He says he proposed a design for Bing, the search engine Microsoft was about to launch, going head-to-head with Google, that would “humanize” searches. If you were searching for a business, you’d see an icon saying a representative was online and ready to chat with you.

Microsoft took a pass on that one too.

Shively chafed at the rejection. “Microsoft has stopped creating new things,” he says. “That part of Microsoft’s DNA has been lost.” So in 2009, he left the company and started his own. He ran with his idea of an online marketplace, focusing on the food business. Despite what he admits now is a “terrible” name—Findood—the company got “some good traction,” he says. Yet it ran out of steam, especially after Alibaba, the successful international trading site, came on the scene.

“I was exhausted,” he says. He went to California to look after a sick uncle. “Then,” he recounts, “I saw this opportunity starting to develop.”

Shively was one of those rare pot users who got turned on to the drug in his 40s. The pivotal moment was a walk he took one day with a programmer friend from Microsoft. “Look, Jamen, I’ve done the research,” Shively recalls his friend telling him. “I’m convinced that within five years cannabis is going to be sold as a health food.”

“I was fascinated,” Shively recalls. So he did his own research, and became convinced that what he’d been told about marijuana in the “just say no” era was a lie. Then he started using pot. “I started having some of the best brainstorming sessions ever, and I was able to connect to people in whole new ways,” he says. For instance, he explains, he found himself able to express love more freely to people, including his brother, with whom a sibling rivalry had long flourished.

So when a friend called as I-502 was sailing to passage asking whether Shively would be interested in starting a marijuana business, he was eager to brainstorm. They did so with what Shively calls, referring to a variety of pot reputed to get the creative juices flowing, some “really, really good sativa.”

The passage of I-502 launched a frenzy of entrepreneurial activity that people like to compare not only to the Gold Rush, but to the end of Prohibition. An entirely new market suddenly came into being, and all types of people—whether archetypal stoners or professionals, young or old, bearing tattoos or clad in suits—wanted to get in on the ground floor

“It’s been really, really insane,” says Hilary Bricken, who has quickly become the go-to lawyer for these emerging entrepreneurs. She’s speaking in the office building where she runs the Canna Law Group, which is targeted specifically at the marijuana industry and was carved out of a larger corporate law firm called Harris & Moure. Just since January, the 29-year-old Bricken has built a contact list that boasts more than 1,000 names, most of them current or potential clients.

They include a middle-aged aerospace professional whom Bricken describes as “super-dorky,” the former CEO of a Philadelphia waste-management company, and a 58-year-old French-trained chef who wants to create high-end marijuana-infused pastries. The chef and the former CEO both moved to Washington for the sole purpose of getting into the marijuana business. They’re not alone. Bricken says she also has clients who are newly arrived from Alaska, California, Iowa—even Colorado, which also passed a ballot measure legalizing recreational marijuana last year.

Colorado has made it difficult for newcomers to break into the cannabis business there because it has given first dibs on licenses to existing medical-marijuana operations. Like Washington state, medical marijuana has long been legal in Colorado; both states have allowed patients to access the drug for more than a dozen years. But the recreational market is expected to be exponentially bigger and more lucrative.

Washington—whose fledgling pot entrepreneurs are trying to take over an illicit market which consultant Kleiman values at about $1 billion­—is giving no such preference to medical dispensaries. That’s not to say that dispensaries, which fear they will be put out of business once I-502 is fully implemented, don’t want in on the action.

Medical-marijuana entrepreneur John Davis, the CEO of NWPRC, says Shively reached out to him at a time that the Diego founder was getting discouraged. Business associates were warning Shively away from the marijuana industry, given its “shady” reputation and the risks posed by federal drug laws.

Davis presented another view. He told Shively about what he says is known in the medical-marijuana industry as the “Davis method.” Whereas other dispensary owners try to keep as under-the-radar as possible so as not to invite law-enforcement action, Davis says his philosophy is to be as open and above-board as possible in an effort to convince authorities that his business is legitimate.

“You want to see my books? I’ll show you my books,” he says of his attitude. He also serves as executive director of a group called the Coalition for Cannabis Standards and Ethics, which preaches self-regulation.

