Marijuana legalization is the hottest story in the US today. 22 states have authorized sales in some form; Denver has more legal marijuana dispensaries than Starbucks franchises. We are witnessing the dawn of a new industry. And like the early days of gourmet coffee chains, the rules and players are being established on the fly.
Christian Hageseth is the face of the revolution-an entrepreneur and father of three who worked in the white-collar professional world for 20 years before opening his first dispensary. The Founder and Chairman of Green Man Cannabis, the fastest-growing legalized marijuana company in the country, he's the perfect tour guide through the wild frontier, where police hardly know what laws to enforce, or parents what to tell their kids. He paints a colorful picture not only of how he got into the business, but of the big interests that are eager to do the same-namely Philip Morris, Monsanto and a who's who of Big Pharma. He predicts a future where the marijuana market splits in two: the high-end, artisanal market, supplied by individual growers and small farms, and the mass market, covered by the cigarette giants and anyone bold enough to compete with them. Much like beer and coffee, your brand of weed will be just one more reflection of your lifestyle. It's an entrepreneur's dream, and Hageseth invites us along in Big Weed as he pitches skeptical investors, negotiates a shaggy cast of colleagues, and builds the biggest business he can.
|Publisher:||St. Martin's Press|
|Product dimensions:||6.20(w) x 9.40(h) x 1.10(d)|
About the Author
CHRISTIAN HAGESETH is a seasoned entrepreneur in the food, finance, and real estate industries, and the founder of Green Man Cannabis, the fastest-growing and most innovative legal marijuana company in the country, which last year produced the best pot in the world. In 2014, Green Man Cannabis won the 2014 US Cannabis Cup, the marijuana industry's highest award for product excellence. He lives in Denver, CO.
Read an Excerpt
An Entrepreneur's High-Stakes Adventures in the Budding Legal Marijuana Business
By Christian Hageseth, Joseph D'Agnese
Palgrave MacmillanCopyright © 2015 Christian Hageseth
All rights reserved.
Brave New World
It all started the way a lot of businesses begin—on the golf course.
The year was 2009, and I was between jobs. My attorney and good friend thought it might be a good idea for me to meet a client of his. He invited us to come play at the Red Rocks Country Club, one of the nicer country clubs in Denver, nestled in the same geologic formation as the iconic Red Rocks Amphitheatre.
The guy I met, Jake, was a stocky Latino, with the build of a boxer.
"What kind of business are you in?" I said.
"You'll like this," my lawyer said, with a smile on his face.
"Marijuana," Jake said. "Legal, medical marijuana."
Oh yeah, I thought. I'd heard something about it, only in the vaguest way. I was a citizen of Colorado. I read the papers. I watched TV. And I knew what the average citizen knew: Voters had approved a law allowing medical marijuana back in 2000. Since then, the cannabis industry had risen from home growers cultivating a few plants on behalf of a few patients to a small number of professional dispensaries scattered throughout the state. But that was about all I knew. I had never set foot in one of those places. I knew nothing about the business. I was a businessman with a wife and three kids. And when medical marijuana was in its infancy, I was busy running a real estate enterprise.
That said, I also was no angel. When I wanted to get high—and I did, from time to time—I bought my weed the old-fashioned way. From a buddy.
"As a matter of fact, gentlemen," I said, rooting around in one of the pockets of my golf bag, "I have some on me right now."
With a flourish, I whipped out a wooden "one-hitter," a small wooden box that had both a small metal pipe and a small storage area that contained some ancient street weed. I had no idea when I'd bought this marijuana or how long it had lain hidden in the confines of my bag. I was just foolishly proud of the fact that I had it. Like I was some cool businessman living on the edge. Counterculture and proud.
Well, Jake took one look at that shit and shook his head. "Check this out."
He produced his own Ziploc bag and handed it over.
My God, there was no comparison. My weed was nearly black with age and smelled like the ass of a mummified skunk.
Jake's weed consisted of plump, sticky buds that were bright green and shot through with fine tendrils of floral color. They looked exactly like what they were: the flowers of a beautiful, generous plant.
"Where did you get this?" I said. I needed to know his guy!
Jake just laughed.
