When the picture of Michael Phelps inhaling from a bong first began appearing on the internet, Mark Fightmaster wrote that "It appears that the sponsors are going to stand by their man, from Speedo to Parenting magazine."

Visa said that it had "spoken with Michael and he has expressed regret for the situation, has committed to being accountable and improving his judgment in the future [...] We intend to support him as he looks to move forward."

But there is a defector from Phelps' camp. Kellogg Co. (NYSE: K) has elected not to renew Phelps's contract that expires at the end of the month.

At most McDonald's Corp. (NYSE: MCD) drive-through windows, the worker's ask: "Do you want fries with that?" But at one Massachusetts McDonald's, drive-through customers got an unusual offer: "Do you want marijuana with that?"

It sounds incredible but it's true. The Eagle-Tribune quoted Haverhill Police Sargent John Arahovites as saying that Michael Brown, an assistant manager at the Haverhill, MA store, sold bags of marijuana worth $20 to $80 along with a McDonald's meal to his customers. He would use his cell phone and direct customers to the drive-through. Police set up a sting to buy $40 worth of marijuana from Brown and arrested him Thursday at the restaurant. Police seized $57 and six bags of marijuana from Brown.

What does Brown say? "This is not going to put me down. I'll get back on my feet." No word on whether McDonald's got a share of Brown's profits. But smoking marijuana makes people hungry. Brown could have created some important synergies.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in McDonald's.

Bear Stearns (NYSE: BSC) James Cayne has been forced to defend his reputation, and respond to unusual allegations for the CEO of one of the world's top investment banks:

Yesterday's Wall Street Journal discussed (subscription required) rumors of Mr. Cayne's use or marijuana as a coping mechanism in the wake of the subprime debacle and the high-profile collapse of two Bear Stearns hedge funds. Now, Cayne is denying that he smoked weed at a 2004 bridge tournament, and denied that he engaged in any "inappropriate conduct".

Of course, there's an argument to be made that presiding over the implosion of two hedge funds due to huge overexposure to subprime is "inappropriate conduct". It's probably something investors should worry about more than whether Cayne did or didn't smoke pot. But Cayne's denial may not be completely categorical:

Asked more generally whether he smoked pot during bridge tournaments or on other occasions, Mr. Cayne said in the article that he would respond only "to a specific allegation," not to general questions.

if the allegations are wholly without merit, and Mr. Cayne doesn't smoke pot at all, why wouldn't he just say that? Paradoxically, some analysts see this as good news, as it could expedite a sale -- Mr. Cayne would probably rather sell the company than be pushed out in a drug scandal.

Are you tired of reading explanations -- such as changing interest rates, profit growth, Yen carry trade -- about what makes the market move? Well then you're in luck because Reuters reports that this market is moving on drugs. That's right. According to Harris Stratyner, a psychologist at Caron's New York Recovery Center, some executives he treats are experimenting with cocaine, opiate-based drugs, Ecstasy and marijuana. Drugs don't make stock prices go up but they fuel the bankers who run it.

And these bankers are making big bucks. Six of the largest U.S. investment banks - Goldman Sachs Group Inc. (NYSE: GS), Lehman Brothers Holdings Inc. (NYSE: LEH), Citigroup Inc. (NYSE: C), JPMorgan & Chase Co. (NYSE: JPM), Morgan Stanley (NYSE: MS) and The Bear Stearns Companies (NYSE: BSC) - combined for $17.6 billion in first-quarter profit this year. That's after paying out $28.8 billion for pay and benefits.Those profit and pay figures are more than double those seen in the first quarter of 2000, the last days before the dot-com bubble burst.

It's not as if the banks don't know what's going on. One hiring manager at a major New York bank told Reuters that new staff must take a urine test, which is typical for the industry. But he said new hires can choose when to schedule the test during a 45-day period before their start date."Our drug test is not so much a test of whether you actually take drugs as it is an intelligence test to see if you can figure out how long it takes to get traces of the drug out of your system." .

Former associate attorney general Webb Hubbell -- known for his highly publicized fall from grace during the Clinton Administration -- claims "responsible" marijuana smokers can finally exhale. Working with NORML (The National Organization for the Reform of Marijuana Laws) and the McLaughlin Insurance Company, Hubbell appears on a five-minute audio message touting the program.

"Hello, this is Webb Hubbell," the recording begins, with a crisp McCoy Tyner soundtrack. "Life insurance is now available for responsible marijuana smokers. For years, [they] have not been able to access affordable life insurance ... No longer."

He then relays the story of a NORML member (and "responsible" marijuana smoker) whose trucking business loan required additional insurance he could not qualify for. He reached out to NORML for help, who contacted their insurance agent, Mr. Hubbell -- now a VP at the McLaughlin Company. Mr. Hubbell was able to convince a carrier to insure this individual, and the rest is history.

But what about the fact that marijuana is still, you know, illegal? Michael Vick was recently detained in an airport because his bottle of water simply smelled like weed. The Washington Post asked NORML's executive director Allen St. Pierre such a question, to which he replied that while marijuana is technically illegal even in the Netherlands (where it can be found on aisle six next to the Pillsbury Toaster Strudel), 11 U.S. states have decriminalized the drug.

Now, you may be wondering, what exactly is "responsible marijuana use?" I spoke with Keith Stroup, NORML's legal counsel, who referred to their Principles of Responsible Cannabis Use, which details "the appropriate and inappropriate ways to use the drug," making sure I also understood, "We don't think people should just go out and get stoned."

"Forty-six percent of the people in this country have smoked marijuana at some point in their lives," he continued. "Why should we treat half of the population like criminals?"

So, is this new policy a small victory against cannabis laws that prohibit the use of marijuana? Or has the insurance industry simply figured out that smoking on the couch while listening to 'Dark Side of the Moon' is a relatively benign activity?

B. Brandon Barker is the author of Operation EMU.