When you look at it this way, it’s smart to bust people for marijuana. It’s the best way to get the largest number of people into the revolving door of the justice system for the smallest possible infraction.
But recently, something snapped with the public. Americans slowly became more savvy about marijuana and demanded a change. In 1996 voters went to the polls in California and Arizona, demanding the right to use marijuana for medical use. When this happened, the feds overreacted, requesting money from Congress to make sure marijuana stayed illegal. Congress spent $1.5 billion between 1998 and 2011 to teach a new generation of people that marijuana was bad.
But all the legal marijuana movement needed to turn the tide was more people with more experience under their belts.
More people to realize that this much-maligned herb had legitimate medical uses.
More people to realize that responsible use of marijuana was possible.
More people to hear out the data and understand that the herb was safer in most hands than alcohol.
Some of the people who learned this firsthand were state regulators and law enforcement personnel. They needed time to start replacing their personal experience of legal marijuana with the disinformation that had been handed down as gospel for more than forty years.
It was happening right before my eyes. The paranoia was dying.
The longer I was in the legal cannabis business, the more MLDS was disappearing like a puff of smoke in the breeze.
Summer 2013. The burglar alarm went off at my grow facility on South Platte River Drive. By now, I’d invested nearly $600,000 in this facility. We didn’t have theft insurance; at the time, no policy existed to insure a marijuana grow, legal or otherwise. A burglary would hit us hard; we couldn’t afford to lose any product or equipment. No business can. The downtime and lost revenue would be devastating.
My iPhone rang. I answered in a daze. It was 1:44 a.m. “Yes?”
“Hello, Mr. Hageseth. This is Digital Safe. We have multiple alarms triggered at the facility nicknamed Platte River Garden. Would you like us to dispatch the police?”
I became fully awake in one breath. My head was completely focused.
“Which zones are alarming?” I asked, reaching for my iPad. I woke the device and launched the app through which I can watch all our security cameras.
“Zones 2, 7, 10, and 11,” came the voice.
A cold chill crossed my body. “Send the cops! Send them now. This is real!”
Zone 2 was our front door, 7 was an interior motion detector, 10 was a storage closet, and 11 was the mother lode—our vault. It held tens of thousands of dollars’ worth of marijuana, all packaged and ready to go.
In less than thirty seconds, I was watching the view of our security cameras live in that facility. I was watching both the bad guys drive away and the good guys—the cops—arriving. The first cop on scene radioed dispatch, and police dispatch called me moments later.
“Hello, Mr. Hageseth, Denver Police have responded to a burglar alarm at your business address on South Platte River Drive and have found evidence of a break-in. You need to go there now.”
It was a hot summer’s night in Colorado. It was probably seventy-five or eighty degrees at 2 a.m. I pulled on my shorts, flip-flops, and the button-down shirt I’d been wearing the day before and ran out to my car. By then marijuana had been good to me, and I was driving the car of my dreams, a convertible Porsche 911. As I drove to the facility, I couldn’t resist sneaking a peek at the security camera views appearing on my phone.
When I arrived at the grow, I was initially confused because there wasn’t a single cop car in sight. But when I pulled into the parking lot, I saw five of Denver’s finest standing by our front door. Two had guns drawn. The other three had their hands on their weapons, which remained in their holsters.
The first cop approached me as I pulled up. I imagined what this looked like to him: a guy in a flashy sports car with the top down, driving around in the middle of the night and dressed as if he’s going somewhere . . .
“Are you the owner?” he asked.
“Yes.” I sensed I was about to hear another lecture about exactly how legal marijuana is, but that lecture never came.
His eyes flashed to the badge hanging around my neck. Its green background indicated that I was an associated key—an owner who worked in the cannabis business.
I could read his eyes. He was thinking, “He’s legit.”
“Your front door has been broken open, and it appears you have been robbed. Because of the locked doors inside, we are awaiting a K-9 unit to come and clear the building.”
Well, shit, I thought. If these guys haven’t figured out that this building is filled with weed, then the police dog certainly will. My body tensed.
“Do you know this is a legal medical marijuana grow facility?” I asked the cop, emphasizing both legal and medical . . .
“Of course we do, Mr. Hageseth. There is a whole bunch of your SkunkBerry spilled over there. We think the bad guys dropped it trying to get away.” He paused and smiled. “Smells really good.”
He asked me to stand behind my car until the K-9 units finished a search of the building. They wanted to be sure the bad guys weren’t in there before they had me enter.
“It looks empty,” one cop said. “But I need you to stay here, sir, while we check it out.”
No problem, I thought.
Guns drawn, dogs at the ready, they swept the inside of the facility.
The rest of us waited outside.
A few minutes later, they emerged empty-handed and gave us the all-clear sign.
No bad guys inside.
Long story short: Some burglars had broken in. When our alarm sounded, they bolted, but not before snatching a few armfuls of harvested weed. In their haste, they dropped buds all the way out the door. The canine unit was sniffing these buds now, trampling them to such a degree that their handlers had to lead their dogs away and pick out sticky buds from their animals’ paws.
The K-9 officers apologized to me for the loss of my product.
I couldn’t help thinking: Wow, the world has changed!
The cops lingered in the area. Some radioed back. Some filled out paperwork.
Everyone was treating me with the utmost deference. Sir this, sir that.
“Hey,” one of them said. “A friend of mine sells medical marijuana.”
“Oh, really?”
“Yeah, interesting business. I tell you what . . .”
And then he launched into the sort of chat you’d have with a friendly stranger in a bar.
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 o
f 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 can
nabis 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.
Big Weed Page 10
