One night not long ago, I attended a political fund-raiser for the governor of Colorado hosted by a handful of ganjapreneurs, myself included, in downtown Denver. Those evenings are always glittering events. People dressed to the nines. Lots of handshakes, hugs, and photographs. Endless rounds of cocktails and equally endless rounds of speeches. But I have to admit that for part of the time, my mind was elsewhere. I was busy looking around the room, counting up how many of those people were cannabis entrepreneurs like me. These were people I’d done business with. People who ran major grows or dispensaries. People who had entered the field when it was still in its clumsy infancy, who had ridden the ups and downs and had emerged unscathed on the other side.
I had to marvel that our state’s top politicians would even want us there. Once, having known drug dealers show up at such an event would have been an anathema. A scourge. Something worthy of scandal. Such a person would have been shown the door, escorted out, or quietly arrested outside. And now our presence was welcome. We were, in fact, the hosts and had invited all the guests. Politicians wanted our votes, our support, and our donations.
I had another thought as well. I found myself thinking: The Steve Jobs of marijuana is here. I don’t know who he or she is, but they’re in this room right now. And, no doubt, somewhere in Washington state, at a similar party in the future, the Jeff Bezos or Howard Schultz of marijuana will be in attendance. In the coming years, the major players of this new industry are going to emerge, and they will surprise the larger world of business with their achievements.
Now, you might well mock such a gathering as an assemblage of highly privileged people. Of course the big shots are going to welcome major marijuana businesspeople to the fold. They’re eager to get a hold of your tax dollars! They want your money, dude!
Yeah, I get it.
But I also think that you don’t have to look far to find evidence that Colorado’s stance on marijuana has mellowed, not just for us entrepreneurs but for everyone.
In fact, the night of this party, my head was still coming to terms with a story a friend had told me at lunch. A neighbor had called the cops to complain about a strange smell emanating from a home in my friend’s neighborhood. When the cops arrived, they found two young men who were growing more than 170 plants on the premises. Each had a red card showing that his physician had approved them for a higher plant count, should he choose to grow his own. However, under the new recreational marijuana laws, they were only permitted to grow six plants each for personal consumption, and the city of Denver does not allow more than a total of twelve plants in any one home. You might say that three separate authorities—the physician, the state, and the city—all conflicted with each other.
In the past, the discovery of such a home grow would have brought out the feds in riot gear. The young men would have been arrested, indicted, found guilty, and done hard time. You will recall that when I was first interviewing growers in 2009, I met a young man who had just been released from prison after eight years. That young fellow’s life was ruined because he had dared to grow this plant.
What was the result of the bust my friend told me about? The cops confiscated (and destroyed) all but twelve plants, issued the men a ticket for a smell violation—yes, there is such a thing—amounting to a few hundred dollars, and bade them a fine day.
Another person I know had a fascinating experience. He was going through security at the Denver airport. After his carry-on had gone through the X-ray screener, the security officer asked to open his Dopp kit, in which he kept all his toiletries.
“What do you have in here?” the airport screener asked.
My friend froze. Before he’d left home, he’d forgotten to remove certain items that he knew he was not allowed to travel with.
“I’m sorry,” he told the officer. “I have some marijuana and a big tube of toothpaste in there.”
What was the response? The security officer confiscated the toothpaste—it was over the TSA’s three-ounce size limit—and sent him on his way.
I am not kidding.
What a difference a decade makes. What a more reasonable, humane response.
If you’re a hard-ass, you might well say that the people in both these stories got off easy. They should have been arrested and thrown in jail. To which I respond: Really? In a world that’s mired with war, famine, poverty, disease—problems that are taxing the resources and intelligence of all nations—don’t we have more important things to do than busting people who want to get high?
I think it’s safe to say that the next decade will be filled with more surprises as we witness the rise of our new marijuana economy. None of us has a crystal ball, but here are some predictions going forward that I feel comfortable making.
