Wanda James and her husband, Scott Durrah, own Denver-based Jezebel’s Southern Bistro and Bar. They are serial restaurateurs, having operated more than five establishments over the past 18 years. In fact, James graced the cover of the February 1997 issue of Black Enterprise when she was co-owner of Jamaican Café in Santa Monica, California, a hot spot among celebrities such as the Wayans brothers.
But James, a former Navy lieutenant, and Durrah, a former Marine and certified chef, became known for more than just their culinary skills. They emerged as a notable part of the legal marijuana scene as the owners of a medical marijuana dispensary and an edibles company.
“From about 1999 until the time we moved from California to Colorado in 2004, we were pretty politically active in getting jail sentences dropped for cannabis [possession],†says James, a former political campaign manager who also served on President Obama’s 2008 National Finance Committee. In 2009, the couple opened Apothecary of Colorado, a 10,000-square-foot growth facility and dispensary, serving some 500 patients on the Colorado registry. A typical medical marijuana Delivery LA dispensary will house shelves with concentrates (i.e., hash and extracted oils), edibles (i.e., cookies and hard candy), and cooking oils.
The couple sold Apothecary of Colorado in 2010 to focus solely on producing and selling Simply Pure, their pot-infused edibles ranging from mango salsa and marinara sauce to coconut oil and olive oil. The couple was supplying roughly 400 dispensaries and generating around $400,000 worth of business annually. They suspended operations in 2012 because they were unable to get banking services unless they lied about their medical marijuana enterprise– which made conducting business tougher at that time.
But the duo isn’t out of the market. For the past two years, Durrah has been offering Simply Pure cooking classes to private clients who want to include pot in their meals. Kicking it up a notch, the couple has opened the Simply Pure Cooking School, certifying chefs in how to cook with cannabis. They are also planning a culinary cannabis excursion to a high-end resort in Jamaica in January 2015.
Cannabis represents America’s next great frontier–”The Green Rush‖with farmers, entrepreneurs, and venture capitalists jumping on the bandwagon feverishly in pursuit of riches from the blossoming business of growing, producing, and selling the plant legally. Everyone from Silicon Valley to Main Street is looking to cash in.
On New Year’s Day, Colorado became the first state to allow the legal retail sale of recreational marijuana as long as the customer is age 21 or older and the store is licensed, taxed, and regulated by the state. Recreational marijuana is now also legal to cultivate, sell, and consume in Washington state and so too are Oregon and the District of Columbia as of November. California was the first state to legalize medical marijuana in 1996 and 23 states and DC allow medical marijuana with roughly a dozen other states having limited medical marijuana laws.
The U.S. market for medical and recreational use is expected to grow more than 70% from roughly $1.5 billion in 2013 to approximately $2.6 billion in 2014. Legal marijuana is projected to become an $8 billion to $10 billion industry by 2018.
That’s good news except for those who have historically found themselves affected by drug laws. Decades of statistics show that African Americans are disproportionately targeted for criminal convictions. Drug use and sales happen consistently at around the same rate across racial lines. According to the Drug Policy Alliance, even though African Americans make up 13% of the country’s population, they comprise 31% of those arrested and more than 40% of those incarcerated for drug offenses.
The consequences of a marijuana arrest can be severe and often lead to loss of employment, child custody, business loans, professional and driver’s licenses, student aid, and public housing.
There’s a Catch-22 in that in most states the only people allowed to grow or sell weed retail are people who have maintained good standing and were previously in the medical marijuana Delivery LA industry, which leaves out millions of African Americans with drug convictions. Michelle Alexander, author of The New Jim Crow (New Press; $19.95), notes, “After 40 years of impoverished black men getting prison time for selling weed, white men are planning to get rich doing the same thing.â€
Investors are poised to cash in on weed’s swift shift from contraband to commodity. Former Microsoft executive Jamen Shively, whom some are now calling the “Bill Gates of Cannabis,†has gone public with a biotech company that plans to corner the market. The ArcView Group is a San Francisco-based network of 300-plus high net worth investors, including billionaires, technology entrepreneurs turned angel investors, venture capital firms, and real estate moguls all trying to find and fund the next deal in the burgeoning green industry. In the last year, ArcView invested more than $12 million in 17 cannabis startups.
The Grass Isn’t Always Greener
There are several ways that entrepreneurs can profit from legal marijuana. Interested business owners can apply for a dispensary license or become a grower or sell cannabis-infused products, which include edibles, tinctures (extracts), salves (topical applications), and beverages. There’s also testing labs, security firms, and the high-end paraphernalia market, like the glass blowing community, with medical marijuana users spending as much as $10,000 for a weeklong tour of the weed industry.
It can cost anywhere from $1 million to $4 million to finance an upstart dispensary or growth facility. And annual revenues for dispensary owners range from less than $100,000 to more than $1 million, according to the Marijuana Business Factbook, published by MMJ Business Daily.
