How do I make money off weed?
October 15, 2020 12:11 PM   Subscribe

I'm nearing middle age and have had a career in advertising achieving lower level executive success. I always enjoyed marijuana. I've grown my own in a closet for close to 15 years and have had great reviews. If this were coffee or a food truck, I'd start selling out of my home. I've become pretty passionate about my product. If this were a completely legal business like starting a brewery or roasting coffee, we'd just do it. Despite our large network, we don't have any connections to help us out. How do we (or I) break into this market and sell weed?

My dream might be naive but I look it as the dentist who always wanted to buy a sports bar and decided to buy one. I've gone through technical startups before where I'm working long hours, for literally no pay and constantly having to be scrappy. During my latest venture, about 9 months into it, a former coworker confessed that he only achieved career happiness doing what he loved. He didn't launch an IPO or even achieve financial freedom but he started working in porn and achieved a level of industry success in starting a fans only type of site. That got me thinking that I love growing weed, giving weed to my friends and telling them about the strain. This might be dorky but I noticed that a local craft beer company has seasonal brews with packaging and marketing sites, there's nothing more I would love than to do thing like an October theme marijuana promotion. I've done this before in other industries, but launching a Halloween themed social media campaign for an autoparts store just isn't the what interests me.

I've done quite a bit of research and reached out to my network of colleagues but haven't found someone with an in to help me get started.

* I've met with a couple of former colleagues that worked for Top 3 consulting firms and started their own cannabis related consulting companies. They're fairly mysterious about what they do, but to be fair they were mysterious about what they did when they were consulting for large banks or car companies. I believe they do analytics reports for things like CBD companies that are easier to be completely legal on.

* I'm not in a state where it is completely legal, but I'm more than willing to move. The laws that govern this vary widely from state to state. Since I'm trying to establish a good professional network it doesn't matter where I move, but I'm looking for the city that is most like NYC if I were to want to get into Broadway. There might other cities with musical cities but Broadway is where it is easier to grow a network and have resources you wouldn't have otherwise.

* Ideally I'd like to have a farm to market business model, if I had to choose I'd want to be on the dispensary side as I have a long history in marketing and enjoy it. Since I have a startup background I always am looking at new technology and ways of promoting it. If I had to guess I'd say I'd bring more value add to sales and operations part.

* People seem, not surprisingly, very secretive about the industry. The closest I got to getting into the industry was randomly running into a couple who did some gray market practices. I believe their business model revolved around selling marijuana in back pages of local magazines with storefronts that didn't adhere completely to local laws. I've worked in a variety of industries and know all skirt laws to varying degrees so I'm okay with some of it but this seemed to be a little bit too over the line. If this is just the state of the industry, maybe it is still in the realm of people who are okay with spending considerable time in jail if prosecutors decide to make a case out of someone. I think that's probably increasingly unlikely in states like California, but this could be why I'm having a hard time figuring out the state of the industry.

* One thing I skipped is that I do have money and funds to start something up. Again, I've gone through the startup experience many times before so I know what I'm getting myself into in the risk. If you asked me where I'd like to be in ten years, I'd be perfectly happy running a popular local craft brewery only for weed. Some agency in my ability to drive the direction of the product and image of what I put out is really what makes me happy.

Again, unlike most hobbies or passions this is underground and traditional avenues aren't helping. If anyone has stories or anecdotes that'd be helpful. I setup an anonymous e-mail address: since I can't respond.

posted by anonymous to Work & Money (10 answers total) 7 users marked this as a favorite
I would look at Canada to see what sorts of operations are successful; there's not really much room for the craft brewery style model, for both practical and regulation-related reasons. I'm also not sure if you want to move to a state where it's legal - where this is more or less just any other business question - or whether your goal is to somehow get people to network with you for the purposes of starting an illegal/gray-market operation in a non-legalized state.

I'm not sure who you're trying to network with, but you could come up to Calgary for a while, and take a course on cannabis business - I think that's the sort of thing you need to be looking for.

