Corporate Cannabis

The costs and benefits of California’s biggest up-and-coming industry

7 min readJun 27, 2017

Only a year ago, obtaining recreational marijuana was defined by the potential for great social and economic risk — growing and distribution were marred with criminal practices, strains were not consistently reliable and the only way to deal in the light was with a fabricated medical card. Today, one needs only to stop by a local dispensary, choose a strain of choice and be on their way.

With the passing of Proposition 64 on the Californian ballot in November 2016, the recreational consumption of marijuana was made legal for all persons over the age of 21 in California. There have been many positive benefits associated with legalization — an entirely new industry has been born of lifted restrictions, allowing for an influx of corporate, capitalistic investments into the cannabis market that promote economic vitality. However, this growth and change is not without consequences; there are the beginnings of what could be a systematic exclusion of minority groups, and many local, small-scale cannabis growers who depend on cannabis profits as their primary source of income will soon be priced out of the market.

The result — the cannabis industry is one marked by contrast; two different worlds collide as cannabis workers chart entirely new waters in post-legalization California.

Nothing captures this peculiar conversation better than the Cannabis Business Summit & Expo, a three day convention held June 12–14 at the Oakland Marriott City Center.

Despite any expectations one might have about a cannabis exhibition, the business summit could have been mistaken for one concerning engineering, law or other traditional industry. The enormous ballrooms are packed with men and women — all in suits, all under the age of 30 — selling their services, networking and soliciting investments.

The strangest thing is, there’s no actual marijuana to be seen. There’s a few people smoking outside the Marriott, but for the most part, any actual cannabis has been tucked away. It’s a symptom of the larger problem of the young industry — combating stigma, in an effort to appear as professional as any other business.

The productivity of the cannabis industry — from a corporate perspective — was kick-started in 2012 with the passing of the legalization bill for recreational marijuana in Colorado. Opportunists from every major industrial sector began to see the potential for traditional firms to cater to the needs of cannabis-based interest groups. Insurance companies, consulting firms, equipment installation teams, technology developers and legal groups sprung up left and right to accommodate the rapidly expanding world of cannabis.

Cayce Bolt, for example, is an account executive at MJ Freeway, a company that specializes in accommodation software, data and accounting — which means it keeps track of a grower’s inventory from “seed to sale.” MJ Freeway also offers up consulting for companies that aim to register as licensed businesses.

According to Bolt, a client (typically a business, rather than an individual) can expect to pay up to $10,000 for his company’s services. Cannabis may be lucrative, but there’s plenty of challenges associated with entering the sector.

Rick Gilcrest, the chief development officer at Guardian Data Systems (an insurance company for dispensaries and growers) admits that much. The difference between a cannabis business and a regular business, Gilcrest explains, is that most traditional sectors — insurance, banking, legal, etc. — aren’t willing to touch cannabis.

Despite the potential to be a billion dollar industry, most executives see cannabis as simply too risky. It’s a concern that’s well-founded; after all, the cannabis industry has been dominated by legally questionable practice for decades. According to the Drug Policy Alliance, over 600,000 people were incarcerated for marijuana law violations, and thousands die every year in the War on Drugs.

Kendra Minkler is the regional sales manager at Urban Grow, a company that installs horticultural technology (such as greenhouses and irrigation systems) for cannabis cultivators. The majority of her clients are individuals aspiring to start up a large-scale business to avoid being swallowed up or priced out of the market by other more productive cannabis companies.

Minkler notes that her work with Urban Grow directly impacts small-scale “mom-and-pop” growers, who may depend upon the sales of cannabis for economic survival.

“It’s a shame, but it is the nature of going legal,” explained Minkler. “In California — we saw this in the other states as well — any time you put regulations on people, it hinders the smaller companies — the mom and pops — from being able to afford to play. That is a fact, and that is not just cannabis — that is every regulated industry.”

Despite this inevitable march towards progress, Minkler notes corporations are still fighting with traditional businesses against the cannabis stigma.

“Everyone, especially older generations who still have a negative opinion about cannabis, those are the ones running those companies, and those are the ones made shareholders, and they don’t want to be involved,” said Minkler. “The industry will progress and get bigger and more professional, and I don’t think it necessarily needs to lose the charm of cannabis — which is incredibly important in California — the history and the culture that we’ve built up here.”

Those that evoke the “charm of cannabis” — individual growers and dealers — face a wholly different set of obstacles. Small scale cannabis works simply cannot find banks that are willing to finance them. As a result, they deal primarily in cash, a practice that brings its own risks.

“For our customers, banking is a big problem, which is a problem for me, because now I’m picking up large sums of cash on the regular,” said Minkler. “Which as you can imagine is not super safe.”

Given the tremendous amount of risk involved, there are groups that exist to protect mom-and-pop workers from incriminating themselves, and from economic collapse.

Kayvan Khalatbari is a mayoral candidate in Denver, Colorado and the director at the Minority Cannabis Business Association, a non-profit that raises awareness of diversity issues within the cannabis community. According to Khalatbari, racial minorities are significantly underrepresented in the industry; there are no minority-owned cannabis businesses east of Colorado, and in Colorado, there are only two.

Video by Paola Barreto, Interview conducted by Shannon O’Hara

“Very few people of color can play, so we want to open it up to more licenses,” explained Khalatbari. “They’re very burdensome to people of color, people who are underserved, disenfranchised in general, who don’t have literally hundreds of thousands of dollars to even apply for an application.”

Lauren Padgett and Ryan Reaves support safe cannabis usage at the student life, as managers of the Students for Sensible Drug Policy — an organization with a chapter at UC Berkeley, as well as 300 other college campuses.

Padgett and Reaves do see many positive benefits to the corporatization of cannabis — legal regulations make access to consistent, reliable cannabis product significantly safer and decriminalizes an impressive number of people.

However, according to Padgett, the majority of the wealth in cannabis is controlled by white men, and many racial minority groups may be forced to turn to black market products, which can in turn promote an unsafe, risky environment.

Legalization will bring with it a host of economic and social benefits, but not everyone will be invited to reap these rewards. The cannabis industry is marked by one certainty — it will only continue to expand.

Text by Shannon O’Hara