Big Weed (12 page)

Two scenarios, two years apart.

In 2009, I was the subject of angry, unwarranted scrutiny for selling clones in a supermarket parking lot. In 2013, I was just another businessman.

In 2013, the cops were there to protect me and my personal property. The lessons they had learned about marijuana over their careers had changed enough to accept the reality that there were legal dealers of this product in their midst. I was stunned. We weren't the bad guys anymore.

Legal marijuana was just another thing that crooks boosted—like TVs or jewelry or cartons of cigarettes.

The world I knew was changing.

That did not mean that I was always on board with how the cops around me perceived that new world.

On another occasion, after someone had broken into a storage shed behind one of our grows, an officer took me aside and offered me some friendly advice.

“There are a lot of really bad people out there. I see them every day. And those bad people know where you are and who you are,” he said. “They won't think twice about shooting and killing you to rob you. You have to protect yourself.”

He was gently advising me to get a handgun. Whether he knew that was a violation of my medical marijuana license or not is irrelevant. In his worldview, guns in the hands of the right people could help save someone's life.

“If one of these criminals comes after you and you shoot him, I'm not going to care too much,” he continued. “But if he shoots you, I'm going to be disappointed in you. I'm going to be pissed. You get me?”

Over the years, I'd gotten to know Matt Cook, who is a good friend of our chief operating officer, Barb Visher. Cook was Colorado's first top cop of marijuana. Initially, he believed with a vengeance that legalization was a scam—a way for stoners to get their high on and beat the rap doing it. Over the course of two years, he helped the state set up its enforcement division. He and his colleagues were charged with tracking down instances where legal marijuana product was diverted into the illegal market. They were the ones who checked the manifests, tracking the flow of goods and revenue as it made its way through Colorado's nascent cannabis system.

They got off to a rocky start. At first, they were way behind the rest of us. Everyone who had a dream had opened a dispensary or started a grow while the cops were still trying to hire and train their officers.

But eventually, their growing pains came to an end.

The cops are not our friends but our regulators. Our relationship is a professional one. But those of us who run clean businesses have earned the respect of these officers.

I knew that the tide had turned when I heard that Matt Cook had left the service and had embarked on a highly remunerative business in his retirement.

He was now one of the best-paid national consultants in the legal marijuana business. He traveled around the United States, helping other states set up their legal marijuana enforcement divisions.

Once he hated the thought of legal weed. Now he sees it differently. In the right hands, legal marijuana can be smart business.

7

Seed to Sale to Bust

And just as things were going great, we were about to go broke again.

Suddenly, every time I went to deliver buds to the dispensaries I had begun to supply, a couple of the owners couldn't pay.

“Where's the money?”

They'd hem and haw and shrug their shoulders. “Sorry,” they'd say, “we spent it all on something else.”

Now, granted, nearly everyone who leaped into the cannabis industry early did so without adequate start-up money. The near-constant stream of expenses, taxes, and new regulations put a serious burden on a lot of businesses. But this sudden surge in nonpayments felt different.

Apparently, it wasn't bad enough that I was struggling with banks and city bureaucrats, or that everyone I dealt with thought I was single-handedly bringing down modern American culture. Now I was forced to play the role of the heavy in some gangster film:
Where's my fucking money?

No doubt about it. It was a horrible, tense time, and it was only going to get worse.

What had happened?

Sometimes all it takes to change the ecosystem surrounding an industry is a simple change in the law. In this case, the state of Colorado had decided that all marijuana businesses should be “vertically integrated.” That means that if you grew the marijuana, you had to be the one who sold it as well. If you ran a dispensary, you had to sell product you had grown yourself.

On paper, it sounded like a great way to close the loop and decrease the chance that a pound or two of product would go missing and end up in the illegal drug market. What could be simpler? The state regulators would track the buds from
seed to sale.

The new law was like telling Exxon that it could no longer sell gasoline to the mom-and-pop distributor around the corner. And telling every mom-and-pop gas station that it had to set up its own oil platforms in the North Sea.