I looked over my shoulder to be sure we were alone. On a weekday in summer, a golf course can be one of the most deserted places on the planet.
"Can we smoke this here?" Jake asked my attorney.
Well, we did, and we were still smoking when we got to the seventeenth hole, and let me tell you: Oh, wow. The beautiful view from the seventeenth hole at Red Rocks County Club just became that much more spectacular. Looking down the fairway as it disappeared out of sight, the tall buildings of downtown Denver seemed to be just beyond the hole.
The second I took that first puff, my mind expanded. And I don't mean that in the woo-woo, New Agey sense. I mean it in the practical sense.
One puff, and I knew.
I could smell, feel, and taste the difference between the street weed I'd smoked as a kid and the prime stuff lovingly created by someone who knew what he was doing.
It was like night and day.
Like the difference between that $8.99 cabernet sauvignon you tossed in your shopping cart at the supermarket because you needed some wine, any wine, tonight with dinner and that amazing bottle the sommelier brought to your table last year when you wanted something special for your anniversary.
Like the difference between a hastily gobbled Snickers bar and a nibble of an artisanal bar of hand-crafted chocolate with 70 percent cocoa content.
Like the difference between Coors Light on a hot summer's day and a microbrew crafted with the freshest hops possible and a few other things you didn't even know you could put in beer.
Holy shit, I thought. I've been smoking ditch weed all my life.
"You should stop by," Jake said. "We can help you get your red card."
I didn't even know what that meant.
Maybe you're like me. When I get excited, I start thinking about possibilities. Opportunities. Implications. It took me all of ten minutes to go from a guy falling in love with what was getting him high to a business guy with some pretty obvious questions.
"What's it cost to grow?"
Jake squinted as he lined up his shot. "Um, it varies."
"Well, what's your margin?" He looked quizzical. "Your profit," I said, trying to make myself clearer. "The difference between what it costs you to grow and what you sell it for. That tells you how much profit you're gonna make."
"Well ... I don't know exactly, but the business has been great so far."
I looked at my attorney.
Jake was a nice guy. Medical weed was only his most recent endeavor. He had started a franchise restaurant, made it successful and sold it off, so he knew a good bit about business. And he knew a lot about weed. He had learned how to run somebody else's business, but was he up to the challenge of creating something out of nothing? That is an entirely different skill set. It also happened to be my skill set.
Jake, incidentally, has come a long way. As I write this, he and I are the respective chief executive officers of two of Colorado's largest legal marijuana companies. We see each other occasionally at industry events and recently we met with the governor of Colorado together. But that day on the golf course, he needed some help, so I agreed to do a brief consulting gig with his firm.
In that moment, though, before my buzz dissipated, I saw an entirely different business in my mind's eye. I saw it as if it had already been built. They say that Michelangelo saw David inside that marble slab and only had to help the statue find its full expression. That's how I felt when I realized what a great marijuana company could be like.
* * *
A few days later, I was sitting in the office of a physician who worked in Colorado's growing medical marijuana trade.
If you wanted to buy medical marijuana in the state of Colorado, you needed to have a red card—official proof that you had jumped through all the hoops. Doctors didn't write "prescriptions" for the stuff, they wrote "recommendations."
The doctor Jake hooked me up with was in his eighties. Kind eyes. Fuzzy gray hair loping over the tops of his ears. "So what's troubling you?"
Where do I start? The poor doc didn't have enough time in the day to hear it all. Did he really want to hear how I'd lost my company more than a year ago when the market crashed? Did he really want to hear how I'd almost brought home a seven-figure payday—and then didn't?
"Anxiety," I said, hitting upon a diagnosis he could probably use. "I have trouble sleeping. Been through a tough time lately. Does anxiety work?"
"No," he said. "It has to be one of the six qualifying conditions approved by the state, a physical ailment that the marijuana can help you treat."
That was marijuana's gift to the world, its raison d'être in the new medical marketplace. While the rest of us prized it for its ability to get us high, there were people living with chronic illness—cancer patients, AIDS patients, to name a few—who wanted marijuana for its ability to extinguish pain, stimulate appetite, and banish nausea.