Overall, I think that this is probably a much more mature market than you expect, especially if you're looking to make a significant return on your investment without incurring equally-significant risks.
posted by sagc at 1:10 PM on October 15 [2 favorites]

Read food industry trade publications and start consulting with potential vendors that catch your eye.
posted by michaelh at 1:13 PM on October 15

Sorry, replied accidentally.

It's a federal crime, it's also a federal crime for banks to take your money.

So, yeah, people are going to be secretive about this law that, while seldom enforced, could still end with a penalty of a year in prison for ANY possession, and 5 years in jail for ANY distribution or cultivation.

Plus, asset seizure.

My uncle had an adage: If you're gonna break the law, you gotta think like a criminal. That means things like not using an "anonymous" email address to solicit a conspiracy to break federal laws — that's the sort of thing that if I was the sort inclined to introduce you to someone, would put me off, because it would mean that you're sloppy in ways that could land my ass in prison.

This isn't true everywhere: Canada has a thriving, legal cannabis business, with both recreational and medical cannabis companies traded on public exchanges. If you're looking to break into legal cannabis, you're gonna have to go to where it is legal, or hope it becomes legal here — not just decriminalized.

That all said, think about how people actually start other businesses. You keep mentioning going from home-brew to craft brew, and that might be a handy model. People often start by making their own, but to make it into a business, you have to get distribution. In weed, people frequently get into distribution from consumption — a traditional path is to buy in bulk to get a better price, then break it up and sell to your friends so you can first smoke for free, then raise a little cash. I did this about 20 years ago; I know people who do it now. It's a little more formal because I live in California, but it's a similar arc. Similarly, I now work for an artisanal roast-to-order micro-roaster. The main guy started out about eight years ago being really into coffee, roasting it in his kitchen, giving it away for free, then finding an existing cafe that wanted to expand into roasting and working with a couple people he knew through coffee stuff to set up their roasting system. He then bought a big enough roaster to work on his own, set up a handful of regular subscription clients, and started hosting pop-up cafes. Covid's fucked the longer plan, but he just bought his second roaster and has a waiting list for new clients, along with three retail locations.

Many weed distributors are limited by state laws regarding their growers, but there's still an informal network of dealers who will work with people who can undercut commercial prices. When's the last time you bought or sold weed? Who do you know from that? If you were looking to buy weed, who would you talk to? What's your current capacity? How would you deal with things like utilities, which are sometimes used by police to locate grow-ops? Who do you get your grow equipment from? They may be a good place to ask about other people doing similar stuff that you could talk to more-or-less face-to-face and get candid answers.
posted by klangklangston at 1:16 PM on October 15 [5 favorites]

You might want to listen to a few episodes of Billy Wayne Davis' and Mike McGowan's Grown Local podcast. They looked at Eugene, OR in season 1, and this season they're looking at Humboldt County, CA.

Davis is a comedian, but McGowan's an experienced grower.

They get fairly deep into the weeds (heh) on what the challenges for the industry in legal states are -- the one that sticks out is that the farm gate price for cannabis went through the floor when recreational legalization hit, in the order of thousands of dollars per pound. Fixed costs didn't change (or they increased because legal growers have regulations and permitting to abide by); the price of their product did, and drastically. And this remains a serious challenge for the long-time industry veterans that they interview, and who predate legalization by multiple decades in some cases. They're not green-rush-come-latelies.
posted by mandolin conspiracy at 1:22 PM on October 15 [2 favorites]

I’d get a legit job with a legal grow op, or a related business in a legal state, if what you want to do is grow commercially eventually. There is a huge learning curve and an exploding range of new technologies and a constant flow of new science to stay on top of if you’re going to make money at it. Not to mention the enormous regulatory complexity at the moment. Any one of these areas is a specialist domain. Very few home growers have the kind of capital or space to gain experience with these new frontiers, even home growers working at significantly larger than closet scale. I live in a rural part of Massachusetts, and it seems like everyone grows here. The industry is exploding and the laws around home cultivation are fairly generous and seemingly lightly enforced anyway, not at all true in some “legal” states. (Yay Massachsuetts!). Selling your homegrown, however, is a whole different thing.