Consolidation Is Inevitable
As I write this, it’s estimated that there are about five hundred dispensaries in the state of Colorado. In five years’ time, there will be fewer than three hundred dispensaries, operated by fewer, larger, and more capable marijuana companies. It’s only logical that stronger firms will buy out the locations of smaller firms, assume their licenses, and rebrand those locations. This pattern will occur throughout the United States wherever marijuana becomes medically and/or recreationally legal.
Starting new retail locations from the ground up is time-consuming, and smart entrepreneurs will want to cut to the chase. Why go through the laborious process of applying for a license from the state, searching for retail space, building out that location, hiring new employees when you can simply buy out your smaller competitors?
The great investor Warren Buffett defines capitalism as “the ability to deploy capital.” To my mind, this means acting in the most efficient manner possible to get a good return. Buying out the competition looks like an expensive way to go, but if you spend $100 million on a few dozen dispensaries, rebrand them, resulting in a more visible chain now worth more than $300 million, you have gained more by taking the more expensive route.
You’ll also sidestep the headaches that come from starting a new location from scratch. In one case, while trying to enter the market in the ski town of Frisco, Colorado, I lost precious months trying to establish a new retail location, only to have the city council call a meeting specifically to rezone in order to eliminate marijuana dispensaries. We spent months and lots of money on that deal before the city council changed the ordinance. If you buy an existing operation, precedent is on your side.
Licensing Will Become Tougher and More Expensive, Favoring Early Players
The current cannabis industry is like Little House on the Prairie—small log homes and farms with a dusty Main Street dotted with shops and churches. The future of cannabis will ultimately look like a massive twenty-first-century megalopolis.
Corporatization of the marijuana industry has already begun.
When I got into the business in 2009, I was just coming off a financially devastating corporate bankruptcy and had little capital to invest. Luckily, all I had to do was send in my paperwork to the state, declaring that I was a caregiver, and then start shopping around for warehouse space with a friendly landlord. Back then the cost of starting a new grow or dispensary was in the neighborhood of $10,000 to $1 million, depending on what you were willing to risk. Today, if you want to start a dispensary in Aurora, a pleasant suburb of Denver, you must demonstrate access to more than $400,000 in liquid assets just to apply for a license to sell or grow.
Expect a similar pattern to occur throughout the United States. Cities and states will welcome marijuana companies, but they’ll do it on their terms. They’ll want the revenue, but they’ll have little patience for small-time operators. Their preference will be for firms that are well heeled, organized, responsible—firms that will be able to start earning and remitting taxes as quickly as possible.
I’m dismayed to say that many states are currently awarding medical marijuana licenses only to associates of those in power. If these entrepreneurs aren’t smart about their hiring and cultivation practices, they stand to lose big when their states move to recreational use and national brands become dominant. Serious marijuana connoisseurs will always gravitate to quality. Those who rush into the business thinking it’s a guarantee for a quick buck will lose their shirts.
Brand Extension through the States Will Follow Consolidation
Why is it that you can walk into a liquor store and buy one bottle of fermented grape juice for $15 and another bottle for $200? Both of those bottles contain the same intrinsic product, don’t they? Well, they do and they don’t. Understanding the difference is the key to understanding how the marijuana industry will evolve.
When our grow facility was robbed and we lost some of our product, I was forced to buy some buds wholesale from other growers in order to meet my dispensary demands. Guess what? Our customers not only knew that something had changed about our product—they complained about it! We had been in business only a few years at the time, but our customers had already become loyal to the taste and quality of our product.
Right now marijuana is a commodity, like cotton, pork bellies, and oil. In general, most buyers don’t really know or care who’s growing, packaging, or selling the buds on the market. But that will inevitably change—and quickly.
All this consolidation has an end goal: establishing brand recognition. The firms that establish a consumer affinity—the magic combination of quality product, locations, packaging, pricing, and service—will own the largest slice of the pie.
