James Nash, State House Bureau, @jmnash
LOS ANGELES — Matthew Feinstein spent most of his recent career in the DVD business until streaming video made it obsolete. Randy Cruzado sold real estate until the market crashed.
Both turned to marijuana businesses after their earlier vocations collapsed, joining a river of entrepreneurship that has grown from a trickle after Californians voted to make marijuana legal for all adults.
Feinstein, who plans a Starbucks-like chain of dispensaries, and Cruzado, who’s expanding his Los Angeles dispensary to include marijuana growing, are among the entrepreneurs grabbing a piece of what’s expected to be a $3.7 billion market for legal marijuana in California this year.
That figure, from Arcview Market Research and BDS Analytics, includes only sales of marijuana and marijuana products, such as cookies, energy drinks and oils that are vaped or placed on the tongue or the body. Legal weed has birthed a seemingly endless array of related products and services, such as smartphone apps to guide people on cannabis strains and retailers, an ad-supported TV network that airs in dispensaries, agricultural suppliers for marijuana growing operations, a marijuana vaporizer, marijuana testing and compliance software, and social media marketing firms devoted to the cannabis lifestyle.
The home of the Gold Rush, the internet bubble and much of the mortgage meltdown is now high on legal marijuana, bringing concerns of another inevitable crash. For now, though, it’s an entrepreneurial free-for-all.
“As with any industry, there will be a shakeout and the most professional people will succeed,” said Feinstein, 48, who touts his two decades in the retail DVD field, during which he ran 400 outlets.
Since legal marijuana sales to adults began Jan. 1, professionalism has been the industry buzzword. The so-called OGs – original gangsters – who went into business after California permitted medical sales in 1997 are yielding to a new crop of entrepreneurs with experience in other industries and product design that mimics Apple, Starbucks and other iconic companies.
“Silicon Valley has produced top talent in the tech industry but likely some of its success stories have moved on to greener pastures in cannabis,” said Matt Karnes, founder of the New York-based GreenWave Advisors LLC.
Some of the OGs are adapting to the new era of marijuana professionalism.
Cruzado opened the Relief Collective in 2007 on a stretch of Pico Boulevard with so many medical dispensaries that it was known as the “Green Mile.” After California lifted the medical requirement for marijuana sales, Cruzado expanded into a 7,000-square-foot space that’s five times as big as the previous location, with an airy motif he describes as “upscale industrial.” He’s ditching the medical-sounding name in favor of calling his store “The Growcery.”
People who enter the store after being admitted by a security guard hear soft music, consult with a “cannabis concierge,” and can purchase sleekly packaged vape pens, marijuana-infused chocolate bars, breath mints and massage oils and even marijuana products for menstrual cramps and sexual performance. With four flat-screen TVs behind the sales counter, the location resembles an Apple Store more than a seedy underground business.
Cruzado, 44, said his customers come from across L.A.’s demographic spectrum. On an April afternoon, few of them fit the “stoner” stereotype, with others looking like they could have come from a yoga session or a white-collar office job.
“Times have changed,” Cruzado said. “Before, it was purely men – 8 or 9 out of 10. Now it’s even.”
Perhaps no L.A. neighborhood better represents the convergence of bohemian pot culture and internet-age innovation like Venice. It’s long been common to smell marijuana smoke wafting from the tourists and homeless along its beachside boardwalk, and green-shirted “doctors” will still sell you a medical-marijuana license for $40 even though there’s no longer much reason to have one.
In recent years Venice has also become L.A.’s answer to Silicon Valley, with the social-media platform Snapchat born in a home just off the beach and Google occupying a large suite of offices nearby.
It’s here where a homeless man who calls himself Bear solicits money from tourists taking photos of him next to a six-foot-long “reefer,” and it’s here where Brian Campbell, a New York native with a background in art and fashion, and Matt Singer, a former software developer in Colorado, teamed up to develop a cannabis lifestyle app called tökr.
Users key in what they hope to achieve from marijuana – making love, yoga, chilling out – and what form they prefer, for example tinctures, food products, vapes and reefers. The app then helps the user navigate the hundreds of strains and physical forms of marijuana and find a nearby retail outlet that stocks the type best matched to their preferences.
Campbell and Singer both extol the virtues of professionalism in the marijuana business and say the OGs – with all due respect – aren’t riding the tech wave that’s transforming the industry. They also say the “stoner” demographic is the past, not the future.
“Here it’s been in the culture for so long that you have CEOs who are using, you have moms at home who are using,” Campbell said. “It’s interesting to see how Californians are developing brands that fit lifestyles. We’re not really interested in the stoner who wants a 2-for-1 joint as cheaply as possible.”
Having started in the edible marijuana business in 2008, Kenny Morrison could be considered pretty close to an OG. He convinced a pastry chef to make marijuana-laced cookies in a rented Venice kitchen for the medical market, and the Venice Cookie Company was born. After non-medical sales began this year, the Venice Cookie Company expanded into a 17,000-square-foot manufacturing kitchen in Oakland, which churns out a dizzying array of products including pretzels, churros, glazed pecans, Cannabis Quencher drinks, fruit chews and, yes, cookies.
All are slickly packaged and not cheap: A 2.8-ounce bag of 10 bite-sized cannabis churros retails for $26.
Even so, Morrison – dressed in a green “legalize nature” T-shirt – insists he’s not getting rich off his product. He says taxes and regulations have limited the profitability of the industry. A former filmmaker, photographer and actor, Morrison still sees nearly limitless potential in his chosen field.
“I told people I wanted to be the Coca-Cola of cannabis, and people patted me on the head and said, ‘That’s cute,'” Morrison said. “As soon as Colorado legalized (in 2014), people thought I was a genius.”