Big Weed (8 page)

Because we were doing things cheap and small-minded, we had unwittingly introduced glaring inefficiencies into the system. Four small grow rooms meant needing four different air conditioners, each running at the same time. Had we designed the warehouse to have one large grow room, we could have gotten by using the one large, efficient AC unit already situated on the roof. But we didn't know better at the time.

If your equipment is redundant, then you've introduced too many moving parts to your simple ecosystem. You know the old rule: Too many parts equals that many more breakdowns. Adam wasn't so much a grower or master gardener as he was a handyman. Much of his time and energy was spent running around trying to fix broken equipment. At that point, you're just killing plants because your system is getting in the way of the product's growth cycle.

To be fair to both of us, the looming disaster wasn't all our fault. As our second harvest was coming close to fruition, our roof sprang a leak. The landlord summoned a roofer who swooped in to patch the leak with tar and pebble. But the blowtorch he used to seal the tar set fire to the roof's insulation.

Smoke started pouring into our workspace.

Other than the roofer, no one was on site at the time. Even though they managed to suppress the fire, the smoke damage was extensive.

Plants breathe through their leaves. Too many of ours got a lungful of smoke. They were goners in a matter of days. Our second harvest was as disappointing as the first.

I had private talks with Mr. Pink where I'd express my frustrations, and he was always a good listener, a true mensch to deal with. He'd let me go off on tangents, and then he'd bring me down to earth. “Okay,” he'd say, “you've been fucking this up, so how are we going to turn it around? Here's what I'd do . . .”

I have always appreciated his advice.

I took Adam aside one day and tried to make sure he understood how serious our predicament was. “We have to hit our numbers next time,” I said, “or we can't pay our rent. Do you get that? We're not fucking around anymore. It has to come in high.”

I didn't think it was unreasonable to shoot for seven pounds of product. Seven pounds would put us at $28,000, enough to put us ahead for three months. And the harvest after that would be gravy. We just needed to turn it around—fast.

“It's not fair that you're putting all this pressure on me,” Adam said. “You should have known. You can't expect this of me. I told you when we started that it would take time to dial this in, man.”

“No,” I said. “No, you didn't say it takes time to dial in. You said we would be up and running, no problem.”

I could sense that we had a fundamental problem, but I was not able to nail down exactly what it was. But one day, when I ran into Adam building light hangers out of PVC pipe and rope, I asked why he didn't just go to the grow store downtown and buy some professional-grade brackets to hang our lights.

“Can't do it,” he said, shaking his head. “When they see you come in to buy all that stuff for lights, they
know
you're growing weed. They copy down your license plate number and give it to the cops.”

Oh shit, I thought. I can't believe what I'm hearing.

I'm sure he believed every word of what he was saying, but all I heard was the old marijuana paranoia. The same sort of fears that
I'd heard from the naysayers among my family and friends ever since I'd embarked on this adventure. People still couldn't get it into their heads that marijuana was legal now. We had a license. We were legit. There was no longer any reason to fear walking into a gardening center and buying tons of lights.
That's what you do when you grow legal marijuana.

But there, in a nutshell, I had seen Adam's biggest problem.

At heart he was a basement grower who loved marijuana. He knew exactly how to grow six to ten plants. He had no clue how to grow two thousand.

He may have spent fifteen years growing weed, but he'd been running scared the whole time. He'd done it under the cover of darkness, policing his every move so that whatever behavior he revealed to the outside world did not betray his secret. Never in a million years would he install a state-of-the-art light system by hiring an electrician. No, he'd do it himself, just to stay under the radar. He was a DIY guy at heart. It was all he knew, and he had trouble thinking big.

Once I understood where he was coming from, I saw it everywhere. It was etched into every piece of equipment in our supply chain.

In the world of business, legal business, you didn't always start out big, but you started out
boldly.
You had to. You needed big profits as soon as possible, or your venture was doomed.

In the world of the illegal grower, staying small was how you survived. You grew enough for yourself, your friends . . . and that's it. Maybe if you were really bold, you grew a little to sell. But when that happened, it was scary. Growing was bad enough; that one prospective grower I'd interviewed had gotten eight years in prison for that felony alone. Growing and selling was enough to bring The Man down on your head with a vengeance.

Wow. Here I was, planning to take the medical marijuana market in Denver by storm and the whole time it was as if I were driving
into my future in a gas-guzzling car with an eight-track tape on the stereo.

