Read about the new ganja service industry, test your medical marijuana knowledge with our quiz, or see the full Mother Jones special report on the coming pot boom.
ON A SUNDAY IN EARLY OCTOBER, Dhar Mann threw a party at weGrow, his hydroponic marijuana superstore in Oakland, California. Trailed by a three-person video crew from Hempire, the reality-show pilot he's costarring in, Mann gave sound bites to a pack of reporters as he strutted past Ikea-style displays showcasing products for every stage of indoor cannabis cultivation—from Sun Pulse lightbulbs to $700 grow tents and Bud Candy plant nutrients. "It's the whole supply chain," said the fauxhawked 26-year-old, self-assured in a tailored gray suit and red silk tie.
Mann stopped to talk to a wholesaler who said his bongs would nicely complement the West Elm couches, hardwood coffee tables, and Afghan rugs decorating weGrow's cozy smoking paraphernalia showroom. "I want a whole variety of products like this," Mann told the bong guy enthusiastically, "because that's what makes us different from any other hydro store."
Two years ago, Mann says, he had never seen a pot plant. Today, he envisions weGrow becoming the "Wal-Mart of Weed," a vertically integrated chain of big-box stores perfectly positioned to cash in on California's booming marijuana industry as it moves from the shadows to the mainstream. In this "green rush" for semi-legal weed, Mann and his partner Derek Peterson, a 36-year-old investment banker, seek to be the modern equivalents of Levi Strauss and Samuel Brannan—the Gold Rush entrepreneurs who made a killing not from mining, but from selling pans, pickaxes, and victuals to the forty-niners.
From risky business plans to IPO dreams, the marijuana market resembles the internet bubble's early days. Where the first tech millionaires had Wired, the new "ganjapreneurs" have Rosebud, a glossy with ads for $230,000 Bentleys.
"Derek and I have really thought about how we can capture the entire market segment," Mann says. Since it opened a year ago in a 15,000-square-foot warehouse near the Oakland International Airport, weGrow has aggressively tried to cover as many angles as possible: It trains aspiring medical marijuana growers at its University of Cannabis (the "Princeton of Pot"); manufactures its own brand of indoor growing gear (GrowOp); dispatches its hydroponics experts on house calls; and keeps a doctor onsite to write medical marijuana recommendations. Mann and Peterson say they've signed contracts to open 75 franchise stores in California, Oregon, Arizona, Colorado, and Illinois, and they're talking up an IPO later this year.
Like Mann and Peterson, Oakland has come to embrace the financial side effects of medical marijuana. The city recently approved a package of permits and taxes for pot-related businesses that it estimates could bring in more than $10 million annually. WeGrow has already caught the eye of local politicians, including Jean Quan, a city council member who was elected mayor in November. On a stage outside the warehouse, Quan commended the company: "I want to congratulate Derek and Dhar. And I want to say that this is just probably the first step in California and perhaps the rest of the nation."
Afterward, Peterson scrolled through messages on his BlackBerry while Mann chatted with city council member Desley Brooks. Since 2009, Mann and his employees have donated $4,300 to Quan and three other council members including Brooks, who recently signed on to a proposal to have the city issue permits for large-scale growing operations. I asked her what criteria the council would use to pick Oakland's most reputable cannabis entrepreneurs. She laughed as Mann cut in, "Tall, good-looking, handsome."
As Mann threaded his way through a throng of cameras, a dreadlocked guy who described himself as a maker of "strong herbalizations" handed him a business card the size of a pat of butter. ("We're saving trees.") Mann politely slipped the card into his wallet, but looked wary as he walked away. "It's so important not to alienate these guys," he said. "At least hear them out and give them a fair chance." The older generation of pot impresarios, he continued, "are brilliant scientists, but they are not such brilliant businessmen. That's where Derek and I can come into play, because we understand both sides."
THE EUREKA MOMENT for the new pot economy was the November 1996 passage of California's Proposition 215, a loosely worded ballot measure that gives anyone who can obtain a doctor's recommendation the legal right to consume marijuana. Enabled by a cottage industry of MDs offering discount scrips for just about anything worse than a hangnail, as many as 400,000 Californians now have carte blanche to get high. (See "Stoned in 90 Seconds.") An estimated 1,000 medical marijuana dispensaries sell strains of designer weed like Grand Daddy Purple and Afghani Goo, which can be smoked, vaporized, or ingested in edibles ranging from old-fashioned pot brownies to ganja-infused beef jerky. Last year's sales of medical marijuana in California topped $1.3 billion (PDF).
In many respects, the semi-legit marijuana market resembles the early days of the internet bubble, where start-ups helmed by young entrepreneurs with risky business plans sought venture capital and dreamed of stock offerings. Where dot-coms had server farms, the pot-coms have high-tech "grow ops"—indoor farms of wires, fans, and coiled air ducts that keep genetically selected, cloned pot plants growing 24/7. Growers have colonized Oakland's abandoned and foreclosed houses; Mann and Peterson have dubbed the electricity-sucking boomtown "Grass Valley."
The marijuana stampede has also spurred a host of high-tech services and spinoffs, from pot-locator and price-comparison iPhone apps to grow-house monitors. (See "Green Jobs.") BR Merchant Service processes dispensaries' credit card purchases, working with an anonymous bank that doesn't mind handling pot transactions. And where the first tech millionaires had Wired, the new "ganjapreneurs" have the San Francisco-based Rosebud, a glossy with ads for $24,000 computerized hydroponics systems and $230,000 Bentleys. Last September's issue featured Weeds star Mary-Louise Parker on the cover.
The mainstreaming of California's largest cash crop, worth $14 billion annually, has sparked a battle for market share. Marijuana dispensaries have traditionally sourced much of their supply from the Emerald Triangle, a trio of far Northern California counties whose main appeal to growers is its rough terrain, which keeps DEA agents at bay. Yet cannabis aficionados are increasingly demanding strains with unique flavors and powerful psychoactive qualities that are most easily bred in hothouses. Hydroponic weed sells for a 50 percent premium over outdoor strains, which has allowed both varieties to coexist. But the NorCal farmers fear that legalization would enable their urban competitors to move out of garages and closets and into warehouses, driving down prices and pushing them out of business. They fiercely opposed Proposition 19, the unsuccessful November ballot measure that would have legalized marijuana for recreational use in California. All three counties of the Emerald Triangle, including liberal Humboldt and Mendocino, voted against it.
"The irony is that the people who made the Emerald Triangle industry, they got into the business because it wasn't a job," says Hank Sims, editor of the North Coast Journal, an alt-weekly in Eureka, California. To survive in the new economy, the old yeoman growers "have to get out and hustle." That means "they have to actually be in the system, where the whole appeal in the past was being out of the system. They have to suit up and go around with a sample case from club to club. And that's going to be hard for people to put their head around."