In a chandeliered banquet hall not far from the U.S. Capitol on Saturday, a man with a Duke MBA and a Wall Street background offered the same sort of tips often given to aspiring entrepreneurs in places like this one: develop a clear business plan; raise enough capital to weather setbacks; find a niche and own it.
Listening were 150 or so people packed into rows of cushioned red-and-gold chairs at the District’s first “Cannabis Academy,” an event perfectly timed to capitalize on the rush from the city’s newly legalized marijuana-growing marketplace. But the stereotypical images of stoner culture — leaf-adorned Bob Marley flags and smoky photos of piled-high pot — were, by design, nowhere in sight at the Holiday Inn. The crowd-members, more gray-haired than long-haired, sipped coffee and thumbed through 100-plus page workbooks with categories such as “Legal” and “Accounting & Merchant Services.”
Less Cheech and Chong, more Berkshire Hathaway.
And for good reason. Attendees had paid up to $299 each for instruction on how to get rich, not high, in an industry that a recent report said could generate $35 billion a year by 2020 if the wave of marijuana legalization continues.
So, on the first weekend since pot became lawful in D.C., the city is hosting ComfyTree’s two-day training session and job expo to prepare the nation’s capital for the “Green Rush,” a term used for the deluge of financial opportunity expected to follow pot legalization. How green that rush will actually run in the District, of course, remains unclear given that the city still prohibits pot from being bought or sold.
This convention, though, isn’t just a how-to. The academy’s polish and professionalism attempts to persuade skeptics that the marijuana industry belongs not inside hazy basements or beneath darkened bleachers, but instead in the commercial mainstream, alongside wine, liquor and beer.
The academy was created by a University of Illinois Ph.D student and a finance manager at a Fortune 500 company. It was organized by a public relations veteran who has planned D.C. conferences for heads of state. Its expo was attended by the subsidiary of a Washington state firm that invests exclusively in cannabis companies and expects to amass $75 million in its latest round of fundraising.
“The industry is changing,” said Micah Tapman, one of Saturday’s presenters. “This isn’t about showing up in a tie-dye T-shirt and long hair to pitch to an investor.”
Tapman, a retired Marine with an MBA from George Washington University, is a partner at Canopy Boulder, a company in Colorado that has raised $1.2 million to invest in and accelerate the growth of “cannabusinesses,” as they’re often called.
The bustling expo, expected to draw about 1,000 people over the two days, had a broad range of commercial enterprises: everything from security systems to insurance, from clothing brands to energy drinks.
The academy and its sponsors represent, in a sense, a classic attempt to re-brand a product still haunted by the ghosts of “Reefer Madness”. But it won’t be easy. Throughout the afternoon, the expo’s main room smelled of its star product, and some people wandered around visibly stoned.
Still, the industry’s leading entrepreneurs have developed Web sites as refined as those of big-money private equity firms, and they talk more about policy, regulation and taxes than they do about strains, effects and highs.
Even terminology is carefully managed, with pot, weed and dope avoided in favor of a more clinical moniker: cannabis.
Behind a table at the expo’s center stood a guy in a dark beard, black-rimmed glasses and a baseball cap adorned with the image of a man smoking a blunt while flying a bicycle. It is intended to evoke the iconic scene from “E.T. the Extra-Terrestrial” — because Rico Valderrama’s clothing brand, “Phone Homie,” is also a play on the film’s famous line, “phone home.”
As two men sifted through a stack of his stickers, a woman nearby overheard Valderrama, 38, discussing trademark issues. She handed him a white business card.
“Mindy B. Pava,” it read. “Kelley Drye & Warren LLP.” Pava is an associate attorney at the law firm, which has offices from D.C. to Los Angeles.
“This is a big up-and-coming industry,” she told him. “We’re interested in seeing if there’s any legal needs for these companies.”
Her firm, she said later, expects the burgeoning market to create a multitude of new revenue streams for law practices. New companies will need help understanding zoning laws, tenant rights, labeling guidelines and corporate real estate.
Her pitch spoke to a big question that lingered throughout Saturday’s event: How do District entrepreneurs legally profit off of pot if they can’t legally buy or sell it?
Some have suggested “pot clubs” in which people pay for a membership to participate in some other activity (knitting, for example) and are “gifted” pot. And though D.C. Mayor Muriel E. Bowser submitted emergency legislation this week to prevent that exact activity, cannabis entrepreneurs doubt such enterprises can be prohibited.
But the law does allow residents to home-grow up to six marijuana plants, three of which can be mature at once.
Daniel Funk, 37, works in construction and anticipates many D.C. residents will want to grow their own — though perhaps fewer will want to undertake the involved process of installing the necessary equipment.
That, Funk hopes, is where he’ll come in. “I’m just trying to get a foothold,” he said, gripping a stack of business cards.
Meanwhile, in the expo room’s farthest corner, a crowd had gathered around an object that looked like an extra-large white vase capped with an inverted saucer.
“ROOT” is, in simple terms, an automated growing device — which looks more like a sculpture — and can hold up to four plants, depending on their size. It’s priced at $299 and is scheduled to ship to consumers by year’s end, according to its creators, each of whom boasts a degree from the University of Pennsylvania — one in mechanical engineering, the other in architecture.
For aspiring entrepreneurs, the industry’s murky future is a double-edged sword. While ever-evolving and unpredictable legislation increases their risk, it also allows them to exist. If the market was suddenly stable, it could attract massive institutional investors so powerful that smaller players couldn’t compete.
The legal cannabis market grew from $1.5 billion in 2013 to $2.7 billion in 2014, according to research by the ArcView Group. That’s a significant leap, but probably still not enough of one for a private equity fund to invest, say, $500 million. Instead, the growth has prompted an invasion of fortune-seeking MBAs.
Still, despite the new presence of ties and wingtips, the industry may never fully shake its bleary-eyed, not-so-adult, giggles- and munchies-inducing image in American culture.
The District’s top strain of pot, for example, is called “Trainwreck,” according to user ratings on Leafly (essentially the Yelp of marijuana). Other national favorites include “Green Crack,” “Girl Scout Cookies” and “AK-47.” Compare those to some of the country’s most popular wine brands: Beringer, La Crema and Clos Du Bois.
The industry’s quirks were on subtle display throughout Saturday’s event.
Two bearded attendees melted into a pair of lounge chairs and, between long stretches of gazing at the ceiling, discussed how much they wished a rave would break out on the table in front of them. Nearby, a woman with a hair clip that resembled marijuana leaves stood behind a table covered with children’s books starring “Stinky Steve,” a green-striped cartoon skunk who explains pot to kids.
This “Cannabuddy,” as the skunk’s Web site describes him, transports curious children to his “magical forest” and “gazing pond” where, apparently, he answers their questions.
And then there was Valderrama, the entrepreneur who took the lawyer’s business card. His film-themed clothing brand, he explained, is inspired by the way friends used to describe his blunts: As big as E.T.’s finger.
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