Some of these brands will extend across state lines. Imagine you are flying from Pennsylvania to Las Vegas. You spot a package of Green Man SkunkBerry for sale in a Vegas dispensary. You remember enjoying the quality of that product and strain during a ski trip you took to Colorado last winter. Because of brand loyalty, you spring for that package over all other strains available. Nearly everything we buy in our lives is brand centered. Marijuana will follow. The brands that come out on top will reach the largest audience.
How that will happen is still up in the air. Currently legal marijuana cannot leave the state in which it is grown. But there are lots of different ways to grow a business. Starbucks is vertically integrated; the parent company roasts the beans and sells them out of stores that it owns and operates. McDonald’s franchises. Budweiser sells its product to distributors who sell to stores. Ultimately, the market will decide which model makes the most sense.
Recreational Marijuana Will Expand Dramatically by 2020
As I write this, medical marijuana is legal in twenty-five states and the District of Columbia. But not all bureaucracies governing those medical systems are created equal. Some work well, others don’t. Moving to recreational would simplify matters enormously. By 2020, we could see ten to fifteen states making the leap to recreational marijuana. There will always be opposition, but reasonable voters and legislators only need to see evidence that it can be done prudently. States like Colorado and Washington are amassing convincing data every day on the positive impact of legalization on a state’s economy and welfare. This data will persuade other states to legalize recreational marijuana.
Marijuana Dosing Will Become Standardized
The marijuana we grow today is nearly eight times more potent than what was smoked at Woodstock. When most people first smoke our marijuana, they take one to two hits, tops. Smoking an entire joint would be like drinking a half case of beer. The evolution of marijuana sales will not be toward stronger marijuana but to consistently dosed servings. Consumers will want to know that they can smoke one joint and not be a complete wreck, just as consumers know that 1 ounce of spirits, 5 ounces of wine, and 12 ounces of beer all have approximately the same intoxicating effect. Similar standards will be created for marijuana dosing. Those guidelines should be created and adhered to by the industry. We should not wait to be forced to do this by a government agency. We know we need this and should proactively make it happen.
Marijuana Must Become Legal on the Federal Level—and Will
The New York Times and other major newspapers have already called for legalization of marijuana, citing scientific evidence that the risks are negligible when compared to tobacco and alcohol. At the moment, marijuana legalization isn’t a priority for federal lawmakers. Both Congress and the White House appear to be quietly watching which way voters swing on the issue and how state legalization efforts impact voter resistance. Everyone’s against it, until they’re not. We just need to wait for the tipping point. Ultimately, the lure of tax money, the demands of sick patients, and the evidence that recreational rollouts have gone all too well will prove too overwhelming to ignore. That’s when DC will take comprehensive action to address federal marijuana laws. That’s when lawmakers will change regulations at the numerous federal agencies that have written the failed drug war rhetoric into their charters.
Banking and Tax Laws Must Change—and Will
The banking and tax issues need to be resolved immediately. But sadly, as long as the cannabis industry consists primarily of small firms, we can expect to be ignored by Congress. When enough billion-dollar, private equity firms or large corporations are investing in marijuana, Congress will be unable to ignore the industry any longer. But we can’t wait for that time.
Like it or not, Congress must act soon on banking. It should allow banks to offer account services to qualified firms, provided the banks vet those cannabis companies on a case-by-case basis and insist upon transparency in all their business dealings. And Congress should clarify the tax relationship of these corporations with the federal government. Being able to remit our taxes electronically to the federal government is fine; being required to remit our taxes electronically and not having access to the bank account needed to do so is not.
For Better or Worse, Corporate Penetration into the Marijuana Market Is Inevitable
We already know Big Tobacco, Big Agra, and Big Pharma are watching the cannabis industry closely. They know it’s going to be profitable, and they want in. Each has its own agenda—and corporate exploitation of the plant will not always be pretty.
