The Greed Rush: Venture Capital Enters Cannabis

A Bob Marley lyric can serve as a prepackaged nugget of convenient wisdom for just about any situation. On a recent sunny Friday in a South of Market medical marijuana dispensary, Marley's words were coming from the lips of two sharp-dressed and sophisticated women from New York City: Tahira Rehmatullah, a Yale MBA who used to work on the mortgage-backed securities that fueled the subprime crisis, and Berrin Noorata, a 20-something branding- and fashion-industry veteran who lives in a gentrifying area of Brooklyn (and who, if you were not feeling accommodating, you would call a hipster).

Easily the most striking people in the room — where some of the early morning customers standing in line to buy cannabis or sitting on benches taking pulls from vaporizer bags looked as if they stumbled into the shop from one of the surviving SRO hotels in the area — the women were there for the first day of sales in San Francisco for Marley Natural, the official Marley family licensed line of cannabis products, for which they are the general manager and communications and marketing expert, respectively.

Choice Marley words, like “Herb is a plant. Herb is good for everything” are printed on almost everything Marley Natural had for sale at San Francisco Patients and Resource Center, in the running for title of the city's toniest (and best connected) dispensary: the $50 eighths of outdoor cannabis — a 10 to 15 percent premium over the other “sun-grown” offerings on the menu — the $40 vape pen cartridges, the Marley logo-branded rolling trays and bubbler pipes and beauty products.

So far, SPARC is the only San Francisco dispensary lucky enough to strike a deal with Marley Natural, in the running for the cannabis's industry's best-licensed brand and backed by Rehmatullah's private equity firm Privateer Holdings, which announced $75 million in Series B funding — much of it from PayPal co-founder Peter Thiel's Founders Fund, and all of it invested in cannabis. In addition to Marley, Privateer invested in Leafly, a web encyclopedia of marijuana strains and information, and Tilray, a Canadian cannabis producer with a license from Health Canada, the country's single-payer healthcare system, to grow and sell cannabis.

Herb is expected to be very, very good for Privateer, the biggest and best-funded but far from the only equity firm making recent investments in the gradually legalizing cannabis industry.

“Everyone thinks Big Pot bought out Marley Natural,” says Rehmatullah, the statuesque general manager of the brand, who takes pains to explain the brand's philanthropic efforts in Jamaica, where proceeds from sales of Marley-branded weed in America will pay to start up small businesses back in Trenchtown, as evidence how this is not so.

For deeper questions about where the marijuana came from (California) and who grew it (producers already known to SPARC and to Oakland's Harborside Health Center, the country's biggest marijuana store by reputation, where Marley Natural went on sale the day before), Rehmatullah must pass me off to someone else. After all, her background is in finance, not phenotypes of weed, and she lives in Manhattan, where her brand's flagship products cannot be possessed, let alone legally sold.

But they can be funded.

It's likely that Bob himself — an astute businessman who may have sung about redemption and justice but whose brand, Tuff Gong, has enjoyed astonishing success spreading Jamaican and Rastafari culture to a worldwide audience in the nearly 35 very lucrative years since his death — would have been an eager partner in this venture. (The children of his, Rohan and Cedella, who struck the licensing deal with Privateer, insist on it, anyway.) Bob Marley's name and image already sell coffee, energy drinks, headphones, speakers, and much else. Using it to sell ganja is, well, only natural — but it's a move made feasible only by recent changes in California law.

Under the Medical Marijuana Regulation and Safety Act (or MMRSA), a package of bills signed by Gov. Jerry Brown last fall, for-profit commercial cannabis activity is now expressly allowed in the state for the first time. And just after Brown signed the bill into law, a U.S. District judge upheld acts of Congress that bar the federal Justice Department from interfering in the state's cannabis industry.

This is not Thiel's first bet on Bob's beloved plant. Nor is he going short on it. He and his former Founders Fund partner, Sean Parker, the 36-year-old billionaire who founded Napster and Spotify and was Facebook's first president, both partially bankrolled California's failed marijuana legalization initiative in 2010.

This year, Parker is the lead funder of the Adult Use of Marijuana Act, a voter initiative vying for the November ballot that would allow California to join Colorado, Washington, Oregon, and Alaska in allowing all adults 21 and over to use recreational marijuana. (Parker has stepped in to take the lead in funding legalization, contributing $1 million to date, when the industry and activists would or could not.)

