Wednesday, September 1, 2010

Go East, Man: California Cannabis Seeks Fresh Markets

By David Downs
Wed, Sep 1, 2010 at 2:50 PM

Call it a reverse gold rush, but a 'go East, young man' fever is gripping California marijuana growers, dispensary owners, consultants, and assorted industry members. The fever is rapidly transplanting the Golden State's best practices as well as its more dubious ones to Rhode Island, Michigan, Maine, and Colorado. But no state is really off limits.

“I think it's a natural development, because California has had fourteen years of experience developing medical cannabis,” says leading Oakland dispensary owner Stephen DeAngelo. “The industry is more well developed here than anywhere else. If you want to get in on the ground floor, California is not the place to do it.”

DeAngelo has been helping to open a dispensary in Rhode Island through his consultancy firm CannBe, comprised of an A-team of lawyers, marketers, managers, growers, and security. CannBe is also looking closely at work in Washington, DC and Oregon.

Similar to a counterinsurgency, the firm takes a low-profile approach, partnering with local forces to train them. For a fee, CannBe provides the advice and expertise to help craft laws, get them passed, and win dispensary permits. But other California groups are less sensitive.

Orange County-based company Medical Marijuana Inc. made headlines in Midwest newspapers this August when they rented out the Silverdome in Pontiac, Michigan, for what they're calling the second biggest marijuana convention in the country. Initial advertising depicted a 1,000-foot bud leaf erupting out of the Silverdome and a jack-o'-lantern with a joint in its mouth. Local newspapers called it a “pot party,” and the local mayor and the police chief went ballistic.

This Medical Marijuana Inc. ad angered Michigan locals
  • This Medical Marijuana Inc. ad angered Michigan locals

“They were really offended by that in a large way,” says Medical Marijuana Inc. Vice President David Tobias. The company explained their intent to abide by all state laws, prevent smoking on-site, and tone down advertising.

“We agreed to take the joint out of the pumpkin's mouth and take the marijuana bud off the Silverdome,” said Tobias.

While California hosts at least fifteen cannabis-related trade shows this year, Michigan has just three, and Tobias said the company continues to look east. “The ground floor is not in the saturated states like California or Colorado; it's the emerging states that have just passed their laws. Just as the hippies started in California and spread across the country, everything starts here. We'll be bringing the experts and the pioneers of that movement to help people go through the process.”

Tobias shrugs off the local backlash, and says it helps publicity. CNN and USA Today covered the Silverdome brouhaha.

“There is that kind of 'This is our territory' mentality," said Tobias. "One club said, 'We don't want you from California coming here telling us what to do.' That's some dumb-ass idiot trying to protect their turf.”

Even a low-profile technique can generate a backlash, though. Large California dispensary Berkeley Patients Group spun off into the Northeast Patients Group and partnered with locals to win four of the state's eight dispensary permits this summer. One Maine city just okay'd Northeast Patients Group's first dispensary location. Meanwhile, several key activists see a conspiracy, and penned an open letter to the governor bashing the California influence.

“Our citizens should be concerned when interests from outside our local economy take the trouble to become self-appointed policy advisors to the government of Maine,” said the letter from the Maine Wellness Center, signed by various groups, coalitions, and lobbyists. "The early journeys of a reverse gold rush have already occurred."

Berkeley Patients Group spokesperson Brad Senesac dismisses such provincialism. “It doesn't matter if it's cannabis or mayonnaise, people are going to have some sort of opinion," he said. "One location had two people picketing, that was it. Everybody should voice their opinion.”

Maine was a personal project of former BPG executive Becky DeKeuster, said Senesac. “We're not the big monster going out and getting into every state.”

Still, Senesac says the California brand has legs. “KFC is from Kentucky. L.A. Fitness is all over the country, because people see people in L.A. as being fit. Does California have the best cannabis in the country? I would say yes, because I've traveled the country.”

Easily one the most brazen attempts to capitalize on the California brand comes from Oakland hydroponic supply company iGrow, which has re-branded itself WeGrow and switched from a retail megastore to a franchise company. WeGrow says it has sixty deposits of $25,000 each granting exclusive territory to WeGrow store developers. All of Colorado is sold, says WeGrow co-founder Derek Peterson.

WeGrow plans on converting its retail location near the Oakland Airport into a franchise template, with a no-bud version for stores in states where medical marijuana is still illegal. Peterson says the market is indeed going east. “I think that's exactly true," he said. "At the end of the day, when medical marijuana is legal in even more states, California is always going to be the gold standard from a product standpoint, and a pioneering standpoint. The founding businesses will always have that cachet from being the original ones in the market.”

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