The charm of the industry as it currently exists is that a customer can walk into a dispensary, buy something to smoke, and know the provenance of that product. Chances are, that product will have been locally produced and nurtured in the most natural way possible, with minimal pesticide use. That is likely to change if large tobacco companies start producing marijuana.
Big Agra will want to enter this field in much the same way that it has infiltrated key crops—corn, soy, potatoes, and the like—in the United States. Expect to see a Big Ag corporation patent the genetic sequence of several marijuana strains. If legal marijuana in the United States ever makes the leap to being grown outdoors on a large scale, which is conceivable, we can expect agriculture technology firms to develop bacteria- and pest-resistant strains. The thought of genetically modified marijuana may seem laughable to longtime marijuana users, but that day is probably coming.
Big Pharma firms are already arguing that the plant is too powerful to be left in the hands of civilians at medical marijuana dispensaries. They want to be able to lock down marijuana so they can generate lab-grown substitutes. Sadly, they may win over a new generation of physicians with expensive new medications, by promising better control over dosing and titration.
Yet part of marijuana’s simple beautiful dance with humankind is that nothing more is required. The plant, humans, and fire—that is all. Just because we can control some aspect of the plant better doesn’t mean we should. Big Pharma makes drugs; God created marijuana. Whom do you trust?
Drug Lords Will Move On
This is a huge guess on my part. It’s hard to imagine a world where marijuana is no longer demonized and no longer the best-selling street drug. But it’s coming. We just don’t know what form it will take. Most people assume that drug lords won’t bother smuggling marijuana into the United States because the current street market as we know it will evaporate. Consumers will chase the quality, convenience, and safety of brand strains. The theory is that drug dealers and cartels will move aggressively into harder drugs, such as cocaine, heroin, and meth. But what if they try to get creative by going legit? We have already seen cases, in medical marijuana states, where drug lords have funneled money to legal marijuana operations for warehouse grow construction. In the case I’m thinking of, law enforcement uncovered the scheme, and the attorney and entrepreneurs who accepted the tainted money faced criminal charges.
Marijuana Will Be a Growth Industry
I’m constantly amazed by the number of people who ask me how their profession can help us grow our business. A man whose company manufactures cardboard boxes recently approached me, asking what kind of paperboard packaging we use on our materials. “None,” I told him. “We’re still using plastic bags.” An executive of a large commercial bakery scheduled a meeting to talk about how their firm should plan for the future of marijuana-laced baked goods. Both of these calls led to productive conversations.
These entrepreneurs are not alone. I meet yoga instructors, physical therapists, and home care nurses who want to talk about how marijuana can be incorporated into their programs to help their clients manage pain, stress, or painful medical conditions. I get resumes from business school graduates, personal assistants, and human resources people who want to know how they can enter this field as well. But that’s just the start. The new marijuana economy will need the help of marketers, real estate agents, inventors, attorneys, and accountants. We will see physicians and alternative medicine professionals who will specialize in cannabis-centered care.
Marijuana-based tourism is already flourishing among Colorado’s bed and breakfasts, spas, and bus tour companies. Is it so unlikely that wedding planners or caterers will start planning events where marijuana is as freely available to adults as alcohol? Why couldn’t gift card and coupon-book companies bring cannabis companies to the attention of wider audiences? Is it outside the range of possibility that universities and technical schools will start offering cannabis horticulture classes?
The marijuana subculture has long embraced the arts. When marijuana is out of the closet, we can expect marijuana-friendly musicians, writers, artists, and performers to be more warmly embraced by the mainstream. Several musicians have already contacted me about doing concerts when our Cannabis Ranch amphitheater opens.
Expect to See a Second-Wave “Micromovement” within the Larger Cannabis Industry
Every year, more small craft breweries go into business and find success, even though the market is seemingly saturated with major beverage companies, such as Budweiser and Coors, and medium-level breweries, such as New Belgium and Sierra Nevada. Local municipalities, eager to boost tax revenues and tourism, allow small entrepreneurs to operate micro- and even nanobreweries.