If AUMA passes, the market for marijuana and for Marley Natural will explode, from the perhaps one million Californians who possess the doctor's recommendation currently required to purchase medical cannabis legally from a dispensary, to the two million or so adults in the state who self-report using any kind of marijuana, according to a 2014 Public Health Institute study.

The phrase “green rush” has been applied to the glut of growers, sellers, and trimmers who have flooded the state to cash in on marijuana's economic potential. But this current rush is different.

Whether you call it big pot or not, this is definitely the biggest-yet pot: Venture capital-backed marijuana has arrived.

Veterans from Wall Street are starting up funds and making investments, and newcomers from other industries are pitching ideas at business conferences and Shark Tank-like pitch events pulled straight from Silicon Valley playbooks. And other celebrities preceded Marley into the branding game. Rapper Snoop Dogg has invested in Eaze, a software platform for delivering cannabis founded by a Valley vet whose first company was sold to Microsoft. Women suffering menstrual cramps will soon be able to buy cannabis-based products endorsed by Whoopi Goldberg, who just announced a partnership with a women-owned, High Times Cannabis Cup-winning California collective. And famed Silicon Valley accelerator Y Combinator has invested in Meadow, a combination delivery-dispensary management software platform.


While federal law and decades of anti-marijuana propaganda are still scaring away the biggest pools of money — pension funds, endowments, corporate treasuries, and the highest-net-worth types like the Sand Hill Road venture capitalist betting hundreds of millions on Silicon Valley unicorns — the cannabis industry is attracting attention and investment from every other sector of finance in the country.

From Wall Street, from the Valley, from real estate, and from anywhere else money has been made, investors are betting on cannabis. After tech, it's the second great ground-floor business opportunity created in our lifetimes, according to dozens of marijuana businesspeople, attorneys, and investors interviewed by SF Weekly.

At this stage, most investors are choosing to remain private, and most cannabis companies are reluctant to report investment dollar figures. But according to one estimate, private cannabis companies saw over $210 million invested in 2015, according to research firm CB Insights, up from under $100 million the year before. Meanwhile, every market estimate gauging the size of the industry seems to add another figure with each passing year.

“Everybody wants in,” says Brendan Hallinan, a San Francisco cannabis business attorney who, in the six years I've known him, has shifted from devoting a portion of his job to cannabis to hiring several other attorneys below him devoted to nothing but. “In another five years,” he says, “it's going to be just like anything else.”

This means a change in the nature and scope of the cannabis industry that is as significant as anything seen in the past two decades — as well as a near-total disruption of marijuana's current business model, in which a relative handful of licensed dispensaries are able to dictate prices to growers, many of whom employ business models unchanged since total outlaw days. For now. Unless they adapt, California's current cannabis providers could find themselves “selling honey by the side of the road,” in the words of one grower currently seeking partners.

Twenty years ago, medical marijuana was a palliative herb grown small-scale in closets and basements by friends who gave it away to the sick and dying, people whom activists religiously referred to as “patients.” (Prop. 215, California's first-in-the-nation medical marijuana law, was the Compassionate Use Act, after all.) For growers and caregivers brave enough to become public faces — and to do it entirely legally — it entailed considerable risk without hope of financial reward. Federal agents would — and did — raid grows no bigger than six plants.

After the Legislature finally passed limited cannabis regulation over a decade ago, cannabis became more of a legitimate commodity, sold farmers-market-style out of Mason jars in comfortable, occasionally rundown storefronts that resembled social clubs. These outfits were all required to be nonprofit collectives and cooperatives, under limited and vague state regulations — and they kept their business records on handwritten ledgers, if at all.

Pot was good living for farmers in former logging and fishing towns in rural California, where a pound of average bud provided legally to a dispensary in town could fetch you $3,000 or more — still less than half what the real outlaws making deals to ship pounds east to Chicago and New York City with various criminal organizations could fetch.

Now, there are art-directed, venture-backed brands with international name recognition sold at stores that lifestyle magazines gush over, using state-of-the-art point-of-sales systems — sophistication and innovation that has required capital.

For the past few decades, the semi-legal nature of medical marijuana has been an economic boom to otherwise-desolate rural communities along the US-101 Redwood corridor, towns that economists say are some of the most cash-rich places in the state.

Now the rush to enter the cannabis industry is transforming towns and cities that already enjoy industry.

In Sonoma County, former vineyards are preparing to transition to growing cannabis. In the Mojave Desert, economically depressed towns are replacing aerospace firms with massive growhouses and vape pen cartridge oil processing facilities. Conservative business groups representing real estate interests now seek out cannabis industry figures for meetings. Emeryville may become home to a massive facility for third-party cannabis potency and cleanliness testing, soon to be mandated for the first time under MMRSA.

