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Can Capitalism Find High Times as California Embraces Pot?

The economics of weed is a tale of three Los Angeles dispensaries.

It’s a spring afternoon on West Hollywood’s Santa Monica Boulevard and in-between a Russian grocery and a tattoo parlor, things are bustling at “Dr.” Dina Browner’s Alternative Herbal Health Services dispensary. A digital tote board touts the benefits of CBD in helping overcome withdrawal from opiate addiction, while a security guard straight out of “Disjointed,” the recently canceled Netflix show for which Dr. Dina served as cannabis consultant, learns that ex-pro football star Keyshawn Johnson is on his way. After getting her baptism in cannabis as a teenager from Snoop Dogg himself, Dr. Dina’s dispensary — one of the first in L.A. — has become a go-to location for the likes of rapper 2Chainz and producer  Timbaland, as well as Charlie Hunnam and fellow “Sons of Anarchy” cast members.

Browner’s retail store was one of only four in L.A. County licensed for “adult use” when legalization took hold in California on Jan. 1, opening to all comers the next day, with lines stretched down the street.

“There were people who just wanted to say they bought marijuana legally, that they’d been waiting all their lives for this moment,” Browner tells Variety.  “And that was the case whether you were 25 or 65.”

Just up the block, would-be franchise MedMen — alternately dubbed the Apple Store or Starbucks of retail weed — also welcomed the curious, offering dazzling in-store displays, with iPads identifying the various weed strains, housed in clear plastic that allow consumers to examine the buds through a magnifying glass and conduct their own sniff tests.

The company’s chief marketing officer B.J. Carretta, a veteran of Fender Guitar and NBC Sports, where he forged corporate branding and specialized in guerilla marketing for action events with Red Bull and Mountain Dew, insists MedMen’s goal is to “normalize and destigmatize the customer experience,” even while admitting, “it’s still the product which will keep people coming back.”

And coming back they are. What was reported as a $6 billion industry in 2016 is projected to grow to $50 billion by 2026, according to Fast Co. Business is booming for local area dispensaries as they cope with the influx of “customers” (as opposed to their former designation as “patients”). MedMen reported nearly 25,000 had shopped during the month of January, a whopping 350% increase over the same time the year before.

Founded over a decade ago by partners Adam Bierman and Andrew Modlin, MedMen boasts locations in Beverly Hills, Venice, West L.A., Santa Ana and a recently opened store on South Broadway in Downtown L.A., as well as San Diego, Las Vegas and three medical dispensaries in New York (including a flagship Fifth Avenue store opening this month). They are also planning to go public in Canada, with a listing on the Canadian Stock Exchange.

MedMen is hoping its compliance-ready infrastructure will enable it to grow even further.  “As other states begin to roll out adult use, they’ll undoubtedly be looking for people who have a system and have been doing things the right way,” adds Carretta. “If it makes sense for us to enter a market, we will.”

Aaron Justis, owner of trendy Buds & Roses, the upscale Studio City boutique dispensary, notes that his clientele has doubled over the past month. But Justis is smarting over the hefty tax bite (15% excise, 9.5% city sales tax) not being paid by what he claims are the more than 500 dispensaries operating without a legitimate license, which Aaron insists represent 90% of the city’s total.

Like Dr. Dina, Justis is also sensitive to not shortchanging his longstanding medical patients, creating dedicated waiting lines and planning on a new 6 a.m. opening time to accommodate the sick and elderly. “We want to make sure everybody who comes through these doors has a great experience,” says Justis.

Product suppliers, like Colorado-based vape/edible/energy drink manufacturer/distributor Organa Brands and L.A. pre-roll packager and flower cultivator Lowell Herb Co. are also experiencing the legalization boom for their products on the increasingly crowded dispensary shelves. “Legalization has been tremendous for us,” says Organa Brands U.S. president Chris Driessen.

Still, Driessen laments L.A.’s “soft” enforcement on illegal dispensaries. As Buds & Roses’ Justis noted, the crackdown was supposed to take place starting April 1, but has now been put off until later in the year, making the competition with licensed businesses unfair.

Lowell founders David Elias and Sean Black, the company’s business and creative heads, respectively, have tried to toe the line between the herb’s righteous roots and the tantalizing prospects of free-market capitalism, even as Q1 sales soar to 580% above last year.

The brand’s ingeniously designed Lowell Smokes packs — available as a $40 seven-joint eighth or a $65 14-joint quarter, sporting a hidden compartment of Diamond Tip matches — offer a detailed description of the flower’s origins, THC percentage, harvest and shelf date. The company pledges to use only organic fertilizers, no synthetic pesticides, incorporate natural materials from seed to sale, and pay its Northern California small farmers a “proper living wage.” Their Bull trademark comes from the legend of a California grower named William “Bull” Lowell, who began harvesting hemp on his farm in 1909, only to have a Henry J. Finger, member of the California Board of Pharmacy, amend the Poison Act in 1913 to outlaw cannabis because “the fear is now that they [Hindoos] are initiating our whites into this habit.”

“The fight to legalize cannabis has been going on a long time,” says Lowell’s Elias. “That’s a community  we wanted to acknowledge in our marketing. … We’re very sensitive to working with people who share our values. We’re not out for a quick buck.  We want to become the first great American cannabis brand. We want to be around 10 or 20 years from now. We believe there’s something special about this plant.”

The company’s latest packaging boon is a burlap-wrapped box boasting a “tasting flight,” an ounce separated into eight separate jars of “curated strains from our family of farms” — with colorful names like “Pineapple Trainwreck” and “Purple Peyote Diesel” — available for $300 as a MedMen exclusive.

Can cannabis and capitalism co-exist in this brave, new world? Are the dreams of cannabis cafes or marijuana tours of Humboldt County in our future, with companies like Flow Kana, a Cali-based small batch cannabis brand, opening up its Mendocino farm to mimic the vineyard experience?

“We’re on a mission to remain true to the cannabis plant,” insists Buds & Roses’ Justis. “We’d like to think we’re a company with some soul that stands for something.”

Recalling cannabis pioneer Steve D’Angelo, who founded Oakland’s Harborside, and how he took a lot of heat on “Disjointed,” which mercilessly lampooned his character, Justis gives the veteran weed entrepreneur credit for teaching him a valuable lesson. “He told me you can learn so much from the plant,” says Justis. “If you nurture and feed it, water it and give it sunshine, it will grow healthy and strong, and provide what you need. And that’s a metaphor not just for the marijuana business, but life. And that’s what we’re all about at Buds & Roses. We want people to find relief by using cannabis, one of nature’s safest therapeutic substances.”

If anything can give capitalism a new heart, it’s the canna-business.

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