I want to tell my coworker to stop wearing a high school branded jacket to work
Why do you think that it is okay to tell them how to dress?
He looks retarded, he needs to get a job
Dress codes are used to communicate to employees what the organization considers appropriate work attire. If your business doesn't have a dress code, then you have no right to tell someone what they can and cannot wear.
But, but, I have control over my team.
Yes, your team and what is being done work wise. You can't tell them how to dress though, especially if there is nothing wrong with what they are wearing.