So I suppose I shouldn't have been surprised the day Adam called me to give me the news on our third harvest. I was driving in the car with my wife.

“Yes?” I said expectantly.

“Four pounds,” I heard him say.

“Shit,” I said. “You know what that means, right? We talked about this. We're finished. We can't pay our rent next month.”

He started to say he was sorry, but I heard it all as an excuse. I hung up the phone and sulked.

“What happened?” my wife said.

I didn't want to tell her. I felt uncomfortable. After all, she'd been so ashamed of my new venture that she'd refused to tell her father about it.

“It's nothing,” I said, shrugging my shoulders. “It's just . . . our numbers are down for the third harvest.”

My mind was racing. What was I going to tell Mr. Pink? We had used up our seed money in nine months' time. Now we were officially out of cash. I tried to calm myself, but it was tough. What I was thinking, but did not say, was
We are fucked, we are fucked, we are fucked.

“I told you so,” my wife said.

I clenched my jaw, tensed the muscles across my back and shoulders, and ratcheted my blood pressure way up. My mind raced. My field of vision narrowed as I squeezed the steering wheel. We may have been driving in silence, but I was screaming in my mind the whole time.

4

The Beauty of Failure

So our initial entry into the legal marijuana industry was a financial failure.

The only reasonable response to that situation was to try again.

Contrary to what people think, having failures—yes, multiple failures—does not necessarily mean that your business will fail. All it means is that the course of action you took did not bear fruit
that time around.
It's possible that that course of action will
never
bear fruit. It's equally possible that that course of action
could
bear fruit sometime in the future,
given a set of subtly different circumstances.

I see this a lot among entrepreneurs. They all profess to accept that business, like life, is about trial and error, but then they take very few chances. Face it: Failure is etched into every strand of our DNA. It's our human legacy. A baby takes her first few steps and falls. Does she sit there and resolve never to walk again? No—she gets right up and tries again. She's determined to claim her birthright as a bipedal organism.

If you are too risk averse, you will never learn anything. Failures are instructive. They force us to grow. If you could teach all there was to know about business in a business school, every new start-up
would succeed. But that's impossible. Failures are the critical 90 percent—the stuff they can't teach in school.

I can say this now, with the aid of hindsight, as the founder of a business that makes millions a year growing and selling legal marijuana. But I assure you that I was not spouting such wisdom back in 2010, after my first attempts in the cannabis industry imploded.

No. Back then I was pissed—but resolved to do better and ready to fight on.

I knew we had to try again. I had to sit down with Mr. Pink and investigate our options.

I had been around the block enough times to know that I was merely looking at Failure No. 1. There would be more. (You'll hear about them, believe me.) People who were around me during this time sometimes found the courage to ask: How do you know you can make this work? Didn't you recently preside over the failure of your own real estate company? You didn't try to revive
that
failing business. Why redouble your efforts on behalf of this strange new business of weed?

My answer is simple. At that point in time, there's a critical element that weed had that no other industry had: opportunity.

In 2010, the world economy was in near collapse. Existing industries, from real estate to banking to technology to consumer goods, were all being challenged by the largest market downturn in recent memory.

Weed was wide open.

Just because we had enjoyed our first spectacular failure did not mean weed had gone bust. Far from it. The profits were out there. We just had to get more creative and put into practice the painful knowledge that we had just paid six figures to acquire.

I had put the word out that I was looking for a new grower. Every time I met a new one, I was more than aware that I was no longer approaching our conversation as a neophyte. I was asking better questions.

Can you show a sample of your product?

What kind of system do you use for your grow?

What brands of equipment do you like, and why?

What kind of system would you recommend for me, a guy who's licensed to grow nearly two thousand plants?

What's your ideal system going to cost me?

How long will it take you to get the system optimized and operating at 100 percent?

The last question was obviously critical. Our business was running on fumes, and not the kind our customers enjoyed inhaling. Mr. Pink and I had had our heart-to-heart talk, and it wasn't looking good. He had a lot riding on this business, well beyond the money he'd sunk into it. He was a lifelong Coloradan and was personal friends with our two landlords. If we couldn't pay our rent, it would be a colossal embarrassment for him.

Yet he didn't once flinch from the awful task ahead of him. He sucked it up. He phoned each of those friends in turn and asked to sit and talk about our problem. One option, clearly, was to liquidate our meager assets and turn over whatever we earned to our landlords. But that option meant we were walking away from the cannabis industry for good. The other option was convincing them to stick with us until we hit upon a better harvest and made good on our lease.

