Pubdate: Fri, 27 Nov 2015
Source: Los Angeles Times (CA)
Copyright: 2015 Los Angeles Times
Contact: http://www.latimes.com/
Details: http://www.mapinc.org/media/248
Author: Robin Abcarian
CASHING IN ON POT GOLD RUSH
Entrepreneurs Gather in San Francisco to Show Off Their Marijuana
Products and Make Sales.
SAN FRANCISCO - Robert Gaither is a 39-yearold former salesman, a
teddy bear of a guy with a full brown beard that makes him look a
little like a mountain man. He does in fact live in the mountains -
Lake Arrowhead, to be exact - but right now he is standing in an
exhibit space at a downtown San Francisco hotel, showing off his
wares at a conference exploring the intersection of cannabis, tech,
media and finance.
Gaither is selling an expensive cannabis extraction system created by
his wife, Brenna, a biochemist.
They decided at the last minute to attend this gathering, the New
West Summit, last Friday and Saturday. And they are glad they came.
Over the course of the two days, their booth will generate more than
$250,000 in orders.
I wondered why he wasn't jumping up and down with excitement. "I'm
just tired," he said. "We are so busy. And we have a 9-month-old."
Here at the New West Summit, everyone seemed busy. Hedge fund
managers and venture capitalists mingled with medical cannabis
dispensary owners, app developers and all manner of cannabis
entrepreneur. Publicists and certified public accountants worked the
rooms, looking for new business. The whiff of money was almost as
strong as the whiff of cannabis, both of which intensified as the
conference unfolded.
The amounts of money are staggering. Troy Dayton of ArcView Group,
which has invested $57 million to date in cannabis businesses,
expects industry revenue to leap to perhaps $11 billion by 2019, up
from $2.7 billion in 2014.
"It's an underground industry that is finally becoming investable,"
said Morgan Paxhia, who, with his sister, Emily, runs Poseidon Asset
Management, a firm that invests in cannabis-related businesses.
During a "Shark Tank" like session, I heard pitches for Evoke, a new
kind of vape induction technology invented by a Cambridge physicist;
Healthy Headie Lifestyle, a vaporizer and accessories business
modeled after Mary Kay ("We bring the store to your door); and Ebbu,
a distilled cannabis liquid to be used as a food and drink additive.
Ebbu's 39-year-old founder, Dooma Weltschuh, who wrote the popular
video game "Assassin's Creed," has raised $9 million. "We are making
the world's first cannabis distillery," Weltschuh said. "We are
creating a whole new product category that is no more deserving of
being called 'marijuana' than vodka deserves being called potato juice."
He told me he had just returned from Albania, where he met with the
country's president to discuss basing a distillery there. Weltschuh
was among many people who corrected me when I used the phrase
"recreational marijuana." "We don't say 'recreational,' " he said.
"We say 'adult.' "
The range of cannabis products was impressive. Jane's Brews are
infused coffees. Sensi Chews are cannabis-infused caramels, created
by a woman who wanted to help a cancerstricken family member. Care by
Design makes coconut oil and cannabis sprays to be spritzed under the
tongue. Everywhere, some optimistic entrepreneur was saying he or she
wants to be the "Uber" of pot, the "Starbucks" of pot, the "Nespresso" of pot.
Gaither, for his part, operates in the "picks and shovels" arena.
("When everyone is looking for gold," Mark Twain supposedly said of
the Gold Rush, "it's a good time to be in the picks and shovels business.")
As we spoke, his left hand rested on a glass contraption with tubes
and coils that looked as if it came straight out of Dr.
Frankenstein's lab. It was a cold-extraction machine that turns
marijuana buds into essential oils that can then be smoked, vaporized
or added to food.
Because it produces such a high-quality product, growers are
clamoring for the equipment, which can cost as much as $50,000, a
price tag that includes installation and two days of training.
Gaither's company, Genius Extraction Technologies, launched April 20,
2014 (yep, 4/20). Last year, the company had half a million dollars
in sales. This year, the Gaithers expect to bring in $3 million. They
foresee doubling their revenue every year, except they are having
trouble finding and keeping qualified salespeople willing to work
under unusual conditions.
For instance, transactions are generally in cash. Folks who sell
marijuana for a living can't use banks, which are federally
regulated, because cannabis is illegal under federal law. The IRS
does not allow cannabis purveyors to deduct business expenses, since
marijuana, preposterously, continues to be classified as a controlled
substance, in the same category as heroin and LSD. That will probably
change only when Congress stiffens its spine and changes banking laws.
During one panel discussion here, Bernie Sanders' pollster, Ben
Tulchin, predicted that if California can get one cannabis initiative
on the ballot in 2016 (rather than multiple competing initiatives),
it will probably pass with 55% of the vote. "The key," Tulchin said,
"is voters in the middle. They don't smoke, they don't use, they're
worried about kids getting access. They want to treat it like
tobacco, with restrictions on how it's used and where it's used."
This year, California finally enacted a regulatory framework for its
nearly 20-year-old medical marijuana industry. The laws govern
licensing, testing and distribution, and are also expected to provide
a basis for the coming era of legalization.
There is no question that era is on the way. I have seen the future,
and it is pot.
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MAP posted-by: Jay Bergstrom