Big Weed (3 page)

Now that I had a red card
in my pocket, I could legally enter any marijuana dispensary in the state. My first visit to Jake's business impressed the hell out of me. Imagine walking in and hitting a wall of that powerful marijuana scent. Once again, I was blown away by the contrast between the smell of street weed and fresh marijuana.

Jake's crew had about ten tall glass jars, maybe a half gallon each, with latch lids on them, crammed with fat, healthy, colorful buds.

His staff—people who called themselves “budtenders”—blew my mind when they asked me a single question: “What kind of marijuana do you like to smoke?”

Well, shit, I didn't even have the mental framework to be able to answer that question. As far back as I could remember, there was
only one kind of marijuana and you got it from a buddy . . . who knew a guy who knew a guy who was going to pick some up from his friend today. So, if you brought your money by now, your buddy would have it later today. And sometimes those best-laid plans just didn't go down.

I remember being just a kid, about twelve years old, the first time I saw my older brother and his friends giggling over a black plastic film canister he was holding in his hands.

“What's that?” I asked them.

“Nothing! Mind your own business.” They blew me off, dashed into my brother's bedroom, and locked the door behind them.

But I didn't give up. “What's that?” I asked the next time I saw them toting one of those little canisters.

Nothing. Silence.

And then one day, my brother blurted, “It's just grass.” The smirk on his face gave it away.

It's just grass.

It's just grass.

And then one day, they let me have a little toke. Wow. I laughed for the next few hours.

I smoked in junior high and even high school. Not often, and I never allowed it to interfere with my relatively normal life. I played football and rugby and hung out with the jocks and preppies more than the stoners.

But the memory of marijuana still remained with me, as did the whole marijuana experience. The semi-ridiculous dance of calling around all of your friends to see if anyone knew someone who had some. Finally finding that one buddy . . . who knew the guy who knew a guy. Then hammering out a price. Pulling together all the crumpled fives, tens, and singles you and your friends could muster. The meet. The buy. The furtive smokefest in your parents' basement, always accompanied by the post-toke, rapacious romp through the pantry. Lots of laughter. Music. TV. The paranoia that sometimes
gripped us: Would someone notice our red eyes, our incessant laughter, or the remnants of our outing?

That was the 1980s for me.

The marijuana we smoked as kids was always sourced the same way. We had one choice, paid one price when we were lucky enough to get to the guy who knew the guy.

But here in Jake's dispensary, I was beginning to learn that there were lots of different types of marijuana. Different strains. Each with different names and different personalities.

I had a lot to learn, but right now I needed to get down to business. I needed about five or six hours with Jake to figure out how his business actually worked so I could put together a spreadsheet that spelled it all out.

The numbers were fascinating. It cost vendors like Jake about $500 to $800 to grow a pound of legal marijuana. That probably sounds like a lot of money. It did to me. But what did I know? A plant is a plant is a plant. People grew tomatoes and lettuce in their backyards each summer, and it wasn't rocket science. I didn't understand why marijuana had to be that much more difficult or expensive. The kicker was guys like Jake could turn around and sell one of those same pounds—at a quarter-ounce at a time—for $6,400 retail. Or he could sell a pound for about $4,000 wholesale at that time.

A profit margin of 800 percent to 1,300 percent. Un-fucking-believable!

The numbers looked good for a retail business. Really good.

So much so that I couldn't get the marijuana business out of my head even after my consulting gig with Jake was up. I was talking about it with everyone I met.

What surprised me was that, although everyone in the upper-middle-class suburban social circle I hung out in had heard that medical marijuana was now legal, very few people had had much experience with it. They'd say the most ridiculous things when I brought it up.

“I know it's legal, but you can't really buy it, can you?”

“It's still against the law, though, isn't it?”

“I don't care if it's legal—it's still wrong!”

And on and on.

I remember the first time my then wife confronted me about it. “What's with this marijuana stuff?” she said.

“It's going to be huge,” I said. “It's an amazing opportunity. I am going to take some time and look into it.”

“You have children,” she reminded me. “You have a family. You need to get a job and bring home a paycheck!”

She had grown up in a fairly conservative Colorado family. Sure, like a lot of people her age, she had smoked marijuana, but she didn't like it, and that was that. Marijuana was wrong. It was something stoners, losers, and criminals did. She didn't see why I found it intriguing. And she had a very different risk tolerance. My entrepreneurship had always made her uncomfortable. Being an entrepreneur in the weed business
really
made her uncomfortable.