Robert Calkin, CEO of the Cannabis Career Institute, a California-based group that holds classes for marijuana entrepreneurs around the country, including in Seattle, says he hasn’t heard of the “Davis method” per se. But Calkin says Davis, who has taught Institute classes, is at the “forefront” of efforts to “put a good face on the industry” and normalize its business practices.

Thomas Jun, until recently a partner in NWPRC, elaborates that Davis never sold marijuana to minors, always did background searches on suppliers, and rejected pot from suspicious locations. Even if such pot was free, Jun says, Davis “wouldn’t touch it.”

Now Shively was coming to Davis for advice. “He asked me what he should do,” Davis recalls. I said basically we should team up.” Davis says he was eager to expand into the recreational market, felt he had valuable experience to offer Shively, and believed the entrepreneur had “resources” that exceeded his.

How wealthy is Shively? Davis says he doesn’t know exactly. Shively’s tenure at Microsoft was long past its go-go era, when almost anybody who walked through the door became a millionaire. Davis says he believes Shively “comes from money” and “did some things down in Mexico” that were lucrative. Rumors abounded. Jun says he heard that Shively was worth $38 million.

Shively declines to elucidate, other than to confirm that he is a millionaire, his wealth derived from “different stages of my life.”

Whatever his degree of wealth, it was good enough for Davis. Jun, a gas-station owner who provided much of the money behind NWPRC, says his business partner was fired up by the talks with Shively. “We got this great deal,” Jun says Davis told him one day. A rich entrepreneur, Shively, wanted to buy an option to purchase the medical-marijuana operation, Davis explained. Eventually they were all going to go national. “We’re going to make a lot of money,” Davis gushed, according to Jun.

“That’s the way you talk to investors,” Davis says now when asked about the conversation.

But Jun says he didn’t like what was happening to NWPRC, or Davis. “He changed,” Jun says, explaining that money seemed far more important to Davis now. One indication of that: Davis raised his salary by 40 percent, according to Jun. Davis declines to talk specifics. But a partnership proposal Davis submitted to Diego in April says that he would make $120,000 a year as the company’s “chief political strategist.”

Jun also felt that Davis’ alliance with Shively was putting NWPRC’s partners at risk. As a medical-marijuana operation, NWPRC was not immune from federal law-enforcement action. The feds have raided some dispensaries and ordered others to shut down. But it seemed to Jun that the business was inviting much more risk with its grandiose plans under Diego’s wing.

In May, around the time of Diego’s Columbia Tower press conference, Jun was presented with a formal “option purchase agreement,” which required the signatures of both him and his wife. It made him nervous. “If this thing blows up, who’s going to be holding the bag?” asks Jun, talking one day this summer in his lawyer’s Pioneer Square office. Ultimately he decided not to sign the option agreement, and to disassociate himself entirely from NWPRC.

“I don’t think he can handle the idea of success,” Davis says of Jun. Davis, on the other hand, can. While he says the fight for full marijuana legalization motivates him more than riches, he also concedes, “Yes, I want to be big.”

In his partnership proposal to Diego, Davis pitched NWPRC as an entity “uniquely positioned to successfully dominate the market.” That’s because NWPRC, with 3,000 customers, was already up and running as a medical-marijuana operation, and could therefore “secure I-502-compliant real estate before competitors.” Once I-502 was implemented, NWRPC could switch its holdings to the recreational market.

The strategy calls to mind Joseph Kennedy’s actions in the waning days of Prohibition. As the end was near, relates Daniel Okrent, author of Last Call: The Rise and Fall of Prohibition, the Kennedy patriarch got a license to import brand-name “medicinal liquor” from Britain—legally prescribed in the U.S. to treat everything from cancer to old age. He brought in “huge quantities” of scotch and gin and set up a system of warehouses, Okrent says by phone. The very day after Prohibition was repealed, Kennedy started distributing his booze.

Diego’s option to buy NWPRC would cost $3 million, according to Davis’ proposal—an investment that could be paid in real estate that would fund NWPRC’s expansion as it readied for the launch of the recreational market. Another $1.5 million, paid in Diego stock, would eventually go toward buying NWPRC itself. “Having an option as opposed to buying at this time keeps Diego one step removed from anything that could be considered potentially illegal,” Davis added.

