Ganjapreneurs set sights high as California’s poised to legalize marijuana
Cannabis connoisseurs wont be the only ones rejoicing if voters legalize recreational marijuana this election. Expect Silicon Valleys burgeoning class of pot entrepreneurs to join the party.
Startups are cropping up throughout the Bay Area that put a signature Valley spin on the age-old practice of selling marijuana, offering sleek on-demand delivery apps for users and high-tech software for growers and dispensaries. The business models are risky marijuana is illegal under federal law and stigma around the drug prevents cannabis startups from scoring funding from many major investors. But with recent polls suggesting Californians are poised to expand marijuana consumption beyond medical use, experts expect cash to pour into the industry.
Its going to blow open the doors to innovation on the technology side of the cannabis industry, said Chris Walsh, editorial director of Denver-based Marijuana Business Daily.
But he warned that startups will have to navigate a period of uncertainty and chaos while lawmakers figure out how to regulate the nascent recreational marijuana industry. The struggle will be compounded, Walsh said, by new medical marijuana rules set to go into effect in California in 2018 among other changes, cannabis businesses will be required to obtain state licenses and local operating permits.
For those willing to shoulder the risk, cannabis is an enormous industry with plenty of potential. Legal marijuana sales in the U.S. are expected to exceed $22 billion by 2020, with California leading the nation, according to a report released earlier this year by ArcView Market Research. And the coming election will be a turning point for the industry, with California among nine states voting to legalize medical or recreational marijuana.
Theres big opportunity to be the next Google of the cannabis industry, said Carter Laren, co-founder of Gateway, a year-old Oakland accelerator focused on cannabis startups.
Some Bay Area startups, such as San Francisco-based Octavia Wellness, are making it easier for seniors to access medical marijuana. The company operates much like Avon, but instead of selling cosmetics to their friends, Octavias representatives make a commission selling marijuana products.
Jeannine Faull, a 77-year-old resident of the Rossmoor retirement community in Walnut Creek, started using topical marijuana-infused creams and oils while recovering from shoulder surgery in 2013. Now Faull orders the products from Octavia to treat her arthritis, and as a consultant for the company, recommends items to other seniors in her community.
She admitted she has concerns about being involved with an industry that isnt recognized under federal law.
It does worry me a little, Faull said. But I believe in it. Im going to take that stand.
San Francisco-based Eaze delivers medical marijuana on-demand a business model that so far has netted the two-year-old company $25 million in funding. Founded by former Yammer executive Keith McCarty, who says he doesnt use marijuana himself, Eaze allows customers to order products such as Bubba Kush ($31 for 1/8 oz), marijuana-infused chocolate bars and pre-rolled joints.
If customers dont have a medical marijuana card, they can use EazeMD to get one online for about $40. That wont be necessary if California approves recreational use, a move Eaze estimates could more than triple the startups business.
Eaze sells its service to dispensaries, and the dispensaries hire drivers to make the deliveries a setup that keeps Eaze from touching the drug, and mitigates some of the startups risk. But Eaze, like all cannabis tech companies, has to deal with hurdles its Silicon Valley peers do not, such as being blocked from advertising on Facebook and Google.
Its a constant struggle, said Jamie Feaster ...
