The marijuana industry is expanding rapidly — and people are cashing in on the opportunity
These joint ventures are smoking the competition.
In a marijuana market that’s only just beginning to unfold, there’s plenty of opportunity for growth — and people from all different backgrounds are jumping at the chance to invest where the grass seems greener.
With nine states and Washington, D.C. legalizing recreational marijuana as of Jan. 1, this year marks the first time the substance will be legally available to some adults on 4/20. Amid changing legislation, IBISWorld reports that the Medical and Recreational Marijuana Stores industry rose 18.4% in 2017 to $8.1 billion, while growers increased 21.4% to $4.6 billion. In 2018, weed retailers are projected to grow 40.2% and growers will expand by 43.6%. And women account for a large percentage of that growth: They hold 36% of executive-level positions in the cannabis industry compared to the 22% average for U.S. companies overall, according to a 2015 Marijuana Business Daily report.
As of 2017, according to Statista, there were approximately 20,000 to 28,000 cannabis businesses in the United States, with more than 90 dispensaries licensed in the state of California alone.
While the social equity bill passed by the Los Angeles City Council says most of the people who receive licenses for retail marijuana dispensaries will have been disproportionately impacted by the war on drugs — meaning people of color and underserved communities are given priority to join the field — the multifaceted industry still allows for a variety of individuals to carve out their niche.
Hollywood veteran Whoopi Goldberg and edibles expert Maya Elisabeth launched Whoopi & Maya in 2016 with a signature line of herbal offerings formulated to provide relief for women experiencing menstrual cramps. Now, the duo’s products are available in more than 300 dispensaries, making it one of the fastest-growing brands in California.
In 2017, Lex Corwin, founder and CEO of Stone Road Farms, had the idea to create luxury pre-rolled joints of the highest quality, along with an unprecedented rewards app where users can bid on free yoga, surf lessons and concert tickets throughout California. “Stone Road’s emphasis on quality and truly creating the perfect joint every time sets it apart from the competition,” Corwin told Moneyish. “Each joint is hand-rolled in clean burning plant cellulose paper imported from France, and all the joints are saliva-free — we opt for a natural gum from the Acacia tree.”
With a background in real-estate development, Corwin indicates that the cannabis business is comparatively more diverse. “I market the brand to women. From our app we’re able to see that 78% of all scans are from women, so we choose to market to our most responsive market,” he said. “Thus, our rewards are geared towards our target market, and we’re actively sponsoring women-run and women-marketed events.”
With four full-time employees and five part-time employees not including manufacturing labor, Corwin’s L.A.-based business began with a $200,000 self-funded investment and 16-hour days, the latter of which he still says he’s working. His first profitable month was this January, just nine months after launching Stone Road.
Like many in the marijuana sphere, Corwin has had to change everything about his business since the sale and use of recreational weed became legalized. “From packaging to the way we do business, we’ve had to do multiple redesigns to meet child-resistance compliance. We also can no longer distribute our own product, so we rely on a third-party distributor to handle all sales and distribution,” said Corwin.
Nicholas Danias, one of the managing partners of the Los Angeles dispensary The Pottery, is another “ganjapreneur” reinventing the wheel. His ultra-modern space sheds a new light on the otherwise lowbrow stigma associated with most shops: “We wanted to make it a modern and clean retail space that wasn’t overly cluttered with product or cheap finishes,” said Danias. “It was designed to have a more elevated and welcoming environment, the kind of place you want to sit and stay a while.”
In addition to dispensing cannabis, the shop also sells a handful of carefully curated products like Malin+Goetz goods and candles. “We encourage different brands to host demo days to raise awareness and educate consumers on their products as they hit the market,” said Danias.
Finding a place to operate from wasn’t an easy task. “The Pottery is one of roughly 161 city- and state-permitted shops operating in Los Angeles. That means we have to comply with a multitude of sensitive use guidelines that rogue shops ignore,” Danias said. But the local community has been receptive to their newest neighbor, he added. “During our construction phase, we welcomed the community to come talk to us, ask questions and express any concerns,” Danias said. “We hosted open interviews to encourage and welcome community outreach and employment opportunities.”
Danias has also had to navigate the many regulations that surround advertising, branding and operating a dispensary: Customers must be 21 or older unless they have a medical patient script and California state ID, in which case persons under 18 are permitted to make a purchase. Consumption is not allowed on the premises; DJs and music (other than ambient) are prohibited.
Despite the laundry list of rules Danias is subject to, it seems he’s doing something right: In its first month of business in March 2018, he said, the shop has seen between 150 and 200 visitors per day. The biggest uphill battle that establishments like The Pottery face comes from cowboy shops operating without charging city and state tax to their patients — taking business away from those who are paying taxes and abiding by laws. “Hopefully by the third or fourth quarter, the city and state will enforce Measure M and implement the daily fines within that ordinance to those landlords and tenants operating those cowboy establishments,” Danias said.
As for what’s next on Danias’ docket, he has plans to collaborate with non-cannabis lifestyle brands like Chelsea Market’s Higher Standards retailer. “The Pottery will open a pop-up shop later this year to exhibit high-end home goods that appeal to both cannabis and non-cannabis users,” he said. “This is about elevating and refreshing the face of cannabis and educating people on the uses of it and informing communities of its benefits.”
This story was originally published on April 3, 2018.
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