It remains to be seen exactly what future consumers will want in cannabis — whether it will be vape pens sold in a boutique, artisan flowers via delivery, or packs of cheap pre-rolls bought in gas stations or at 7-Eleven.

But what is clear that the industry is maturing past its outlaw social justice roots, and leaving some of its progenitors out.

In this, there is a brutal irony. For decades, all cannabis producers and sellers wanted was to be treated like any other industry, advocates and farmers said again and again. But every other industry is dominated by big business. Now that big business is here, some of those same people are pining for the bad old days of helicopter raids and black market prices.

“Back in the day, really alls you had to do was have the will to take on the federal government — and that was about it,” says Aundre Speciale, a longtime activist with deep hippie roots. In the late 1980s and early '90s, she rode a bus around the country promoting hemp with Jack Herer, an author and agitator revered as a hero of the movement (who today is best remembered as the namesake for a popular strain of sativa).

“That meant a lot of marginalized people were participating,” she says. “There were so many risks that the people who were willing to take them were the ones who had nothing to lose… Big business didn't want to touch it.”

Speciale now runs dispensaries in Oakland, Berkeley, and Sacramento. She is the kind of person who says things like “love is the best business model” — and means it. Such holdovers from the activist era still doing business in the age of capital-backed cannabis can be counted on one hand. And there are fewer every day.


“There are a lot of big business people coming in, and their only goal is taking over,” she says. “The prevailing attitude is dollars. It's all about the money and the returns.”

Whether activist, dispensary, or longtime grower still cultivating a plant sprouted from seeds smuggled from Afghanistan, current cannabis industry players who want to stay in business now have a choice: Take on a partner and take investment, or get displaced. In serious business circles, and among cannabis's most successful entrepreneurs, there is little sympathy for the gray-market operations that were able to push product that would get laughed out of today's marketplaces.

And it looks less and less likely that the activists, outlaws, and hippies who made marijuana legal and paved the way for the plant to become the basis for a new industry — but lack the access to capital and the business savvy that the new wave of entrepreneurs enjoy — will be able to cash in. Or even remain in the game at all. In the last year, as the state considered regulations that would have denied licenses to people with drug convictions on their record, activists rightly identified the racial implications. How could you deny a place in the cannabis industry to those — mostly black and brown people — most affected by cannabis prohibition? But now a class divide is appearing — between those with access to capital and those without.

“This is the hardest transition of my life,” says Tim Blake, the longtime Mendocino County marijuana grower who co-founded the Emerald Cup, the outdoor cannabis competition prized as much for its true-to-its-roots values as its high quality of the offerings.

At the Cup this past December, Blake took significant heat from his former friends and comrades in the semi-legal market for publicly endorsing Parker's AUMA initiative. He's since rolled out an Emerald Cup-branded line of cannabis products and is seeking investors and partners. When I reach him by phone on a recent morning, he's moving a million miles a minute, directing some of his employees, begging my indulgence to take other calls, and sending his kids out the door. He pauses to take a breath.

“It's a whole different world,” he says. “If you don't know how to navigate that, you're going to get screwed.”

When Rehmatullah and Thiel were studying business and making investments, Valerie Corral was learning how to prepare her friends' corpses for burial.

“It's harder than you think,” she tells me over tea in her kitchen, in a rambling and shape-defying wood-frame “hippie house” built in fits and stages over the 30 years she's lived on a hilly plateau overlooking the Pacific near Santa Cruz. “Especially if someone is sick with cancer. The body can be very toxic.”

Corral takes a sip from her mug and pauses. Muted conversation floats from the adjacent living room, where her mother, who is in her 90s and recovering from recent surgery, is laying on a couch watching a movie on an Apple monitor. The last rays of sun from the early April day — spent outside with a volunteer crew of about 10 people, preparing a hillside for another cannabis-growing season — can still be seen bouncing off the Pacific and lighting up the marine layer, visible through the French doors leading to the patio.

All around us are moving boxes. Corral, who will turn 64 this year, has until the end of the month to move out.

A petite barely five feet tall, with high cheekbones, piercing eyes, and dyed hair that almost matches the orange bandana she wore in the field earlier today, Corral has been getting stoned since she was a teenager in the 1960s. She started using cannabis medically after a car crash near Las Vegas when she was 20. She and a friend were out driving in a VW bug in the desert when a joyriding airplane buzzed them overhead, close enough to touch the car. Too close.