You don't have time to be wasting on bullshit “opportunities,” she thought.

We have five mouths to feed.

We have an expensive lifestyle with a mortgage and a couple of cars to pay for.

Chris, what you need right now is a good job.

A real job.

With a decent paycheck.

You know—like the one you used to have.

Apparently I used to be somebody. A contender. A mover. A shaker.

Once I was the founder and CEO of a national real estate company. During the booming housing market, which lasted from 2002
to 2008, I developed a novel way of financing pools of real estate. I had executed it only a couple of times before forming a company to do more, similar deals. You can only structure so many securities before you exhaust your exemptions with the Securities and Exchange Commission. If I wanted to keep using this method, I had to launch a public offering. I'd never done such a thing. I was thirty-eight years old at the time and a self-made millionaire.

I'd spent the last six years building a real estate corporation initially devoted to increasing the value of residential real estate. As the housing market started heating up in the United States, my company began buying properties all over the country. The demand for housing was insatiable, and it seemed as if every investor and bank on the planet was throwing money at us.

Our process was fairly simple. Basically, we'd assemble a group of, say, twenty investors, each of whom would buy one property. Each investor would then contribute the property in a tax-deferred exchange into a limited partnership. Then the pool of properties would be managed and eventually sold or exploited for their cash-flow potential. The owners of the limited partnership would then receive the benefit of the sale or the cash flow that stemmed from the rent we were charging our tenants. A structure like this allowed each investor to spread the risk over the entire pool of properties. This diversification of risk and normalization of return was the premise I'd built my business upon. And it had worked wonderfully—until it didn't.

Everything I'd done in the last six years was building up to that public offering, with a net asset value of $1 billion.

My company stood to earn $17 million at offering alone and much more over time.

And I, the humble servant to this paragon of American entrepreneurship, would be taking home a solid seven-figure payday to my loving wife and three adorable daughters.

I made this happen.

I had it coming to me.

I had earned it.

It was American capitalism at its best.

Yeah, I know now: I and my investor buddies had just participated in the biggest real estate fuck-up in the history of American business. We just didn't see it.

The first glimmers of the collapse, in fact, were barely noticeable.

Some people saw it on Wall Street. Me, I learned about it firsthand from the comments the SEC tacked onto the first set of documents we sent describing our public offering. It asked us to get the financing underwritten.

“No problem,” I said.

I'd done this hundreds of times and had connections throughout the industry. I started taking meetings with the lenders with whom I had worked over the last several years, thinking it would be an easy sell. But every time I wrapped my pitch, they'd be sitting there, staring at me, with an awkward grin on their faces.

Yeeaahhhh, that look said, we're not going to be investing in that anymore. The market's turning . . .

I figured they were just skittish, so I took more meetings. Guys, do you see the opportunity here? A billion fucking dollars. Can you smell that, guys? We are within a month of the offering! We've been working on this for more than a year . . .

Crickets.

It took me only a few meetings to realize that nobody was biting. That no one would ever bite again. The worm had turned. The industry was sunk. My company was in over its head and heading toward bankruptcy. We had spent a majority of our cash reserves on the costs of the public offering. My personal assets were safe; I'd wisely kept them apart from those of the company. But now I had to dismantle the behemoth I'd created. It took me fifteen months to shut the whole
thing down, while, on the sidelines, millions of other less fortunate investors were scrambling to save themselves and their skins.

Fifteen months of shucking off what I had worked so hard to create and what everyone in America was now regarding as the world's worst idea ever.

I tried to be philosophical about the loss. After all, business was in my blood. I'd started that chain of ice cream shops when I was fresh out of college. Then I'd sold them and moved on to another business, then another and another. It was what I did. I was an entrepreneur. Guys like me don't just go out and get a job. We look for opportunities and we create businesses where there are none. People, products, and services are our paint, brush, and canvas. Creating those companies is what inspires us.

But something had changed inside me. Something I had rarely spoken about, even to my wife.

When I was dismantling my latest company, I came across some documents that forced me to rethink the course of my entire life. Among them was a list of my company's assets on one particular day: September 30, 2006. Looking it over, it occurred to me that if I had stopped buying properties on that day alone and sold off everything, my company would have escaped the housing crash unscathed.

Why didn't you stop, Chris? I asked myself.

The answer, when it came, was hard to stomach.

Because it wasn't enough.

What
was
enough, Chris?