Once the major players become dominant nationally, the same will happen with cannabis. Small craft growers will focus on some unique feature that they alone can provide—exotic strains, perhaps, or ultra-organic cultivation. We may even see the birth of a local marijuana café culture like the one so prevalent in Amsterdam.
Expect to See the Rebirth of Industrial Hemp
Industrial hemp, a low-THC cannabis crop, is likely to return as states legalize marijuana. Just as Thomas Jefferson and George Washington were saying two centuries ago, hemp has a wonderful array of uses, from food, to fuel, to fibers. In Europe, I learned that several car manufacturers use hemp-based plastics in the molded door finishes in high-end automobiles because those cars are required by law to be 100 percent recyclable. Ben Dronkers, the owner of Sensi Seeds and my host while in Amsterdam, has been a passionate force in the hemp world for decades. If you buy a high-end BMW or Mercedes in Europe, the door panels are made with his hemp.
As I write this, nearly a thousand acres in Colorado are devoted to hemp production to extract the analgesic cannabidiol (CBD). Other U.S. states are moving forward with legalizing hemp. I expect this area of hemp production to grow first for two reasons: (1) Hemp is naturally low in THC and may encounter less federal resistance when it comes time to ship this product across state lines; (2) CBD is a valuable medical commodity. At this writing, it remains to be seen how the U.S. federal government will react to out-of-state shipments of CBD oil.
Commercial adoption of hemp for textiles, fuels, food, and the like will take longer because the United States is technologically behind other industrialized nations, such as Canada, China, Russia, India, and many in Europe. Sadly, because marijuana has been under attack in the United States since the middle of the nineteenth century, it never really experienced the effects of the Industrial Revolution here. The large-scale machines used to process cotton and other fibers don’t work well with hemp. If this country wants to embrace hemp again, it will need to innovate, invent, and build its hemp-processing infrastructure. This is an area of low-hanging opportunity waiting for smart inventors and venture capitalists.
Public Perception of Marijuana and Its Users Will Evolve in Key Areas
I don’t think it’s far off the mark to say that marijuana users today are still regarded as unambitious stoners. Even within the industry, we still use terms like “stoners” and “potheads” to talk about ourselves. When marijuana use is as normal as asking for a glass of wine or stepping out for a cigarette, that perception will change and morph into something more accommodating. Specifically, I see three areas that will generate challenges and change:
Case Law, Due Process, and Workplace Safety Standards
I’ve already discussed how law enforcement and the judicial system are evolving to the new realities of legal marijuana. As a nation, we will need to hammer out a driving-under-the-influence standard, for example. But on the civil level, I have to wonder what will happen to employment practices when marijuana is no longer considered illegal. I think we can all agree that we don’t want a forklift operator to use marijuana on the job. But what about an employee who works from home three days a week and smokes in the privacy of her home because of the debilitating effects of rheumatoid arthritis? I know of one case where an employee with a medical marijuana recommendation from his doctor was fired after he tested positive for THC in a random drug test. The firing was upheld in his suit against his former employers. This is a serious gray area that must be addressed and resolved in the courts.
Substance Abuse Education for Children
As a society, we need to get clear on the new messages we’re delivering to our kids about marijuana use. I see no reason why we can’t talk about marijuana the way we talk about tobacco and alcohol; all three are not appropriate for kids.
We’ll need to educate kids about the developmental risks to their growing bodies posed by those three substances. And we will want to break down for them the relative dangers of each, just as we have in the past. To my mind, it’s clear that marijuana poses the lowest risk, but it remains to be seen if parents, educators, and public health officials will take the same view. I know what I’d tell my daughters: Prescription drugs can kill you upon first use. Street drugs such as heroin or meth can addict you. Alcohol can foist upon you an hour of stupidity that you will regret for the rest of your life. Marijuana is the least of these dangers, but you need to be safe and you certainly don’t want to be driving under its influence.
