Solo walks through empty industrial areas at night aren't part of my usual routine. But I had a good reason to wander through a lonely warehouse district at the foot of Potrero Hill last week.
I was looking for millionaires.
In front of a brick building a block away from a freeway overpass, a solitary man wearing a wool poncho sat shivering on a bench next to a plastic garbage bag filled with his possessions. Today's nouveau riche are eccentric; I knew I had the address right — the three BMWs, one Mercedes, and one Maserati parked on the street hinted I was headed in the right direction. But this couldn't be it.
Of course, it was. Around the corner from the expensive imports, in front of a crowd of attractive people dressed in dark clothes, I found it: the cannabis velvet rope.
This was the afterparty for the invite-only cannabis investors' association Arcview Group. At the Fairmont Hotel on the top of Nob Hill, eager fortune-seekers had spent the previous two days pitching their products to capitalists eager to make the right bet on a pot product.
Now is the time. The American legal marijuana market nearly doubled to $2.7 billion last year, according to Arcview's own estimate, with just under half of that in California — without full legalization. Just imagine the extra zeroes once another 38 million people live in a state with fully legal green.
So who's in the driver's seat? No Birkenstocks here: A cannabis investor looks an awful lot like every other investor in San Francisco in 2014: crisp dark jeans, a fresh button-down (sometimes with the tell-tale creases straight from the package), expensive sports coats — and, with very few exceptions, white faces.
Silicon Valley gets a lot of heat for being a rich white man's club, with the ranks of board members, top-paid engineers, and other lucrative gigs consisting overwhelmingly of white men.
The scene in Mike Judge's Silicon Valley — in which techies achieve diversity by adding one Indian guy and one Asian guy to the mix — is playing itself out in the marijuana industry. And somehow, the weed industry is even whiter, so much so that, according to an attendee, one of the Arcview execs attempted an uncomfortable joke: “This is the most white and male convention you could go to.”
Some of these investors aren't pot smokers. Not even casually. (“There were a lot of guys there that knew nothing about cannabis,” one entrepreneur told me, noting that their “value add” would be monetary). But they know a profitable thing when they see it.
There are exceptions: San Francisco-based Poseidon Asset Management has a woman principal. But the heavy hitters, including the people who will decide if California can legalize next year, prove the rule.
It will take somewhere between $10 and $20 million to qualify, run, and win a legalization initiative in California in 2016, political watchers say. Who will fund this effort is still unknown, but the short list of names — capitalists, Silicon Valley billionaires — is also short on diversity.
Cannabis is gentrifying. And the people taking advantage of the once-in-a-lifetime economic opportunity presented by legalization aren't the same people who paid the price during cannabis's lengthy prohibition.
Seibo Shen is a safe bet. The 38-year-old spent over a decade in sales for top software companies, and he's also been an early employee of four startups that have been acquired or gone public. This earned him the title of “serial entrepreneur” at the Arcview event, and played a role in his product's victory in ArcView's pitch competition. His company makes the “VapeXhale,” a high-end, more portable $650 vaporizer that works on both flowers and concentrates.
Shen has already raised $500,000 since he started making the vapes in 2012, and he's hoping that Arcview interest will help get him to the $3 million mark. He's a rarity in cannabis circles — a smart businessman who is open and proud about his cannabis use and has a solid idea with a business plan and a product prototype ready to demonstrate. He's also Asian, which makes him one of the very few minorities I can name who are poised to do well in a legal marijuana market. He's well aware, and it doesn't make him happy.
“I understand we do need more diversity,” he told me, adding that women aren't doing great in the weed business yet either. As any walk through a HempCon or High Times Cannabis Cup shows, women are indeed “leaning forward” — but while wearing low-cut tops to entice the (mostly male) customers to stop by booths.
“I'm the father of two women,” Shen told me. “If my daughters got into this space, I'd be concerned — it seems like some of the only roles available are ones where you walk around with weed leaves on your tits. It makes me sad.”
Sad, but true. Legal marijuana, which was partly expedited by the AIDS epidemic that plagued the Castro in the 1980s, is now the provenance of straight, white men. And the black and brown people who did, and are still doing time for weed, are not representing the activists or capitalists who are playing a huge role in weed today. Of San Francisco's 27 dispensaries, I can name only two or three that are operated by people of color. Berkeley's black-owned dispensary, 40 Acres, is the subject of a shutdown effort by the city.
It's a white man's rush.