Something to think about, which may be more true in a non-legal state, is that cannabis is widely used as barter currency.
posted by spitbull at 2:31 PM on October 15 [7 favorites]

I'm in the industry in Canada.

What opportunities and challenges you'll encounter will very much depend on your jurisdiction (different rules and environments in different states, in Canada, it's a little bit more homogenous but you'll still be dealing with provincial-level differences when it comes to selling).

In Canada, you might be interested in looking into the "Micro Cultivation" licence; these were geared towards bringing in black market operations "in from the cold." The licencing process isn't actually very onerous, but it requires the ability to pass a security clearance (which takes a lot longer for non-Canadian nationals) and a bit more startup costs (security and GPP - good production practices) than your "traditional" farmer.

Increasingly, we're seeing more and more product from micro cultivation licences hitting the provincial retail shelves - and their product is getting increasingly better. However, the big players have been in a tough spot and are racing to the bottom in terms of pricing. The margins for the micro cultivators are pretty slim already but the race-to-the-bottom is making things more difficult, especially due to the prohibition of advertising, and getting your product into stores can be a challenge depending on which province you're operating out of.

If you're considering operating out of Canada, feel free to drop me a memail or something.
posted by porpoise at 2:35 PM on October 15 [3 favorites]

The secretiveness may be due to your location? In California, the legal industry is very open and extremely high-tech. Look into the offerings of Oaksterdam University which is a great jump off point to learn the ins and outs of current industry practices. Farm to dispensary is an extremely challenging part of the market to get into because of the scope of what you have to know and the scale you'd have to operate at. Finding a niche may be a better approach. Check out Oaksterdam and also look into the growing number of industry publications that cover everything from grow to dispensary, including the latest terpene science.
posted by quince at 2:43 PM on October 15 [1 favorite]

If this were a completely legal business like starting a brewery or roasting coffee, we'd just do it [...] My dream might be naive but I look it as the dentist who always wanted to buy a sports bar and decided to buy one.

I'm saying all this as someone who worked in coffee roasteries for over a decade, and have lots of personal contacts in beer/wine/cannabis/general vice industries. They overlap a lot, and we all compare notes.

You have unfortunately stumbled into being A Type, and that Type is not really well regarded in 'viewed as craft' industries. Being in any of these 'viewed as craft' industries, you get a fucking mountain of successful, bored, white collar dudes asking you how to do your job because they engage in it on a hobby level and romanticize it as a profession. It's generally not romantic. It's generally not "fun." It is generally not creative work. It does take skill, but it is production. It is working in a factory with hipster-good-marketing window-dressing. It is flawless repetition often within razor thin margins. It's a shocking amount of paperwork, bills of lading, spreadsheets, and really boring work...for like maybe 20% of your time to be spent on The Thing you like to do. Working in those conditions can be really fun, and for the right person really great. But the thing is, that you have to be able to make it work financially know, eat. Most folks in those industries had to start at the bottom and work their way up. Even if they keep this a little guarded, they usually deeply despise those who they perceive (rightly or wrongly) to have bought their way into the industry. White collar dude quitting day job to do craft job is something they have to deal with honest to god, basically daily...and it's a really unfun part of working in those industries. The parallels are more than most would like to admit, but if you haven't you should read Kitchen Confidential, specifically the sections on would-be restaurant would probably serve you well if you're able to honestly take in that information.