Public Health Issues for All of Us
No health organization has ever established a fatal dosage level for marijuana. While I concur that it is virtually impossible to kill yourself with marijuana, and while we can be proud that we’re selling a product that is safer than, say, alcohol, only a fool would argue that it is completely safe.
Only an open enlightened public debate supported by rigorous scientific research will help us determine the scope of marijuana’s risks—and benefits. Unfortunately, because marijuana is currently a federally illegal substance, research on its uses and impact is sorely lacking in the United States. I expect that universities in states in which marijuana is legal for medical use will mount fresh studies. Yes, I know that we can point to numerous worldwide studies, but science tends to operate by local (i.e., national) consensus. The more American universities and researchers work with marijuana, the more likely they are to be comfortable with the overall findings.
Does that mean that companies like mine should not be allowed to sell marijuana? I think we should. From tobacco to Ferraris to doughnuts, U.S. culture permits the sale of countless products that are not completely safe. Only moderation and prudence can help navigate the trade-offs. Personally, I believe the long-standing historic research, which has found that marijuana is relatively harmless compared to tobacco, alcohol, sugar, salt, and a host of other drugs or foods. But the industry is constantly developing new products that ought to be investigated properly. For example, there are questions about the risks of vape pens, smokeless devices that allow users to take a hit of THC or nicotine without inhaling the harmful by-products of combustion. But any cannabist who is reasonable and a critical thinker has to be interested in what new research into these devices will find. Will we be using them twenty years from now, or will new devices be invented that are even safer?
Good cannabis education for adults will also teach about the trade-offs inherent in using tinctures and edibles. At first glance, they appear to be the safest way to consume marijuana because you sidestep the issue of smoking altogether. But dosages will continue to be difficult to assess in edibles, and the levels of fats, sugars, and salt in edibles further complicate the issue. What good is it to pass up vape pens because you’re concerned about the risk of carcinogens, only to ingest a lot of fattening calories instead?
I predict edibles will become the chief locus of marijuana horror stories. The number of pothead foodies will grow. People will experiment with marijuana in their kitchens, and there will be mistakes. I can see it now: People will have near-hallucinogenic responses after eating commercially prepared or homemade edibles, and the media will blow the stories out of proportion. Antimarijuana activists use this as an excuse to say: See? We never should have made this drug legal! My response to that is: No—we need to teach people to read labels and follow the instructions of their budtenders. We don’t ban habanero peppers because enthusiastic home chefs get some in their eyes. This is another reason why it would be unwise to move marijuana outside the realm of dispensaries. Trained staffers can best guide customers.
Commercially prepared edibles probably should be manufactured in dedicated facilities. The issue of cross-contamination, already so important in the food allergy community, is equally important with marijuana. And most important, edibles need to be prepared and packaged in such a way that they are not inviting to or accessible by children.
From where I stand, the fact that we can even talk seriously about the new marijuana economy is evidence that the United States is becoming a better society.
For close to a hundred years, the United States put its sons and daughters through hell because they dared to play with a plant that made them feel good. The nation’s might, and its spite, was so great that it sucked other nations into that hellish vortex. The American war on drugs hasn’t just wreaked misery on Americans—it’s crushed and killed human beings all over this planet. Citizens of neighboring countries and far-off continents have died, and are still dying, to serve America’s illegal marijuana habit.
A habit that shouldn’t be illegal in the first place.
So when reactionary politicians and pundits say legal marijuana is just a charade, I have to shake my head. It’s so not. It’s about evolving into something better than we once were. It’s about moving away from the sins of the past. It’s about becoming the best “we” we can be.
Call me crazy, but I feel as if the entire United States is going through a process of enlightenment. That’s the theme I see emerging through the eyes of the cannabis industry. The legal marijuana story warms my heart because it reveals an America that is ready to right past wrongs and grow as a society.
I believe it’s finally happening.