But Diego did not intend to hide in the background waiting for a green light. The company’s early business plan stressed the need for “bold and decisive” marketing “in order to capture mind share and market share early on.” Part of Diego’s strategy, the business plan continued, was to create a public perception of marijuana as a “social and creative elixir, analogous to how fine wines, spirits, craft beers, and tobacco products were elevated to such statures centuries prior.”

To that end, the business plan gave an example of how it would market one of Diego’s “flagship varieties.” “Diego Reserva came originally from the heart of the Guatemalan highlands, where special plants were carefully selected over many generations,” the description would begin. “The bouquet has a sweet, floral aroma with woody hints, and also subtle undertones of sour lemon.” The marketing would also note that the strain’s “flowers ripen with impressive purple and reddish colors” and that its properties provide an “energetic high, perfect for an open-minded, creative, and active lifestyle.”

The business plan also shed light on how Diego intended to become a national enterprise despite federal drug laws and the fact that only two states have legalized recreational marijuana. “If, as we expect, more U.S. states legalize cannabis for social use, we intend to scale our business operations from state to state following legalization trends as they occur.” Each store would earn $1.44 million a year, the business plan estimated.

Shively says Diego has changed its business plan since that draft was written, but declines to say how. Certainly he has followed the blueprint for “bold and decisive” marketing.

“Are you Big Marijuana?” a reporter asked Shively at his showy press conference back in May. “Yes, we are Big Marijuana,” he responded. Asked later whether he??s made mistakes, Shively cites that answer. He doesn’t elaborate. He doesn’t have to.

“I don’t think he impressed anyone,” says Seattle City Attorney Pete Holmes, one of the sponsors of I-502. Shively’s “Big Marijuana” statement, the national operation he described, the talk of eventually going international, all that “flies in the face of what I-502 intended,” according to Holmes. He says the initiative is aimed at creating “a completely homegrown operation”—one geared for “smaller local entrepreneurs.”

That’s not only to assuage the concerns of the feds, wary about Washington and Colorado marijuana leaking across state borders, but to prevent corporate business practices like aggressive advertising to youth, Holmes explains. Alison Holcomb, the former campaign manager of I-502 and its author, says she also opposes corporate domination because it would likely squeeze out businesses run by minorities and those currently catering to the illicit market, both of whom she would like to see enter the legal market.

Longstanding marijuana activists and entrepreneurs, meanwhile, are also skeptical. “Some of us have worked for 20–30 years on this,” says Andrew DeAngelo, the general manager of Oakland’s Harborside Health Center. It was uncomfortable, he says, “to see people with a lot of money jumping in, making intense moves.” Especially when they compare marijuana to tobacco, DeAngelo adds. Shively’s analogy with “luxury cigars” goes against the grain in a culture that presents pot, in DeAngelo’s words, as an “agent of wellness.”

Yet amid the press-conference backlash, Shively reached out to a number of activists, including DeAngelo; his brother Steve, Harborside’s executive director; and their attorney, Wykowski. The lawyer says client/attorney privilege prevents him from discussing details. “But my position is, if you want to be in the industry and you want me to beyour lawyer, you have to do it appropriately,” he says. “It’s more than about just making money.”

DeAngelo says he and his brother were encouraged by Shively’s willingness to engage, and helped him put on another press conference in San Francisco, also attended by Fox. The entrepreneur and the former president announced they would hold a three-day symposium in Mexico devoted not to business opportunities but to the consequences of the drug war and possible legalization policies around the world.

DeAngelo says he thought the Mexico conference, held in July, was a “brilliant” idea. Holcomb, who participated in the event despite her initial reservations about Shively’s outsized ambitions, says she came away feeling “much more positive” about the entrepreneur.

Yet just a month later, Shively concedes he will no longer be serving as Diego’s CEO. He says he never wanted the top job, and is happy with the role of company “visionary.” But it’s obvious he has been curtailed. Before talking, he says he has to check with Davis.

At this point, it isn’t clear who is really calling the shots at Diego. Davis returns phone calls when inquiries about the company are made. A new CEO from Colorado, with experience in the medical-marijuana business there, is waiting in the wings, but cannot yet be named, according to Davis. The man identified on Diego’s website as its board chair, a Wall Street trader named Alan Valdes, is nowhere to be seen.

