The cannabis gold rush is full of aging white guys who've never smoked. Does that matter?
When I was invited to attend the Viridian Capital Advisors Cannabis Investor Conference in January, I had an image in my mind of what to expect.
The sleek, monolithic name "Viridian"—a nod to the color of marijuana that simultaneously sounds as corporate as possible—gave me a clue. I pictured rows of middle-aged men of means, eager to drop money on something still mostly on the precipice of becoming a truly legitimate industry in 2016 in the United States. A group of guys who spent 1969 getting MBAs instead of caravanning to Woodstock. People who do not, and possibly never have, smoked weed.
I was not disappointed.
It was bitterly cold and windy on Manhattan's West Side when I trekked to the venue, which in a bit of delicious irony was held at the John Jay College of Criminal Justice. People were wandering around the lobby, a sea of blue and gray suits. A few other journalists were there, immediately identifiable by being decades younger than almost everyone else.
Businesses slotted to present to investors had tables set up, and I did some mingling before we were invited to the auditorium. One company that I'd earmarked for attention beforehand was CannaKorp, which touts itself as "the Keurig of weed" and whose product is a giant vaporizer called the CannaCloud that uses single-use pods. ("The X of Y" is a popular elevator-pitch convention when talking about startups, but in this case CannaKorp had actually poached some former Keurig employees.)
While talking to a CannaKorp representative, I met one of the other journalists at the conference, a woman of color about my age. She and I talked briefly about the makeup of the crowd. I mentioned the irony that so many older white people were already poised to profit on the legalization of cannabis, the long-running prohibition of which has been responsible for the incarceration of many others, disproportionately people of color. We both laughed, in the way people laugh at something that isn't funny.
We were welcomed into the auditorium. I sat down and set up my phone for recording. Then I heard it: Bob Marley's "I Shot the Sheriff" playing in the background.
Viridian Capital Advisors, the group hosting the event, is an "investment bank and advisory platform" dedicated to the medicinal cannabis market. The companies under its wing include those dedicated to "smart" growhouse lighting, such as HelioSpectra; grow facility security, such as Canna Security; and even marketing analytics like CannaSys. Founded by Scott Greiper in 2014, Viridian is small but serious, and Greiper himself has been an investment banker specializing in emerging markets for 20 years.
One of those emerging markets was homeland security. Greiper is also president and founding partner of Secure Strategy Group, another investment bank focused on security and defense technology.
"One of my favorite things in life is to be first in doing things," Greiper told us during his introductory speech. He seems to be decent at it.
Greiper spoke at length about getting Viridian off the ground, and explained the full name of that day's event, which was "Investing in the Emerging Cannabis Industry While Managing Risk." "Risk" didn't refer to financial risk, Greiper said, but "reputational risk," something many potential investors are concerned about.
Referring to the entrepreneurs slated to present, Greiper said, "These are not guys from the corner of Haight-Ashbury that decided to get into the industry and cut off their dreads." Neither, clearly, are the investors. And this is touted as a net positive.
"There are still people who believe that we're nothing more than drug dealers in white coats. That we're Snoop Dogg with a dime bag behind the 7-11."
Does it even matter if these guys—and it was at least three-quarters men at the conference, by my estimate—are seemingly out-of-touch Wall Street types? The notion of all these finance guys eager to stake a claim in a cannabis gold rush worth $5.4 billion in 2015, and projected to be worth $11 billion by 2019, curled my lip. But is it hopelessly naive to think that people who've never smoked can't effectively represent marijuana's potential medicinal benefits?
I wanted to sit down and have an honest conversation about the industry with someone on the inside, someone who was also interested in marijuana solely from a business perspective and who didn't partake, though perhaps someone who was also less sharklike than the crew on offer at the recent Viridian investors' conference. As it happened, I knew of just the person.***
After the conference I called up David Reader, the father of a close friend and who is on the R&D team of a Florida-based company called AltMed.
AltMed was founded in 2014 by two former pharmaceutical executives and is structured as a holding company with several subsidiaries. It's designed to cover a wide swath of the industry, from growing medicinal cannabis to selling cannabis-related accessories, and aims to bring the biotech resources and precision of the pharmaceutical industry to the world of medicinal cannabis.