Like many growers, we were not in the position to be able to open a dispensary on the fly. We were so focused on growing, on keeping our warehouse greenhouses running smoothly, that we had not the time, the money, or the inclination to get into retail.

But the law said we had to.

Luckily, a solution presented itself. All around the state, growers like us were solving the problem by forming business partnerships with existing retail operations. What could be simpler? You'd draw up a contract and marry the very same people—dispensary owners—who had been buying from you all along.

It made a certain kind of sense. We already knew each other, right? They bought my product. They paid their bills on time. Why shouldn't we just get hitched, and live happily ever after, brothers and sister in bud?

I picked four dispensaries that were my best customers and we drew up papers to become partners. Two of my four partnerships blossomed beautifully. I grew the product, brought it to them on a regular basis, and collected my fee, and they sold it to a rapidly
growing clientele. The other two partnerships turned into a nightmare. They kept missing payments to our firm. We filed suit, became embroiled in a legal tussle, and ultimately settled for pennies on the dollar. The process dragged on for several months, a time I'll remember not-so-fondly as the third time we almost lost the business.

I had plenty of time to think about what this fresh disaster had taught me. The most immediate lesson was never go in business with someone you can't trust. The marriage analogy was a strangely apt one: If you can't see eye to eye with someone, if you aren't soul mates of a sort, your balance sheets probably shouldn't be legally joined.

When Mr. Pink and I talked, we were almost always on the same page. If we weren't when we started talking, we were when we finished. We sometimes bickered, we sometimes saw things differently, but what we hoped to accomplish with the business was one and the same thing. In the business sense, we were made for each other.

The other thing I learned during this terrible period was something I always knew but probably needed to learn again and again, though not quite so expensively:

He who controls the source of the product controls the market.

Who earned the most supplying gasoline to the American public—the gas station owner around the corner or Exxon?

Who earned the biggest profits annually—the guy who owns your local liquor store or Budweiser?

Whose balance sheet would you rather have—the owner of your local bottling plant or Coca-Cola's?

Who makes more on that new car sale—the dealership or Ford Motor Company?

Ditto that shiny computer you just bought—your local indie computer dealer or Apple?

This holds true for most businesses. If you're manufacturing the product, you're first in line to make the serious money. Anyone else who comes after you earns a small percentage as a middleman.

I hate lawsuits. Who doesn't? But while I was waiting to get justice, I resolved to nail down what was working in my business. I had chosen a good partner in Mr. Pink. And two of my state-mandated marriages were actually working well.

Two things came out of it that changed the course of our business forever. Going forward, I had to stick to growing the product. It was the strongest part of the business, and the most profitable. But if I wanted to establish a brand that struck a chord with the public, I had to have a retail presence, too. So I worked out a deal to acquire the two dispensaries owned by the partners I got along with—not the ones owned by my legal antagonists. I rebranded those locations under the Green Man Cannabis name.

Through the mergers, I acquired new operating partners: Barb Visher, who would become our chief operating officer, and Audra Richmond, now our senior vice president of human resources. Green Man had become bigger—a team. No longer was it just Mr. Pink and I and my vision. Now we had a group of people who woke up every morning with fire in their bellies to make Green Man win.

As part of our legal settlement, I came to retain the services of a grower, a quick-witted young man named Corey, who had a degree in legal cannabis cultivation. Solely through Corey's efforts, one of my antagonists had landed the most coveted award in our fledgling industry—the Cannabis Cup. The first time I met him, I liked Corey immediately. He came off as a thoughtful man with a good head on his shoulders. Not flighty or erratic. No personality issues. A guy I could get along with.

As it happened, I was in the market for a good grower. Brandon's hours had started to drop, and when I confronted him about it, he admitted his heart just wasn't in it. He liked growing marijuana; he just didn't want to grow someone
else's
marijuana. He wanted to start his own company, doing what I was doing. We parted ways amicably. Kim left my employ shortly after, and one of their assistants had already been running the show for a few weeks.