Wait. Back in my youth I'd suffered an injury in a snowboarding accident and compressed a thoracic vertebrae in my back. The injury still bugged me. So much so that I used an inversion table to hang myself upside down from time to time. Stretching myself out was one of the only ways I'd found to chase the pain and numbness away.
"That'll do," the doctor said.
He initiated the paperwork and helped me fill out the state application. I stepped outside to get it notarized by someone in his office. Next, I needed to stop by the post office and mail it in to the state via registered mail. But I could walk out of the doctor's office right now and buy up to 2 ounces of weed per visit.
It sounded too good to be true. In fact, a lot of habitual marijuana users thought so, too. That's why they stuck with buying their weed off the street.
As I was about to leave, I lingered in the doctor's office. I have a soft spot in my heart for docs. My dad was a former U.S. Navy flight surgeon. In December 1968, he soloed for the first time, earning his wings. The very next day, he delivered me at the hospital at the Naval Air Station in Pensacola, Florida. I grew up all over the United States—North Carolina, Washington, California, and finally Colorado. Ours was an interesting childhood, to say the least, but a distinctly middle-class one. The thought of an elderly doctor willing to write recommendations for marijuana struck me as odd.
"If you don't mind my asking," I said, "why do you do this?"
He shrugged and gave me another smile. "I always thought marijuana was harmless. I'm glad I'm able to finally do this for people."
* * *
Now that I had a red card in my pocket, I could legally enter any marijuana dispensary in the state. My first visit to Jake's business impressed the hell out of me. Imagine walking in and hitting a wall of that powerful marijuana scent. Once again, I was blown away by the contrast between the smell of street weed and fresh marijuana.
Jake's crew had about ten tall glass jars, maybe a half gallon each, with latch lids on them, crammed with fat, healthy, colorful buds.
His staff—people who called themselves "budtenders"—blew my mind when they asked me a single question: "What kind of marijuana do you like to smoke?"
Well, shit, I didn't even have the mental framework to be able to answer that question. As far back as I could remember, there was only one kind of marijuana and you got it from a buddy ... who knew a guy who knew a guy who was going to pick some up from his friend today. So, if you brought your money by now, your buddy would have it later today. And sometimes those best-laid plans just didn't go down.
I remember being just a kid, about twelve years old, the first time I saw my older brother and his friends giggling over a black plastic film canister he was holding in his hands.
"What's that?" I asked them.
"Nothing! Mind your own business." They blew me off, dashed into my brother's bedroom, and locked the door behind them.
But I didn't give up. "What's that?" I asked the next time I saw them toting one of those little canisters.
And then one day, my brother blurted, "It's just grass." The smirk on his face gave it away.
It's just grass.
It's just grass.
And then one day, they let me have a little toke. Wow. I laughed for the next few hours.
I smoked in junior high and even high school. Not often, and I never allowed it to interfere with my relatively normal life. I played football and rugby and hung out with the jocks and preppies more than the stoners.
But the memory of marijuana still remained with me, as did the whole marijuana experience. The semi-ridiculous dance of calling around all of your friends to see if anyone knew someone who had some. Finally finding that one buddy ... who knew the guy who knew a guy. Then hammering out a price. Pulling together all the crumpled fives, tens, and singles you and your friends could muster. The meet. The buy. The furtive smokefest in your parents' basement, always accompanied by the post-toke, rapacious romp through the pantry. Lots of laughter. Music. TV. The paranoia that sometimes gripped us: Would someone notice our red eyes, our incessant laughter, or the remnants of our outing?
That was the 1980s for me.
The marijuana we smoked as kids was always sourced the same way. We had one choice, paid one price when we were lucky enough to get to the guy who knew the guy.
But here in Jake's dispensary, I was beginning to learn that there were lots of different types of marijuana. Different strains. Each with different names and different personalities.
I had a lot to learn, but right now I needed to get down to business. I needed about five or six hours with Jake to figure out how his business actually worked so I could put together a spreadsheet that spelled it all out.