AltMed's goals are currently a big point of focus in the cannabis industry: One should expect a degree of quality control while imbibing some form of THC (tetrahydrocannabinol, weed's psychoactive ingredient) or CBD (cannabidiol, one of the plant's other active compounds) for medicinal reasons. Patients should know the THC/CBD concentrations of what they're smoking or eating, be able to expect consistency, and also should know which concentration and ingestion method is most appropriate for their given ailment.
Florida's allowances for medicinal use of cannabis are currently quite restrictive, only allowing low-THC marijuana use, and only in patients with cancer or seizures. But that very well could change in the next several years, and AltMed wants to be in place for when that happens.
"From our perspective, Florida's existing medical marijuana scheme didn't present a business model that we believed was as attractive as we hoped it would be," Reader said. He did mention that Florida has new legislation due for a vote in November, and he said it looks like it might pass. The last time Florida voted on the issue was in 2014, when advocates of expanding the state's provisions for medical marijuana came just over two percentage points short seeing the bill pass.
For the time being AltMed's grow facility is in Arizona, one of 23 states that have legalized medicinal marijuana in some capacity.
Watch HIGH COUNTRY, Motherboard's 2013 doc on the Silicon Valley of weed.
AltMed is also forming a nonprofit to help educate communities about medical marijuana in hopes of dispelling some unfounded fears.
"Think about where everybody's coming from," Reader said. "Think about Reefer Madness, and the [70s] war on drugs. "There are still people who believe that we're nothing more than drug dealers in white coats. That we're Snoop Dogg with a dime bag behind the 7-11."
Between 2001 and 2010 over 7 million people were arrested for possessing weed, according to the American Civil Liberties Union. And people of color were almost four times as likely as whites to be arrested despite both groups using marijuana in similar proportions. What do we do when so many of the people poised to make money off cannabis are white men, and when thousands of people of color are incarcerated in the US for nonviolent marijuana-related offenses?
It's a question Reader thinks we need to grapple with as marijuana is further legalized.
"There are lots and lots of white faces" in the industry, he said. "And someone who's not white is going to look at this and say, 'These guys are getting away with it, so why is my cousin in jail?'"***
Of course, there are people of color who have been or are currently deeply involved with the medicinal cannabis industry. Take Wanda James, a Colorado restauranteur and former co-owner of a medical marijuana dispensary. I called James to get her opinion on the racial divide in the burgeoning marijuana market.
"It's not just about the industry itself," said James. "It's not like people who are involved in the industry are anti people of color being in the industry. The bigger issue comes from the regulatory framework … and the fact that law enforcement has decimated the black and brown communities by arresting mostly young black people between the ages of 17 and 24 in droves, causing them to have felony convictions."
James and her husband, Scott Durrah.
This is something I spoke to Reader about as well—that it'd be great if we could help young people with possession charges go straight, so to speak, by becoming bud-tenders and growers and entrepreneurs. But no grow operation or dispensary will want to hire someone with a serious rap sheet, so scores of nonviolent people are effectively barred from participating.
"Now that cannabis walls are falling and people are making money, it's absurd to me that people in certain zip codes are becoming millionaires while people in other zip codes continue to become felons," James told me.
The industry isn't to blame for this, though it is in a prime position to push for justice. As legalization spreads and the cannabis profit grows, Big Weed could lobby for convictions to be overturned, for charges to be vacated. But I saw no sign at the conference of anyone concerned with giving back, of leveling the playing field, of righting the wrongs wrought by the war on drugs.
For her part, James doesn't fault anyone for wanting to make money.
"My begrudgement comes when we stop people from being able to participate in the business aspects of marijuana," she says. "And that's effectively what we're doing right now."***
Like both James' former dispensary and AltMed, the Viridian conference as a whole was focused primarily on medical marijuana. After all, only four states, plus Washington, DC, have legalized cannabis for recreational use. Plus, I got the sense that operating under the auspices of helping sick people makes outside investors more comfortable with the idea of spending large sums of money on something that's still landing disproportionate numbers of the less fortunate in jail.