Our company now had two indoor grows and two retail locations. Thankfully, we now also had one of the best growers in the entire state of Colorado.

I had noticed that every time we brought on a new grower, our yields dropped while he or she brought us up to speed. This happened again under Corey, but he immediately instituted an important change to our system that radically reduced our workflow obligations.

Before Corey, we had been using a hydroponic system that used coconut coir fibers as a growing medium. The roots of our plants were surrounded by those fibers and drew their nourishment from the water and plant food we systematically fed them. There was just one drawback to this method, which you can probably guess if you've ever run your hand over the exterior of a coconut. Those fibers have good heft, resist bacteria, and degrade slowly, but they don't stay wet for long. When we used them, we were obliged to water our plants three times a day.

Corey switched us over to a new medium that consisted of peat moss and perlite. The result was a spongy mixture that drained well but stayed relatively moist. Best of all, we only had to water our plants every three days.

It was time to put the bullshit lawsuits behind us and get back to growing some prime bud. Green Man had not only survived another attack; we had blossomed in the process. The challenge had made us bigger, stronger, and more passionate than ever. By the end of the lawsuit,
I
became a
we
and the result was a diverse group of ganjapreneurs ready to put their hearts into making Green Man Cannabis the premier brand of marijuana in Colorado.

8

The Cannabis Ranch

One morning in 2014 I drove out of downtown Denver with the top down. The road took me east, away from the foothills of the Rocky Mountains. The strip malls and businesses thinned out, and the blocks became more sparsely populated. Warehouses and industrial buildings popped up. I rode along streets lined with chain-link fences topped with barbed wire. When I got to 40th and Ulster, the road petered out. I pulled over and killed the engine.

I was parked outside the gates of an airplane salvage yard. A tall, blue corrugated steel building stood on the other side of a fence. The fuselages of long-retired planes sat in pieces around the site.

The building sat on 15 acres of land, a lopsided rectangle mostly covered with weeds and the remains of dilapidated airplanes. Some were military aircraft dating back to World War II. Others were broken husks of planes that had crashed and now lay around, waiting to be picked apart for parts.

In the 1960s and '70s, the land had served as a rental car maintenance facility. At some point in its history, one of its owners had installed an underground fuel tank. Another time, a jet fuel storage tank on the adjacent land had burst into flames, coating the land with toxic soot. Somewhere under that soil lay decades of industrial
waste buried in a hastily constructed landfill, a sad legacy that spoke of how we humans sometimes treat the earth that is our home.

The land and its tortured history had become part of my plans for the future of our business. When I envisioned the marijuana business I'd be building, I'd been wrestling with two conflicting urges that I'd only recently begun sharing with other people.

One was a problem.

The other was a dream.

The problem was this: From the moment we'd set up shop in the warehouse on South River Platte Drive, it had become obvious to me that the cannabis industry was grossly inefficient. In order to grow our plants inside a cinder-block box, we were forced to replicate what nature does effortlessly. Over the last few years, growers had come and gone, and with each new regime, we had upgraded our equipment. We were now operating with cutting-edge technology. Our warehouses held 350 lights, enough to grow nearly 4,000 plants. We were pushing the envelope, moving beyond my one-light-equals-one-pound rule of thumb to one-and-a-quarter pounds per light, harvesting close to 175 pounds of buds a month.

I loved visiting those rooms.

To walk in in the morning and smell the oxygen-rich air, tinged with just the right hint of moisture, and to smell those flowering buds coming into fragrance was a joyful experience. I was so in love with the
aliveness
of it all. It was much more gratifying than being stuck in the artificial environment of an office.

But I still disliked that those plants were thriving in an artificial environment of our own making. The lights cycled on and off, dousing the plants with precisely twelve hours of light and twelve hours of darkness. The plants were surrounded by intake valves and air handlers and air conditioners. The high-pressure sodium lights got so hot that we had set up a separate system to flush out heat. Even the “air” those plants breathed—the carbon dioxide—was supplied by giant tanks that we wheeled in and out for that very purpose. With
all the clicking and whirring, it may not have resembled an office, but it did sometimes feel like a factory.

