Young entrepreneurs to aim at budding marijuana market
A new generation of entrepreneurs is positioning itself to take advantage of an emerging marijuana market in the nation’s capital by attracting customers with upscale products.
“When I research the people who are buying these products [they are] lawyers, doctors, psychologists,” Davis Clayton Kiyo, creator of the Stashtray said. “It’s become clear that this is way more acceptable and no one has really filled that gap.”
Since Initiative 71 passed in late February, entrepreneurs have set up innovative businesses in the District that help customers do two things – grow and consume marijuana.
Take Kiyo, for example. He had the idea for the Stashtray — a magnetic rolling tray that includes a container, grinder and ashtray and can be disguised as a leather bound book — years before marijuana was legalized in Washington.
“People go on dinner dates and say ‘let’s go back to my house for a drink,'” Kiyo said. “I don’t drink much, so I would say ‘let’s go back to my house for whatever.’ I’d come back and have a huge mess on my coffee table with a grinder and plastic baggie. I had this idea for a liquor cabinet but more towards my side of the industry.”
“I’m from D.C., I’ve always been embarrassed by the stoner stigma,” he added. “I’d go to rallies, there would be tie dyed shirts and long dreads. I wanted to look more put together.”
And so, the Stashtray was born. Before the passage of Initiative 71, Kiyo usedIndiegogo, an international crowdfunding website, to get funding for his product. He recently opened a storefront in Bethesda, The Fogden, that not only sells the Stashtray, but also several other high-end products like vaporizers, dabbers and grinders Kiyo said he created the products to make smoking weed more upscale.
He also said that despite having no marketing budget, his business is exceeding all goals, although he declined to supply specific numbers..
Businesses like Kiyo’s are popping up all over the District. But while it’s no longer necessary to purchase vaporizers and bongs under the guise of smoking tobacco in D.C., sales of marijuana itself are still prohibited, which has considerably stunted the growth of some possible business ventures.
“At the end of the day, it becomes very difficult for residents of D.C., whether they be patients or just consumers, to obtain what they can now [legally] obtain,” said Brielle Pettinelli, the creator of ROOT, an indoor hydroponic gardening system. “It’s now a struggle for residents.”
Initiative 71 allows anyone over the age of 21 to have two ounces or less of marijuana, which can be smoked or consumed on private property. Residents are also allowed to grow as many as six marijuana plants within their home or apartment, but no more than three may be flowering at once.
The law is being criticized by some for not allowing people to buy or sell marijuana in the District. Instead, marijuana, both the seeds and the actual consumable plant, must be given or shared.
“The law in D.C. is really insane in a lot of ways,” Kiyo said. “It’s legal, but there is no possibility of sales. There’s a huge amount of tax revenue the city could make from that. It’s just a matter of time before they really realize that.”
A bill that would legalize the sale of marijuana in the District, as long as the seller had a license,was introduced in January but the D.C. Council hasn’t acted on it since holding a public hearing in early February.
“D.C. is kind of in an odd spot right now because they’ve legalized a certain amount of growing, possession and use,” said Taylor West, deputy director of the National Cannabis Industry Association. “There’s not really another market right now that reflects that same kind of set- up. I don’t know if there’s anywhere else where you’ve got fully legal possession and growing but no commercial market at all.”
It is legal to buy and sell marijuana for recreational use in four states and for medical use in several more. The legal cannabis industry in the U.S. grew from $1.5 billion in 2013 to $2.7 billion in 2014 according The ArcView Group, which conducts market research on the cannabis industry.
“[The market] is anticipated to grow quite a bit, depending on how quickly states move forward,” West said.
“I think that the public opinion is in favor of legalization,” said Tracewell Gordon, creator of kuLi, a vaporizer pen. “We won’t necessarily have it until the federal government legalizes it though.”
Gordon, a master’s student at Catholic University studying law and business, started an online marketplace, Tracewell’s, to sell marijuana-related paraphernalia. He and his business partners then invented the kuLi, a vaporizer, or a device that allows the user to smoke marijuana extracts, which typically have near-pure THC content.
The kuLi, which looks like a pen and comes in different colors and designs, is being sold at head shops across the country, Gordon said. Most recently, he added, he has been able to start selling the product at Takoma Wellness Center, one of D.C.’s three medical marijuana dispensaries.