To that effect, the keynote speaker was Dr. Sue Sisley, accompanied by US veteran Sean Kiernan. (Sisley was the only female speaker at the conference.) Both are passionate advocates for legal medicinal marijuana: Sisley through her medical work, and Kiernan as cofounder of advocacy group Weed 4 Warriors. Sisley is currently working on a FDA-approved trial using marijuana to treat combat veterans with post-traumatic stress disorder. Kiernan suffers from PTSD himself.
Sisley and Kiernan's talk was the event's emotional hook. It's hard to walk away from hearing about Kiernan's first-hand experience with combat-related PTSD and not think legalizing cannabis, at least for medical purposes, makes sense. When it comes to treating PTSD, weighing addictive benzodiazepines and anxiolytics that come with a host of side effects against weed, which comes with far fewer negative side effects, is more or less no contest.
But now that the investors were primed and ready, having heard about all the good marijuana could do for the troops, it was time for the business pitches.
The organizers had made it clear that no deals were to be made at that day's event. But they were pitches all the same. And they unfolded much like any other business presentation would, to the point I could have been attending a conference on just about anything else.
Viridian seems to think it's special, though. Even quirky.
"There's serious money to be made," Greiper told the investors in his speech. "But one of my favorite parts of being in this industry versus homeland security, which is generals and admirals and the Department of Homeland Security and the chief of police—and I love those guys, I do business with those guys, [but] they're boring." Greiper implies that working with the cannabis industry means dealing with a less formal, less uptight group of people, unlike Homeland Security.
Some of the ideas presented had real potential, from a business perspective. CannaKorp, by adopting Keurig's successful product model, is positioning itself for adoption by an older demographic of medical marijuana consumers who'd be into having a sophisticated, dedicated appliance for imbibing. HelioSpectra is dedicated to developing LED lighting systems for grow houses; LEDs are much more energy-efficient than a lot of lighting systems currently being used, both reducing a facility's carbon footprint while minimizing electrical costs. (The cannabis industry currently uses 1 percent of the nation's electricity, which is no small amount considering the industry's relative size.)
But as I milled around the company booths after presentations were over, watching a sea of identical-looking men shake hands, I wondered if the industry is really going to end up looking like this. Here were a bunch of people who didn't seem to care much about either the fraught sociopolitical history of cannabis or the basic spirit of the substance. And who definitely didn't address it.
Of course, not every player currently in the cannabis industry is like this. Motherboard sister site Broadly recently visited a weed wedding expo in Colorado, and the entrepreneurs there seemed like a more fun-loving, potentially empathetic crowd. But in the eyes of the classic American businessperson, these mom-and-pop outfits aren't making the money they could be. The next wave is looking to bring rigorous quality control, professional marketing, and vertical integration to the industry.
"A lot of times we get caught up in America thinking we can only talk about subjects in one way, when the subject of cannabis is so interesting because it's a catch-all."
One would hope there could be space for both types of venture in the near future, or that middle-ground companies like AltMed, which are at least interested in giving back to the community by increasing awareness, would take a sizeable chunk of the market share. With recreational marijuana, there will always be an appeal to using boutique, sui generis products, because recreational weed is still considered more of a luxury item.
But with medical cannabis, the Big Pharma equivalents could end up taking all. At the end of the day, business is business. Viridian is as much the color of money as it is the color of marijuana. So what does it mean, exactly, when a business owner doesn't have direct firsthand experience with his product?
As Reader told me, "Would you be asking the same question of someone who started a store to sell gift wrapping?"
But after hours of presentations, this was the burning question that remained. I went to every occupied booth—there were at least a half-dozen—found one of the company's representatives, and asked if they smoked bud. In the hopes of promoting honesty, I didn't record them and I promised neither their name nor their company's name would be associated with their answer.
One guy, who actually turned out to be the "cannabis tester" for CannaKorp—what a job—said yes. Everyone else said no. A few seemed annoyed that I would even ask the question.
But why should it matter? Cannabis is an extremely multifaceted business, and when you examine it critically you have to take many factors into account, as James told me.
"A lot of times we get caught up in America thinking we can only talk about subjects in one way, when the subject of cannabis is so interesting because it's a catch-all," she said. "It's about jobs, it's about money, it's about healthcare, it's about cancer, it's about social justice, it's about mass incarceration, it's about new forms of revenue. I mean, it's about so many things."