Legal cannabis enterprises under state law are getting hammered by federal tax laws, facing an income tax rate as high as 50% to 75% compared with 15% and 30% for other businesses. The substantial charge is the result of a 1982 tax code provision barring those who sell illegal substances from deducting related expenses, such as rent or payroll, on federal income taxes.
But the big issue is banking. Financial institutions are reluctant to take deposits, make loans, or issue credit cards because marijuana is still illegal under federal law, even though 18 states have decriminalized it, generally relegating pot possession to a minor offense subject to fines. Federal law, however, still classifies marijuana as Schedule 1 of the Controlled Substances Act, which means it has no medicinal use and is a drug on par with heroin, acid (LSD), and ecstasy.
Financial institutions fear that federal agencies will hit them with racketeering or money laundering charges if they handle marijuana money. As a result, such businesses are forced into cash-only transactions, placing retailers’ safety at risk of burglary and assault. In July, the House of Representatives voted to allow banks, without penalty, to provide traditional banking services to cannabis businesses that are legal under state law.
Additionally, federal law enforcement agents continue to raid legal cannabis growers and retailers. “They will come in like gangsters and take all of your money and your product even though you are following all of
the state laws,†says Amber E. Senter, veteran of the U.S. Coast Guard, who started a cannabis lifestyle brand, The Cannasseur, which consists of an edibles company and a magazine. She is also co-founder and vice president of the nonprofit Bayside Botanicals Collective, a mobile delivery service in Santa Rosa, California, providing service to Sonoma County.Senter has been a proponent of cannabis for years, blogging her weed-growing wisdom for HailMaryJane.com. She helped a colleague re-launch a cannabis edibles company in 2013 before stepping out earlier this year with her own company, which delivers different strains of weed, concentrates, and edibles. It made perfect sense given the issues around distribution–cannabis entrepreneurs can’t use FedEx, a local post office, or regular carriers.
Mobile marijuana businesses, which offer patients convenience and owners a cheaper alternative to a brick-and-mortar shop, are flourishing across Southern California, reports the Los Angeles Times. Pot delivery services have nearly tripled in three years nationwide, from 877 to 2,617, according to Weedmaps, an online directory.
Delivery services, like dispensaries, require registered patients of medical marijuana to join as members of a collective. In California, you have to be registered in order to distribute medicinal grade cannabis, explains Senter, 34, who has lupus and uses medical marijuana.
As an edibles vendor, she sells her products wholesale to a local dispensary. She rents a commercial kitchen with a staff of six people helping her bake goods. “I’m trying to target the high-end spectrum with marijuana medicated hot chocolate, Belgium waffles, cheese straws, and other items not typically found in dispensaries,†she adds.
Ending Marijuana Prohibition
“Drug laws have always been used to maintain a social or racial hierarchy within this country, and it continues to this day in places like New York City and Chicago,†says Art Way, senior policy manager of the Drug Policy Alliance of Colorado, “where 85% of all the drug possession charges are young black and brown people.†Regulations and restrictions on the sale of Cannabis Sativa as a drug began as early as 1619. Restrictions increased across the country in 1906 followed by prohibition in the 1920s. Cannabis was regulated as a drug in every state, with 35 states labeling it a narcotic, by the mid-1930s.
Today, much of the legalization resistance comes from baby boomers. “Many of those over 50 years old or who came from the
old civil rights guard did not support marijuana legalization and really took a hard line in the drug war,†says Way. That hard line is expected to soften now that the numbers show the disparate and selective discriminatory enforcement of the drug war.Way and other members of the DPA are appealing to black small business owners to engage in the emerging market. “Those who are able financially without the criminal background to prevent them, that’s the specific demographic that we’re trying to reach.â€
In order to reach them, Way says they’ll have to help erase the stigmas. “We need to educate members of our communities. Let them know that the opportunity is available for those of us who are able to engage on a higher level or to be at the level of ownership. We need to talk about the potential harms of marijuana and actually base that conversation on science as opposed to the propaganda we’ve had under prohibition.â€
Way says the goal is to get the federal government to allow states to decide how they want to deal with marijuana and possibly end the federal prohibition. Medical marijuana legislation appeared on November ballots in Florida, to which voters said no in Florida, while Alaska, Washington, D.C. and Oregon voters said yes to the legalization of recreational marijuana.
The American Medical Association doesn’t endorse recreational or medical marijuana, but it does support changing strategies and expediting research for clinical trials. However, some statewide groups such as the California Medical Association (representing more than 35,000 physicians) endorse marijuana’s medicinal value and urge legalization. Not only is the attitude among medical professionals changing, but so is public support. A Pew Research poll shows those in favor of legalizing marijuana use is at an all-time high of 54%. Moreover, 76% of Americans oppose jail time for possession of small amounts of marijuana.
James believes that by 2016 another 11 states could legalize marijuana, and that the DEA could declassify cannabis as a dangerous substance. States would then adopt their own regulations, she adds, pointing to the 25-page application required to get licensed and registered with the secretary of state in Colorado. “Once it is dropped from Schedule 1, it will remove a lot of the penalties people are facing associated with this drug.â€
–Additional reporting by Richard Spiropoulos