“One thing that has become really popular right now is portable vaporizers,” West said. “A lot of people have moved to using it because it’s much less harsh on your lungs.”
Tracewell’s incorporated in late November of 2014, but didn’t start selling the kuLi untilValentine’s Day this year. Since then, Gordon says the business has raked in over $60,000.
Most recently the company started the Pen 15 Club. For $15 a month, subscribers receive vaporizer pens or coils (the heating part of the vaporizer) – or both – each month in the mail.
“It’s like the Dollar Shave Club, but for vaporizers,” Gordon explained.
While many have looked to sell vaporizers and other smoking devices in D.C., still others have opened businesses that help D.C. residents grow their own pot at home.
Pettinelli and her business partner, Eric De Feo, created ROOT, a hydroponic grow system that can fit on a countertop and syncs to the user’s phone to alert him or her when plants need water or nutrients.
“There are a lot of people who want to grow,” Pettinelli said. “They say it gives them the best access, maybe it’s healthier. We all live in urban environments where we don’t have environmental space, and on the East Coast, it’s colder. Growing hydroponically allows you to grow year round.”
She added that consumers can use ROOT to grow any type of plants, not just marijuana. Despite this, one of the business’s major markets is people interested in growing marijuana.
“Primarily we’re targeting a Gen Y segment,” Pettinelli said. “Obviously that comes first in the legal states. This industry is awesome in how it’s so receptive to technology. People are so excited about how they can grow.”
Even business owners in D.C. who say they aren’t interested in targeting marijuana consumers directly have benefited.
Capital City Hydroponics’ business has more than doubled since Initiative 71 passed, owner Michael Bayard said.
“Since the laws have changed, business spiked dramatically,” Bayard said. “There’s all sorts of people coming to the store now. Now it’s full range of ages, sexes, races — everybody.”
Bayard noted that he never gives customers specific information about growing marijuana. Instead, he refers them to a marijuana growing consultant, Nate Thompkins.
Thompkins comes to the store on weekends to give advice on growing pot. He also runs a business called Grow Big Grow Home, through which he sells a consulting service aimed at novice marijuana cultivators.
Thompkins visits his customers in their homes and helps them set up an indoor garden or gives them advice on existing gardens. He said he does not provide seeds, but rather directs his customers to places where they can find supplies for growing, including Capital City Hydroponics.
“When I started growing, I had nowhere to turn,” Thompkins said. “I was a medical patient in California. When I came out to D.C. I wanted to be able to provide that to people who are curious about growing.”
In his first month and a half in business, Thompkins has had about six customers.
“I love teaching people how to grow, it’s definitely a passion,” Thompkins said. “I love when they get the final finished product.”
Thompkins also gives his clients lessons on D.C.’s marijuana laws, because many are still a bit confused by it.
“People are ready for the change, they are just scared themselves,” Thompkins said. “It takes a couple of people to stand up and say you can lighten up and let your hair down. You can talk about smoking weed.”
So what does it take to find success in D.C.’s emerging marijuana market?
“Because this is D.C., people are very into their image, everything is political, everyone is into networking,” Kiyo said. “That’s why I think I found my niche here in DC. It’s the type of product you want to show off.”
He added that all kinds of professional people — lawyers, doctors, psychologists — are buying his products.
Being on the East Coast is a boon for business, too.
“The East Coast is totally open, the West Coast is totally saturated,” Gordon said. “I think the big boom coming is the East Coast in 2016.”
There is a lot of value placed on innovative products too, West said.
But she added, “Until D.C. regulates the system, they’re not likely to benefit from that.”
If – or when, as many enthusiasts predict – marijuana is legalized for sale and purchase in the District, the market will radically change.
“Everybody and their mother wants to get in this industry,” Kiyo said. “Everybody is planning to do a grow operation or dispensary…I have no interest in selling the product. There’s too much competition.”
Gordon said he plans to circumvent the competition – if the sale of marijuana is legalized federally – by creating cartridges similar to Keurig cups for the kuLi.
Regardless of personal future plans, those involved in the marijuana industry believe growth is inevitable.
“They have to set up a market,” Thompkins said “Not everyone has the time to grow, and not everyone has the ability to grow.”
When that time comes, though, Kiyo warned, those in the industry should expect change.
“Expect an immense amount of competition,” Kiyo said. “The big boys still haven’t gotten into this. Once the real numbers start coming out, the big boys with deep pockets will join in and it will be more challenging.”