“I was sitting in the driver's seat rolling a joint,” she says. “He basically landed on top of us.”

Bumped by the plane, the car rolled several hundred feet through the desert, through “rocks and trees and brush.” Corral was thrown from the vehicle. Everyone survived, but Corral had a massive head injury. Brain damage led to migraines, epilepsy, and grand mal seizures. They were out of control until her then-husband, Mike, read in a medical journal that marijuana had solved seizures in mice. A few puffs fixed Val Corral's head, too, so the couple started growing it illegally in the late 1970s.

By the early 1990s, activists and agitators like Dennis Peron, the military-man-turned-hippie whose marijuana sales in the Castro District reputedly helped fund Harvey Milk's early bids for supervisor, had publicized cannabis' healing power for AIDS and cancer sufferers, and were selling the drug openly. In 1993, Mike and Valerie followed his lead into the medical marijuana game. They planted a bigger garden. They sold to who could afford it, and gave the rest away for free to people who needed it, calling their organization the “Wo/Mens Alliance for Medical Marijuana.”

WAMM has a small office on the west side of Santa Cruz that serves as the collective's dispensary. It's unlike any other in the state. You can go in and buy some of the organic outdoor grown on the hillside near Val's house — some of it for as little as $5 a gram, cheaper than other dispensaries by half — but only after you are interviewed and approved for membership. On my visit, while there were young men in their 20s behind the counter, speaking eagerly about the flowers available, the people sitting around the lounge smoking were old, infirm, military veterans, sick. Some had driven up from Monterey or Salinas. This is their closest and best option.


By Val's count, 150 WAMM members have died in the past two decades — from AIDS, cancer, old age. Seventeen of them, some of whom lived out their last days here, are buried on the highest point of the property. Rather than deal with county authorities — and doom friends' bodies to a pauper's cremation — she learned burial prep.

Earlier in the day, a work party had set out from the west side office to the hillside, where brush was cleared, holes were dug, lunch was served, and weed was smoked. Everyone who came out — one man in a wheelchair, another woman walking slowly with a cane — was a WAMM patient. One, a man in his 50s who introduces himself as John, says he uses WAMM's cannabis to replace the pharmaceutical he uses to treat severe colitis, after the pills he relied on jumped in price from $19 for 60 pills to $249 (in a scheme similar to Martin Shkreli's).

“I couldn't afford that,” he told me. “WAMM literally saved me.”

For a while, most medical marijuana collectives in the state operated in a way similar to WAMM. You would see indigent or disabled people working behind the counter — and someone broke or sick could walk in and expect to receive something, sometimes as much free weed as they needed. (To this day, while Medi-Cal and Medicare are good for pills, no healthcare coverage subsidizes medical cannabis.)

Val has to leave the house because it is no longer hers. She owned the land and the house jointly with Mike — but the couple divorced in 2014, and Mike wanted to sell. With the land and house appraised at $1.86 million, Val needed $1 million or so to buy him out and keep the land. An online fundraising campaign fell way short. That meant entertaining investors.

“I got offers,” she says. “'I'll give you $1 million if you just let me sneak pot out the back.' People wanted the WAMM name, definitely.”

“Yes,” she nods. “I could have had the land if I would have sold out.”

WAMM's garden at least will stay on the land for another year under a “generous” deal with the new landowner. After that, its future is unsure — as it would be even if Corral had bought the land. Under the new state rules, which did away with the classic cannabis nonprofit collective model, cannabis businesses cannot be vertically integrated monopolies. Under MMRSA, there are licenses for growing, for transporting, for selling, and for distributing. But you cannot have one of each, and you can only have a state license if local law allows the activity. There are some temporary exceptions, but the message is clear: Integrated operations will be broken up.

“It's hard to say what will happen to WAMM,” says Corral, before she launches into an angry monologue. “MMRSA is about gross commercialism. There's nothing for patients. They don't talk about patients. They just talk about customers.”

When I leave, well after sunset, she loads me down with gifts: fresh-baked sourdough bread, a few redwood saplings, bamboo plants “you can just stick them in the ground, and they'll grow,” she says, and some of last year's harvest. It smells — and smokes — exquisite.

Both Corral's generous attitude and her bitter complaint are familiar among fellow members of cannabis' old guard, who are finding themselves squeezed out — whether by changing circumstances, changing law, or a change in the savvy and ability of the competition. But “compassion” has also been a crutch used by subpar dispensaries, who might give away a schwaggy joint to a Vietnam vet and then trumpet their commitment to social justice, while selling mid-grade weed at full price to everyone else. These days, there is also little patience for that line. WAMM was exceptional; it was also the exception.