You can grow great cannabis in your closet; I believe you. You might even have a talent for it. That's super fucking cool, and I'm jealous of you! Some of the best cannabis I've had has been grown in very small quantities by like, copywriters and system admins. I guarantee you that doesn't translate to the Commercial Production of Cannabis. I roast some very high end, (IMHO, really good) coffee at home that lots of people can't even really readily access and routinely melt the faces off my friends and neighbors with them. The unfortunate truth to perceived cool-craft-production-products is that quality does not matter that much when it comes to performing your job. An amount shockingly close to zero of my home-coffee-roasting knowledge serves me in a commercial roasting setting. If you are serious about this, you should get a job working on a farm or with a grow op (which will likely mean starting by trimming, and being paid minimum wage, for at least a season or more). When working at a roastery where they liked to enter competitions, the competition coffee was a whole different project where extra care was taken. 98% of the production of the facility was the middle of the road, pretty good but nondescript coffee that paid the bills. Every once in a while you'd get a fun project or unique coffee to deal with, but this was the exception, not the rule. One hundo fuckin percent of the coffees I roast at home are top tier, high-score coffees. I'm only highlighting this to say that production at home is just so, so, so different than production to keep a business out of the red. I've had so many beers with so many perceived-as-craft workers that mirror this, and its always the bummer of the night. Most of your time in production is producing stuff that is 'meh' because the reality is that the true connoisseur is rare (because this true connoisseur also has to have loads of cash), and most people want something that's just 'not gross' especially when it comes to a product where there is an active ingredient. No one is paying shit buckets of money for top shelf decaf or CBD hemp that tastes like candy, because those markets are small, as is the market for actual top shelf cannabis. The marketing of high end craft products has far outpaced the actual market for them in many if not most cases.

All that said, the folks who run the radio show/podcast This is Cannabis do a great job of demystifying lots things around the industry (Heavy focus on Oregon and the west coast, but dips into other locales too), and checking out their archives would probably be good listening for you.

As someone who has gone the other way: starting at the ass-end of a viewed-as-craft-industry, done good work, been chewed up, chronically underpaid, precariously employed, and finally dumped on the side of the road to get into stable, white collar work...I would beg of you to keep growing dope shit in your closet, maybe move somewhere it's legal to grow at home so you don't really have to keep it a secret. Build yourself the best fucking greenhouse. Dip your toes into breeding. Do fun branding for it, make rad packaging, give it away to your friends, enter home-growing contests (this is a thing in the state you've moved to where its legal, promise), go deep into the subject. You'll be able to go deeper and produce higher quality anything on a serious-home level than you could working in the context of a business. Take pride in the fact that not everything you do has to be capitalized on and earn you a living to be valuable to you.
posted by furnace.heart at 4:10 PM on October 15 [41 favorites]

there's nothing more I would love than to do thing like an October theme marijuana promotion. I've done this before in other industries, but launching a Halloween themed social media campaign for an autoparts store just isn't the what interests me.

I forgot to touch on this: If that's true, and that's really what you want to do, marketing and sales positions very much do exist within the industry. Your home-growing knowledge might serve you well here. Have you looked into positions with larger cannabis companies? This is a job that I see pop up on job sites regularly enough to notice it; only the largest companies can have in-house folks, but this could be a great niche to work into or find an existing firm that specializes in this.

If THIS is your goal, that's far more realistic, and approaching the industry from this angle would not necessarily carry the same baggage as your current approach.
posted by furnace.heart at 4:20 PM on October 15 [13 favorites]

My wife and I looked into setting up an end-to-end or processing business very briefly (we also grow our own, for our own use) and one of the (several) things we hadn't considered is that the entire process is governed by food-safety rules that vastly increase the complexity and expense of setting up a commercial operation. This wouldn't apply the same way if you stuck solely to a retail dispensary, of course.

I'd look into the existing businesses in states where it's legal and reasonably widespread, and find a job at a company that has already handled the legalities. I'm in MA, and there are several local places that are always advertising. Even if you have to work your way up, if you have the capital to not be worried about your income during that process, it might be a good way to break in.
posted by restless_nomad at 8:15 AM on October 16 [1 favorite]

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