Then there’s Anderson, a Diego co-founder. While never mentioned publicly, the Bellevue resident has, at least until recently, been playing a central role by selling investment in Diego through a private offering.

Financing marijuana businesses is a tricky proposition. Banks won’t give loans to such businesses, or, in many cases, even bank accounts. In part that’s because federal laws require financial institutions to report on money linked to suspected drug activity.

In theory, private investors could fill the gap. Davis says he’s had meetings with lots of them. “They all say the same thing: ‘Wow, I really want to get into this!’ ” Davis recounts. But then, he says, they consult their lawyers and get cold feet.

Anderson, however, seems to have had some success in overcoming this resistance, judging by Diego’s tally. In August, Shively says the company has $10 million in “verbal commitments,” if not in hard cash. Anderson is “a fantastic fundraiser,” Davis enthuses.

You’d expect nothing less after reading Anderson’s bio, posted to the website of an investment firm called Wall Street Capital Partners, which lists Anderson as its CEO and Valdes as its chair. Educated in part at Harvard, a former Marine, Anderson started various companies, including an unnamed one that brought in more than $20 million in revenue, according to the bio. It also says Anderson co-chairs a cattle company that focuses on “strategic beef systems in China and Russia.”

Court documents, however, paint a less impressive picture.

In June 2009, King County Superior Court Judge Susan Craighead presided over a civil trial held to determine whether Anderson had cheated business associates out of roughly $80,000 in commissions. Jim Feek and Gary Justice (the former KIRO news anchor) had a firm that sold life insurance and helped wealthy people invest. In the early aughts, Feek Justice Financial heard about a tax-shelter program in which investors would lease thoroughbred horses raised on a Kentucky farm and write off the expenses of the animals’ care.

Big money was involved. Investors paid anywhere from $1 million to $28 million, according to the court record. The company running the program, ClassicStar, promised generous commissions to those pitching investors. Feek Justice began marketing the program with a series of meetings. At one, Anderson turned up. Eventually Anderson talked Feek Justice into turning the ClassicStar marketing over to him.

“He presented himself well,” Feek recalls by phone. “He dresses well. He’s good-looking, not a hair out of place.” He also represented himself as a “big shot,” someone who routinely dealt with “affluent people from around the world,” Feek says.

Wining and dining investors, Anderson raised millions of dollars for ClassicStar, according to the court record. In return he received $2.1 million in commissions, a share of which he was supposed to turn over to Feek’s firm. But after ClassicStar reneged on promised compensation terms, Anderson—“furious,” according to the judge’s description of the case—stopped paying Feek.

“They did no work nor fronted any expense,” Anderson fumes in one of several long e-mails to Seattle Weekly. He also claims Feek Justice should have exerted its influence over ClassicStar to make the horse-breeding company live up to its obligations.

In a scathing 29-page findings of fact, the judge countered that Anderson himself—not Feek Justice—was the ClassicStar insider. “He had a close, personal relationship with ClassicStar’s David Plummer, and traveled to ClassicStar’s operation in Kentucky frequently,” Craighead wrote.

The judge—who noted that Anderson’s body language and speech patterns diminished his credibility—went on to find that Anderson had defrauded Feek Justice by commingling business and personal funds—funds that had been used to pay for Anderson’s home (roughly 5,000 square feet and valued at $1.2 million, according to county property records), as well as his Mercedes, BMW, Hummer, and Nissan.

Craighead entered a judgment of $845,000, including interest, against Anderson—a ruling that prompts him to speculate that the judge’s “business experience is limited to paying the guy who does her lawn.” Shortly after losing the case, he declared bankruptcy. “He hasn’t paid a nickel,” Feek says, although Anderson contests that.

Craighead made one more finding of note. Anderson, she wrote, “was in a better position than anyone else to see the telltale signs of a Ponzi scheme.”

She’s referring to ClassicStar, whose shady operations were fully brought to light by a lawsuit in Kentucky. In 2011, a federal judge there found that ClassicStar was a ruse that funneled investors’ money to a parent company involved in natural oil and gas exploration. ClassicStar didn’t even have enough thoroughbreds to satisfy investments. The judge ordered ClassicStar’s principals—including David Plummer, the man Craighead described as having a “close, personal relationship” with Anderson—to pay $65 million.

