Budding passion for product and profits drives cannabis boom

DENVER — Lori Bentz, a 19-year-old finance major at Ohio University, hopes to find a lucrative career in the cannabis business.

James Bo Keyes, 29, wants to bring International Organization for Standardization certification to the marijuana industry.

Linda Giannosa, 60, is a Denver woman who, with her husband, abandoned the concept of marijuana cultivation because of the myriad complexities but still plans to start a medical business.

They’re just a few of the 1,200 conference participants at the Cannabis Business Summit held in Denver in late June. The exhibit area offered a range of service providers — distillation equipment vendors, security companies, green energy suppliers, consultants to help wade through the paperwork — for those looking to find a foothold in the growing pot business.

There’s plenty of opportunity as more states legalize medical marijuana and even recreational-use pot. But as with any industry, risk accompanies the potential for reward.

“Only a few will survive,” said Frank Marino, who operates MJX, a California-based investment fund. He said only about 3 out of 10 startups typically succeed, and the same holds true for pot startups. “There will be a huge amount of mortality,” he said.

Bentz is honest about why the marijuana business appeals to her. “The money, the potential,” she said. “The exponential potential.”

That’s what drew her to the first Cannabis Business Summit.

“I saw an advertisement for this conference and said, ‘You have to spend money to make money,’ bought a plane ticket, and now I’m here,” she said. “I see the train going. I want to be on that train.”

Armed with cards listing her LinkedIn profile, Bentz said the conference was worth the money, especially in demonstrating the range of ancillary businesses serving the cannabis industry.

While Bentz concedes her primary motivation is cash, others profess an affection for the product.

“I’ve been doing startups, but that’s not where my passion lies,” said Lar Van Der Jagt, a 30-year-old software developer who lives in Brooklyn. “My interest is in working directly with the plant. We’ve been co-evolving with the plant forever, but we’re now behind in our knowledge of the plant.”

Van Der Jagt hopes to find a way to help cannabis growers use analytics and data visualization.

Then there’s Tony Gallo, 53. He parlayed a corporate security career into his own business, Sapphire Protection, based in Austin, Texas, about a year ago. Within six months, he realized he should take his consulting services beyond pawnshops and jewelry, liquor and gun stores and into cannabis.

“It was a natural progression,” he said.

He’s now working with marijuana businesses in Nevada, Washington and Illinois and hopes to get work in California and Colorado. He gives advice on storing and transporting cash and keeping the product safe.

While Gallo and Van Der Jagt have existing businesses and Bentz has a few more years of school left, Keyes is looking for investors to fund his certification startup, Bud Basics.

He said he needs about $200,000 to spend the next year getting the certification process in place. “I’m really seeking partners. That’s my main goal,” said the 29-year-old MBA, who lives in Dayton, Ohio. “The revenue stream is about a year away.”

That’s where businesses like Marino’s MJX and, more prominently, The Arcview Group, come in.

Troy Dayton co-founded Arcview in 2010 after working in cannabis advocacy groups and tech industry finance. The company researches the finances and reach of the cannabis industry, but its angel investor network is the big draw.

Some 250 investors participate in weekly webinars featuring a half-dozen entrepreneurial pitches a week. In 16 months, investors have put more than $12 million into 14 companies, said Dayton, Arcview’s CEO. “It’s like the ‘Shark Tank’ of the cannabis industry,” he said, referring to the ABC entrepreneur reality show.

“I think we’re seeing a lot of people who see this as the next great American industry, and the clock is ticking,” he said. “Part of what comes with that is a lot of hype.”

While Dayton sees extraction equipment, cannabis packaging and alternatives to smoking pot such as vapor pens as promising ventures, he’s skeptical of the movement toward hemp-derived oil products, which include some penny stock and multilevel marketing schemes.

“If you look at the dot-com boom, most of the companies foundered, but some of them did incredibly well,” he said. “I think you’ll see that same thing here.”

The reality is that getting into the business is complicated.

Conference attendees flocked to free consultations with MedMen, a California firm that helps clients navigate regulations in various states allowing medical or recreational cannabis.

The regulations are especially complex when it comes to setting up a dispensary or cultivation operation, said MedMen executive vice president Bryan Marquina.

“The people getting into the business have money,” he said. “If you’re going to do a cultivation center, you better be able to provide $10 million. It’s unfortunate that that weeds out so many people with knowledge of marijuana in the medicinal programs.”

At the summit, Marquina said he saw lots of interest from Florida, where voters will consider legalizing medical marijuana this fall.

Tracy Christian, a compounding pharmacist from Palm Beach Gardens, Florida, said she attended the summit to get a sense of the opportunities.

“For me, I would not be able to dispense marijuana because it’s federally illegal,” Christian said. “I think a lot of businesses from the states that are already doing it are going to rush into Florida to get in on the ground floor.”

Like Christian, Giannosa is still trying to get a handle on the business. A former middle school teacher who has worked in the building industry, she is interested in the medicinal benefits of cannabis and initially considered getting into cultivation.

“It is not an easy crop to grow,” she said. “You want to be able to cultivate a really pure product.” She and her husband, a former pharmacist, are now looking at pursuing a dispensary or even patient education in the medical marijuana business.

“I really want to get rolling, but as with most entrepreneurial efforts, money is a problem,” Giannosa said. “I think the time is very short for when a small entrepreneur can get started. I think big money’s coming in. I’m hoping I’m not too late.”

FUENTE: http://america.aljazeera.com/articles/2014/7/16/cannabis-boom-businesssummit.html

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