The numbers were fascinating. It cost vendors like Jake about $500 to $800 to grow a pound of legal marijuana. That probably sounds like a lot of money. It did to me. But what did I know? A plant is a plant is a plant. People grew tomatoes and lettuce in their backyards each summer, and it wasn't rocket science. I didn't understand why marijuana had to be that much more difficult or expensive. The kicker was guys like Jake could turn around and sell one of those same pounds—at a quarter-ounce at a time—for $6,400 retail. Or he could sell a pound for about $4,000 wholesale at that time.
A profit margin of 800 percent to 1,300 percent. Un-fucking-believable!
The numbers looked good for a retail business. Really good.
So much so that I couldn't get the marijuana business out of my head even after my consulting gig with Jake was up. I was talking about it with everyone I met.
What surprised me was that, although everyone in the upper-middle-class suburban social circle I hung out in had heard that medical marijuana was now legal, very few people had had much experience with it. They'd say the most ridiculous things when I brought it up.
"I know it's legal, but you can't really buy it, can you?"
"It's still against the law, though, isn't it?"
"I don't care if it's legal—it's still wrong!"
And on and on.
I remember the first time my then wife confronted me about it. "What's with this marijuana stuff?" she said.
"It's going to be huge," I said. "It's an amazing opportunity. I am going to take some time and look into it."
"You have children," she reminded me. "You have a family. You need to get a job and bring home a paycheck!"
She had grown up in a fairly conservative Colorado family. Sure, like a lot of people her age, she had smoked marijuana, but she didn't like it, and that was that. Marijuana was wrong. It was something stoners, losers, and criminals did. She didn't see why I found it intriguing. And she had a very different risk tolerance. My entrepreneurship had always made her uncomfortable. Being an entrepreneur in the weed business really made her uncomfortable.
You don't have time to be wasting on bullshit "opportunities," she thought.
We have five mouths to feed.
We have an expensive lifestyle with a mortgage and a couple of cars to pay for.
Chris, what you need right now is a good job.
A real job.
With a decent paycheck.
You know—like the one you used to have.
* * *
Apparently I used to be somebody. A contender. A mover. A shaker.
Once I was the founder and CEO of a national real estate company. During the booming housing market, which lasted from 2002 to 2008, I developed a novel way of financing pools of real estate. I had executed it only a couple of times before forming a company to do more, similar deals. You can only structure so many securities before you exhaust your exemptions with the Securities and Exchange Commission. If I wanted to keep using this method, I had to launch a public offering. I'd never done such a thing. I was thirty-eight years old at the time and a self-made millionaire.
I'd spent the last six years building a real estate corporation initially devoted to increasing the value of residential real estate. As the housing market started heating up in the United States, my company began buying properties all over the country. The demand for housing was insatiable, and it seemed as if every investor and bank on the planet was throwing money at us.
Our process was fairly simple. Basically, we'd assemble a group of, say, twenty investors, each of whom would buy one property. Each investor would then contribute the property in a tax-deferred exchange into a limited partnership. Then the pool of properties would be managed and eventually sold or exploited for their cash-flow potential. The owners of the limited partnership would then receive the benefit of the sale or the cash flow that stemmed from the rent we were charging our tenants. A structure like this allowed each investor to spread the risk over the entire pool of properties. This diversification of risk and normalization of return was the premise I'd built my business upon. And it had worked wonderfully—until it didn't.
Everything I'd done in the last six years was building up to that public offering, with a net asset value of $1 billion.
My company stood to earn $17 million at offering alone and much more over time.
And I, the humble servant to this paragon of American entrepreneurship, would be taking home a solid seven-figure payday to my loving wife and three adorable daughters.
I made this happen.
I had it coming to me.
I had earned it.
It was American capitalism at its best.
Excerpted from Big Weed by Christian Hageseth, Joseph D'Agnese. Copyright © 2015 Christian Hageseth. Excerpted by permission of Palgrave Macmillan.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
1. Brave New World
2. My Education
3. First Grow, First Blood
4. The Beauty of Failure
5. Don't Bank On It
6. The Haze of Paranoia
7. Seed-to-Sale to Bust
8. The Cannabis Ranch
9. Family: Hageseth, Genus: Cannabis
10. Best in Show
11. Marijuana's Mecca
12. Marijuana on the Ballot
13. Looking for the Win-Win
15. The New Marijuana Economy
16. The Cannabis Ranch