Pubdate: Tue, 07 Oct 2014
Source: Houston Chronicle (TX)
Copyright: 2014 Houston Chronicle Publishing Company Division, Hearst Newspaper
Contact:  http://www.chron.com/
Details: http://www.mapinc.org/media/198
Author: Ronnie Crocker

INVESTORS LISTEN AS POTENTIAL MARIJUANA MOGULS LAY OUT PLANS

The young biochemists who trained at Rice University came to pitch 
their business plan for testing legally produced marijuana for a 
"cannabinoid signature" that consumers can use to decide which batch 
of a given strain is best for their medical conditions or the 
recreational high they desire.

A team from Florida and another from Colorado each made the case for 
new lighting systems designed to cut electricity expenses for indoor 
growers while helping boost their agricultural output.

Another hopeful entrepreneur outlined plans to convert trees killed 
by pine beetle infestation into a unique charcoal that would feed 
fertilizer to plants more efficiently and reduce runoff, while some 
big dreamers from Washington state promised tourists a "luxury 
cannabis experience" in a Victorian-era castle with a pot-friendly 
hotel and fancy restaurant.

These were among the 21 entrepreneurs in the legal marijuana trade 
who mustered in a west Houston hotel Monday for the state's first 
Marijuana Investment Conference. Their presentations reflected myriad 
facets of an industry starting to blossom across the country, where 
23 states have legalized the medical use of marijuana and two, 
Colorado and Washington, have OK'd recreational use as well.

The conference also showed that investors are starting to pay 
attention. Conference spokesman Mark Hayden said 45 investors, mostly 
representing institutions, came to hear out the would-be marijuana moguls.

Douglas Leighton, managing director of title sponsor Dutchess Capital 
of Massachusetts, told the assembly that while the legal marijuana 
trade is expected to more than triple in size, to $6 billion, by 
2018, it remains a fraction of the estimated $50 billion black market.

As more states contemplate legalization - measures are under 
consideration in four states next month - the smart money might be on 
marijuana, Leighton said. His 18-year-old firm has already invested 
in 11 cannabis-related businesses.

He said he expects U.S. consumers to spend $1.7 billion on legal pot 
over the next 18 months and that number could grow by up to $300 
million more if just one of those four states approves legalization.

"The demand exists already," Leighton said. "It's just being filled illegally."

Houstonian Alan Brochstein, who founded 420 Investor two years ago to 
"capitalize on cannabis" and launched 420 Funder earlier this year, 
urged investors to also consider such societal side-benefits as 
reducing jail populations. "We're all here about money," Brochstein 
said. "But there is a bigger story."

The entrepreneurs who paid around $1,000 apiece to make a public 
pitch and schmooze one-on-one offered a range of products and 
services, including a social network for pot users, home-delivery 
systems that operate with an Uber-like model and a "compassionate 
cultivation center" for breast cancer patients in Los Angeles County, Calif.

There was also a flavored liquid product that bottlers can use to 
make and sell a cannabis-infused drink.

Coca-Cola of cannabis?

"We're the Coca-Cola of cannabis," said Tony Alfiere, founder of 
Boulder, Colo.-based Ripley's Formula.

Tim Clark, a suited businessman from Florida-based Modulux Lighting, 
said his company's LED systems will boost yields while cutting 
electricity costs. "We're all here for return on investment," Clark said.

Joseph DiMasi, head of another lighting company, Colorado-based 
Bright Space, said electricity costs for lighting and heat removal 
during indoor growing can make up a third of the final wholesale cost 
of a product. His company uses fiber-optic cables to bring natural 
sunlight into grow houses.

Other presenters include Houston businesswoman Amanda Gross, who 
showed off a small-scale model of a "growing tent" for her planned 
cultivation center in Los Angeles, and the Rice-educated scientists 
who have formed a company to determine the chemical profile of 
commercially available cannabis. Their proposed laboratory would test 
legally produced marijuana for not just THC but also a variety of 
other chemicals that produce anti-inflammatory, analgesic, 
neuroprotective or recreational effects.

Erol Bakkalbasi, CEO of Cannametrix, said he and his partners will 
move to Colorado if they get enough funding to launch. But, noting 
that life can be unpredictable, Bakkalbasi said the trio is also 
considering a biotech company that could have applications in gene 
therapy and other medical processes.

If they do move, he said, it would be only because their work would 
be illegal here.

Love of Texas

"We all really love Texas," Bakkalbasi said. "It has a great 
entrepreneurial spirit, especially Houston."

Hayden said it's too early to say whether there will be another the 
conference ahead. He said the entrepreneurs reported they were happy 
with the feedback and networking but they also wished there had been 
more investors to hear their plans.

Hayden acknowledged that pot be a tough sell when it remains illegal 
in more than half of the states, but he is confident that interest 
will grow as more people learn about the medical and other benefits of the drug.
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MAP posted-by: Jay Bergstrom