Anderson denies that he knew ClassicStar was a fraud. “The feds certainly did not think this was the case because they would have charged me,” he says. He’s talking about yet another court case involving ClassicStar, which last April resulted in Plummer being sentenced to 18 months in prison for tax fraud. Anderson says he helped prosecutors build their case, spending “countless hours with federal agents in deposition.”

Still, Anderson’s history with ClassicStar hardly reassures investors considering his latest pitch. Instead, his past calls to mind Kleiman’s initial suspicion, which is not isolated. “This whole thing looks very much like a penny stock scam,” says longtime marijuana activist and lawyer Douglas Hiatt, who represents former NWPRC partner Jun.

Yet in early September, responding to questions about his past and his role with Diego, Anderson says that he has “moved on” from the marijuana company. Davis says the same, stressing: “Doug is not a director, not a stockholder; he’s nothing.”

Davis says the split was prompted in part by state rules requiring everyone who has anything to do with a licensed marijuana company, including investors, to be local. While broad wording in I-502 suggested as much, the state Liquor Control Board, which is charged with implementing the initiative, has made the matter crystal-clear in its detailed proposed rules.

While Anderson is local, Davis says, “It’s easier for him to not have the restriction of just raising money from Washington state.”

Valdes, the Wall Street trader who chaired Diego’s board, is also no longer involved with the company, Davis says. Asked who is on the board, Davis says he doesn’t know, adding that there is a possibility that he’ll become a board member himself.

Anderson, however, has continued to promote Diego. Medical-marijuana activist and dispensary owner Steve Sarich says he had an “informational” meeting with Anderson days after the pitchman was described as having made a break with Diego. Anderson talked up his marketing plans for the company, according to Sarich.

“I am happy to meet with anyone about Diego Pellicer,” Anderson says when asked about ongoing meetings. He adds that he wishes Shively, “a good friend,” success.

In the late summer and early fall, Shively mostly stayed out of the limelight. He could be found at Hempfest staffing a Diego booth, his smile as broad as ever as he chatted with an organic-fertilizer supplier. But the booth was just one of many, undistinguished by either crowds or cameras.

He also seemed to be backing away from his initial hype. Recognizing that federal legalization of pot may take a while, he said that Diego will be building its brand by going into hemp apparel and accessories. The company is still pursuing cannabis, he said, but added that such is a “long-term” strategy.

His goal, and that of countless other pot entrepreneurs, was furthered by a Department of Justice announcement in late August that it would not challenge Washington’s and Colorado’s legalization laws, even though marijuana would remain illegal federally.

Less than a week later, however, the state dealt Diego a blow in its updated version of proposed rules for marijuana businesses, which can begin to apply for licenses in mid-November. The LCB, saying it wanted to avert a corporate takeover, stipulated that no business could get more than three licenses, undermining Diego’s plan for a vast retail chain.

Nevertheless, Davis, whose medical-marijuana business is not bound by LCB rules, says he’s busy acquiring “multiple” new locations. He is also looking at venturing into other states where medical marijuana is legal.

The expansion falls in line with the blueprint laid out in his partnership proposal to Diego, which envisions NWPRC building its infrastructure before being acquired by the recreational-marijuana brand. Davis declines to say whether Diego is funding the real-estate acquisitions, as also laid out in his proposal.

“All you need to know is this,” Davis says. “I’m funded in the seven figures. We are moving forward. And Jamen will be a part of it.”

Shively even seems back in hype-spouting mode. As the featured speaker at a webinar last week put on by a new web network called 420 Investor, he called attention to the “worldwide news” Diego made with its May press conference, saying that his “brand is out there more than anyone else in the entire industry,” and claiming his July symposium in Mexico “literally changed the course of Mexican history” by opening discussion on the wisdom of the drug war.

He also talked about holding an IPO in six months to a couple of years, and purported to be in discussion with a New York TV producer about creating a reality show, presumably about Diego. He did interject his remarks with what he calls an “important disclaimer.”

“Look, I’m going to talk about rules and concepts, some of which might not be practical or possible today given the rules and regulations,” he said. Anything he asserts “outside of those bounds,” he continued, “is nothing more than speculation.”

nshapiro@seattleweekly.com

 
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