Yes, we got great product this way, but I couldn't help thinking there was a better way. A more natural way. But every time I talked to expert growers, they told me that this was the only way to get great yields.

I didn't understand that, because all over the world commercial growers were growing hothouse crops in glass greenhouses. They used the free power of the sun when they could and cracked open windows to allow the free exchange of air and carbon dioxide.
Their
plants seemed to be doing just fine.

It reminded me of a story.

Once there was a woman who used to bake a ham on holidays and special family occasions. Before she dressed the ham and popped it in the oven, she sliced it in half. Year in and year out, her children watched her do this and always wondered about her culinary technique. Did each half of the ham cook more thoroughly that way? Finally, one day, one of her grown children finally asked her why she did it that way. “I don't know,” was her response. “That's the way my mother did it.”

In a sense, that's what the best minds on cannabis cultivation were saying. They grew inside cinder-block boxes because that's the way it had always been done. The collective wisdom of the community said this was the best way. But that wisdom dated to a time when the most expert growers were criminals trying to evade the law. It didn't make sense to grow that way anymore.

We were legal now. It was time to come out of the closet.

Doing so would save us money. It still cost us about $850 to grow a pound of marijuana. If we transitioned to a more natural system, I estimated we could probably get the cost down to $350 a pound—nearly a 60 percent decrease in cost. At that rate, we could charge customers less in our dispensaries and still hit the same profit margin. Conceptually, we would be able to sell to our customers and
make money for less than our competitors could even grow their product for. If I was wrong, we would lose big on a very expensive gamble. But if I was right, this model would revolutionize the industry so thoroughly that every large indoor grow would eventually become economically obsolete.

But there were also reasons beyond cost and efficiency. It made sense to me that we'd want to share the cannabis industry with the world. We'd want to stop hiding and start demystifying marijuana for people who were curious about it but afraid to try it. If we could show off a modern, large-scale legal marijuana grow facility and educate people about the product and the brand, it would set Green Man apart.

How could I best share our product with the world?

Get it out in the open was the answer. Get it where they can see it. Offer them tours of your facilities. Get them to get acquainted with Green Man in an environment that was fun and familiar, an environment designed with tourists in mind.

Every year, millions of people visited wineries and breweries the world over. People knew exactly what that experience entailed. They took a little tour. They saw the fermentation tanks. They heard brewers and vintners talk about their work. They visited the gift shop afterward and sampled some of the wares. It was a great experience that had done much to educate Americans about wine and had fostered the growth of the microbrewery industry.

Why couldn't we do the same with marijuana?

If we were too shy to do such a thing, if we were too scared of the backlash of sharing a formerly criminal drug with the world in such a way, then weren't we tacitly agreeing that there was something shameful about our product?

The idea for the Cannabis Ranch took root in my imagination and blossomed when I first got into the business. At first, I didn't share it with too many people. I talked to Mr. Pink about my concept, and though he was enthusiastic, we both realized that it would
be a while before we could make the dream happen. At the time, the industry was geared solely toward medical marijuana patients. The only people who could enter a dispensary had to be bearers of a red card. Building an expensive tourist destination for so small an audience was impractical.

But when Colorado voters approved recreational marijuana in 2012, it made sense to start thinking big. That's when I hired the architect to create a conceptual model and drawings so I could more clearly communicate the dream to others.

In strictest confidence, I shared the concept with Dax, my real estate buddy, who got to work looking for the ideal parcel of land. Whenever I had some time, we'd drive all over the region looking at places that we thought would work. I was picky about finding the right place. I wanted a location that would be highly visible and accessible from Denver International Airport (DIA). I wanted it to be in the city and county of Denver, because it had become the most accommodating to ganjapreneurs like me.

I suppose I could have looked for property outside Denver, but I'd watched other cannabis businesses plunk their cash on land and warehouses outside of town, only to later run afoul of county zoning commissions. The four surrounding counties still didn't look kindly on marijuana, no matter how legal it was in the state.