“The reality is, it's about the bottom line — it always has been,” one industry insider snarled. “Fuck you guys and your compassion.”

Weed's new wave looks a lot like David Hua. The 34-year-old son of recent Chinese immigrants who ran a Chinese restaurant in small-town Pennsylvania — “My friends would supply the weed, and I would bring the Chinese food,” he says — Hua wears the Silicon Valley uniform of jeans, chunky New Balances, and a T-shirt bearing his company's logo under a gray hoodie.

Gregarious, and possessing a quick smile and a childlike excitement that dissolves his face into a giant grin, Hua's 18-month-old startup just closed a $2.1 million funding round, winning investment from Justin Kan, the founder of Twitch and a partner in Y Combinator — which gave Meadow seed funding last year — former SV Angel managing director David Lee, and Reddit co-founder and CEO Steve Huffman (with whom Hua camps at Burning Man). When we meet a few days before the funding round is announced, in the industrial warehouse space that serve as Meadow's offices, he whips out a big jar of weed to show it off like a baseball card collection. (I decline a puff off the fatty he rolls as we talk.) He's relaxed enough to nerd out with me over Star Trek trivia, even though his wife is due to deliver their first child — a girl — later that day, but immediately turns serious when talking about his company, which is enjoying considerable success.

A born salesman who was so successful selling Cutco knives in between summers at college that he was running his own Cutco franchise at 19, Hua filled a key role at Sincerely, a startup that turned smartphone photos into birthday cards. Hua is also an avowed stoner. After the company was acquired, he had an inkling a weed venture would be next. He attended a cultivation class at Oakland cannabis college Oaksterdam University, where he met like-minded people — dispensary owners upset with terrible business management practices, and consumers tired of unreliable and insecure delivery.


Meadow — an inventory management platform that also handles the patient recommendation intake and verification for the dispensary — solves both issues, and is now used by a significant portion of the dispensaries and delivery services. It's a perfect investment vehicle: It's software, so it can scale up almost immediately. And since it doesn't directly touch the plant, the risk is significantly reduced. All of this helped when Meadow won a “Crunchie” last year for Best Boot Strapped Startup from the tech news site TechCrunch.

Meadow exploits a market inefficiency in the cannabis industry, but it also follows the Silicon Valley model of having a team with some past success and a business model. His investors, Hua says, don't see it as a weed investment as much as they do any other business.

“They are people who invest in startups,” he says. “They're looking at the team, and they're looking at the market.”

But big money — the biggest money — is still staying away, in part because a company like Meadow is still too small to attract attention from the kinds of VCs who are betting on companies valued in the hundreds of millions of dollars.

The firms who publicly announce their interests in cannabis still look a lot like Poseidon Asset Management, a San Francisco firm that bills itself as the “pioneer cannabis hedge fund.” Started by brother-and-sister Morgan and Emily Paxhia, both of whom dress and talk as if they were working in Manhattan, the fund works with individuals with a net worth of about $10 million who are willing to drop at least $100,000 into their pool of companies. (They won't name their partner companies, but note one does cannabis-laced dog-treats, and they also invested in Meadow.) For now, they are based out of WeWork, a co-working space on a formerly dodgy block in South of Market.

“This is a market that is super inefficient but yet has a lot of opportunity and a base of pent-up demand,” Emily Paxhia says.

Many of the investors Poseidon and other fledgling cannabis funds initially worked with knew very little about the industry, allowing the funds to do the research for them. The funds, in turn, looked for teams that had business sophistication recognizable to veterans of other capital-backed industries. That was once a rarity in cannabis; that's changed.

“We are seeing many more Ph.D.s and MBAs and years of strong business experience coming in,” says Al Foreman, a former JP Morgan investment banker who is now a partner in Tuatuara Capital, a New York City investment firm that announced a $26 million fundraising round last summer — followed by a partnership with country music legend Willie Nelson to sell a “Willie's Reserve” brand of cannabis in Colorado and Washington state.

Startups that touch the plant have to work harder to find the right investors, even if they have that kind of management team in place that's both attractive to capital and willing to take it on. It took Michael Steinmetz, another tech sector alum who is co-founder and CEO of Flow Kana — a farm-to-table delivery startup that hopes to enter the wholesale market as a brand of heirloom, outdoor organic cannabis — six months to fund his company when he was planning on only three.