No, if I was going to do this, I would have to stay in Denver, which was still marijuana friendly.

This wasn't the first time I'd come by to see the airplane graveyard. I'd come out the first time with the realtors and had been back several more times to see it on my own. I had a few other parcels in mind, but this was the one that kept reeling me in.

I'd been talking with a businessman from out of town who was keen to invest in the marijuana industry. I met more of these people as the years went by and our business flourished. These days it was tough to find decent investments, especially if you were a man or woman with a billion to your name.

This guy—whom I'll call William—had been saddened to learn that his out-of-state residency meant that he was ineligible to own stock in a Colorado cannabis company. The state had enacted such a rule to keep the inevitable rush from outsiders at bay. But I had thought of a way that William could help us out. If he was game, he could buy this sad little property, build the facility we needed, and rent it to us for twenty years. It was win-win all around. He'd get the 15-plus percent his portfolio demanded, and he'd get a ringside seat at the table in the cannabis industry. Someday, when the ban on out-of-staters was lifted, maybe he'd be able to invest directly in the marijuana operating company.

I just needed to get him interested in taking a chance on the property. That wouldn't be easy. The airplane graveyard was near Interstate 70, the main artery leading in and out of downtown Denver, and it wasn't far from DIA. But the land was hardly a pristine agricultural site.

This place certainly had some environmental issues. Engineers I'd spoken to had said that the section of land atop the landfill would probably sink seven inches over the next twenty years, as the contents of the landfill settled.

But all was not lost. It
was
possible to salvage a good chunk of the property. The land would cost about $3.2 million, and I'd estimated another $800,000 for environmental cleanup and remediation. We could show the world that it was possible to do some good with an injured piece of land and in a sense atone for our own resource-intensive industry.

I wasn't planning to plant marijuana directly in the soil. Those precious plants would spend their lives in 5-pound bags of growing medium, just the way we grew them in our warehouse. But I did need the space on the site to construct a greenhouse to enclose them.

As I peered through the chain-link fence now, I tried to imagine just where the greenhouse would go. Once it was built, anyone driving on I-70 toward Denver would see it rising two stories into the air.
If you flew into Denver from the sky, you'd spy it out the window of your aircraft. Wouldn't that be a fine way to get people's attention? Wouldn't that make people curious?

Recently, Denver's Regional Transportation District had made a decision that made this parcel of land even more desirable. It had announced the extension of a light-rail line that would run from the airport straight into town. Three stops in, the light rail would stop at Smith Road and Ulster Street, right at the end of the block where I was standing.

It sounded too good to be true.

It practically made me laugh to think about it. As it was, the state's airports were strictly off-limits for marijuana. Since recreational marijuana became legal, the state was happy to have travelers come experience Colorado's exciting new cannabis culture. Come, smoke, get joyfully stoned was the message. But don't even think of smuggling some of that weed onto an airplane on the way out of town. The city of Colorado Springs had even installed “amnesty boxes” at its airport. As people headed back to the real world, they were encouraged to drop their extra weed in one of these green boxes, no questions asked.

I kept thinking about those travelers at DIA. Some of them never left the airport because they had to catch connecting flights. If our Cannabis Ranch was close by, was it so crazy to envision savvy travelers booking long layovers at DIA so they could catch the light-rail system straight to our front door? They could ride out, take the tour, get stoned, have lunch in our restaurant, get stoned again, and ride the train back to catch their flight.

The idea was so enticing, I couldn't wait.

I checked my watch. It was time to run out and pick up William. He and his advisor, Justin, were coming back to town to look at this deal again; they'd been out a few times already. They weren't landing at DIA but rather a private airport in Centennial, Colorado. I'd be waiting on the tarmac for them when their company jet pulled to a
stop. I'd give them a warm welcome, then whisk them away for lunch to talk over the deal some more, then out to the site again.

Business deals of this kind are a little like courtship. You both want it to happen, but you're always wary. It has to feel right, and the numbers have to work.

I wanted to get this thing built badly. But creating the first of anything is never easy.