“I got a lot of nos up front,” he says, in a lightning-fast patter with a hint of an accent from his native Venezuela.

While he won't identify his backers or where they got their capital from, he describes them as older investors, with enough success behind them that they were willing to take a bet on something new.

“One told me, 'I'm too old to invest for money,'” he says. “'I want to see cool shit out in the world.'” (There were plenty of shark-like types from dubious firms and “accelerators” who may as well have been flipping housing, he added. But those meetings ended quickly. “They were scummy, bro.”)

Flow Kana's business model relies on small farmers. Based in remote hills in places like Mendocino County, they are able to use the company's platform to get their names known — and perhaps to become brands — and to get their product to market.

California's small farmers may have the most to lose as cannabis takes on capital investment. Though none who would go on the record could be found, some of the biggest buy-ins have been in production facilities.

“Everybody and their mother is growing right now,” Steinmetz says. “There are huge commercial grows … the amount of cannabis that's going to come on line in the next few years is three to five times what it is now.”

Competing with that kind of volume will require cooperation heretofore unseen in the state's cannabis-producing regions, where processing is still done on-site at small farms, by unskilled labor — the famous “trimmigrants” of the Emerald Triangle. To stay afloat, Steinmetz sees a co-op model similar to coffee or cacao beans, where multiple small farms share a production and processing facility.

Building something like that will take capital. In other words, to beat Big Pot, you have to play its game.

“Pretending we can build this industry without capital is false,” he says. “There is so much that needs to get better. And the only way to do that is to get investor money.”

The last time I spoke to Steve DeAngelo in person, the pigtailed and porkpie-hat-wearing co-founder and public face of Oakland's Harborside Health Center — by reputation and self-proclamation the biggest cannabis retail outlet in the country — was at the head of a protest, where an angry crowd holding signs calling for the federal government to lay off his business, which had just been served with an asset forfeiture lawsuit by the federal Justice Department.

When I meet him at his second-floor suite in a small office park near the Oakland waterfront on a recent morning, he's blasting Bob Marley from his Spotify account as his two Chihuahua mixes flit about the room in between resting on office chairs. Marley Natural will launch at Harborside the following week, and DeAngelo is trying to “reconnect” with Bob prior to the big day. (Not that Harborside needs the business; when I visit the dispensary, a few minutes away up the Oakland Embarcadero, it takes me almost half an hour to make my way through a 30-person deep line to one of the eight sales counters — in the middle of the day on a Thursday.)


“I'm not afraid of quote-unquote Big Pot,” DeAngelo tells me in between sips of milky tea.

But if there is a Big Pot in Northern California, it would be DeAngelo, a former petty weed dealer from Washington, D.C. who founded Harborside in 2006 — and enjoyed incredibly fortuitous timing, as a dispensary in Hayward on track to sell $52 million worth of cannabis was raided the following year, giving Harborside, one of only four dispensaries allowed in Oakland, almost total access to that market sans much serious competition. DeAngelo went on to co-found Steep Hill Labs, one of the Bay Area's biggest cannabis testing facilities, and was a cofounder of the ArcView Group, the cannabis industry's first big network for accredited investors.

Harborside recently received initial approval from Monterey County officials to open a massive greenhouse in the Salinas Valley, one of dozens he and other cannabis entrepreneurs are hoping to open in the land of Steinbeck.

DeAngelo's vision is to have cannabis products in every household in America. To do that, and to begin in Monterey, Harborside — which already sells enough marijuana to become one of Oakland's biggest taxpayers — had to take on investment. DeAngelo formed a for-profit public benefit corporation that will eventually own all of the company's assets — à la Google's Alphabet — and has hired professional people like John Yost, the ad maven who worked on the campaign that launched Yahoo in the 1990s.

And neither he nor the market will have any patience for entities who decline to modernize.

“Yes there will be a battle for the cannabis industry's soul,” he tells me with increasing intensity. “And yes, there will be a lot of displacement as the industry professionalizes.”

“But here's the hard truth,” he says, leaning forward. “The really hard truth. Because cannabis has been illegal, there have been a lot of people able to sell cannabis, to grow cannabis, and to advocate for cannabis in ways that are not terribly effective. For a long time, you've been able to grow fairly mediocre weed, run a fairly mediocre dispensary, and skate by for a long time. You could be a cannabis, quote-unquote advocacy organization that takes in a lot of money and doesn't get anything done.”

“Those days,” he says, leaning back in his chair with a sense of triumph, “are ending.”

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