“How can we get the numbers up?” Mr. Pink asked.

I'd been talking with a couple of promising growers, Brandon and Kim, whom I'd met through the dispensaries I sold to. Some of those dispensaries also bought regularly from Brandon and Kim. They were not a couple, by the way, just two individuals who had independently earned a reputation for good work. What I'd seen of their product was top-notch, but to get it, we needed reliable, state-of-the-art equipment that was light-years more sophisticated than the jerry-rigged budget system Adam and I had cobbled together.

Raising marijuana was now looking like an expensive, complex enterprise. But if you set aside a lot of the bullshit and looked at the
problem as simply as possible, it boiled down to an equation anyone could understand:

More lights = More pounds

More pounds = More money

I could buy more lights piecemeal, the way Adam and I were doing, or we could hire some contractors to install lighting and an air handling system, but that would require an efficient design. We'd need the services of a commercial architect, and we'd need to pull numerous permits from the city.

“How much are we talking?” Mr. Pink asked.

“Half a million to do it right.”

Mr. Pink could have said no. He could have thrown me out of his house. He could have told me he had already talked to our landlords, we're liquidating everything, we are getting out from under this debacle so I can save some face with my friends.

Instead, he said, “If you can get that much money elsewhere, I'm still in.”

I'd been talking to contractors to get a feel for the cost of the renovations. One of them happened to mention some friends out in Los Angeles—a retired athlete and a one-time actor—who were interested in investing in some businesses, particularly in the hot new cannabis market.

The longer I am in this business, the more I realize that you can never predict who is going to turn out to be a diehard marijuana fan. I have met highly successful attorneys and physicians who treat their chronic pain or daily stress by smoking marijuana. I once met an elderly woman—an insanely wealthy individual from a highborn family—who confided in me that she smoked marijuana every day. Many actors and athletes prefer marijuana over alcohol, possibly because alcohol can mean hangovers and extra calories, but they are ever aware of a damning double standard that forces them to hide their marijuana use. An athlete who drinks to blow off steam on his time off, for example, is unlikely to garner bad press or be penalized by
his team or his sponsors. A marijuana user will. Athletes have been suspended from the team and lost their endorsement contracts over infractions of this kind, so they take pains to hide their use of marijuana.

“You should talk to them,” the contractor said. “Make it happen. Don't sit on this. They're serious.”

I made a note of it. “Seriously? I'll call them right away.”

Then I got busy with the architect. Got mired in wastewater issues down at city hall.

After a handful of phone conversations, and before ever seeing our facility, our new friends from LA cut us checks. As we'd anticipated, both wanted to remain silent partners. They were more interested in raking in a decent return than participating in our business in any way. All told, thanks to them, our bank account had risen by the amount of $495,000.

Every dollar had to count. I couldn't fuck around anymore. I was playing with other people's money now, and they would be carefully watching what I did with it.

One day, I pulled Adam aside and gave him the bad news. He must have seen it coming and took it like a man.

He was out.

Brandon and Kim were in.

I had created another opportunity to get it right. The clouds lifted, and I had hope again.

I decided on a two-prong approach: We'd hire a contractor to get started on the renovations, hard-wiring us for a ninety-two-light facility, while Brandon and Kim would establish a temporary, twenty-five-light grow in the building next door. Yes, it meant more money. A second lease. A second rent payment every month. More permits. More headaches. But we could not afford to wait while our first building was renovated. We were too desperate to establish a revenue stream.

We weren't the only ones. You have to recall that everything we were doing was playing out against the backdrop of the worst financial
crisis in the United States since the Great Depression. I'd lost my last company due to the housing crisis, and millions of other Americans were struggling with the ripples emanating from that downturn. Our contractor, who I'll call Sam, was the same guy who'd put us in touch with our new investors. He was the patriarch of a construction firm with a long history in Denver. I thought I'd made a solid decision when I'd hired them to be our general contractor. Mr. Pink and I both knew him, and our kids all went to school together. What could be more stable than a firm that's been in business more than ninety-three years in the same city?

Well, I was wrong.

The work on our grow moved glacially. I'd go down there some days to find no one on the premises. Other days, a guy I called Bob the Builder was the only one working in that 5,000-square-foot space. Some days, I'd call and text Sam incessantly to light a fire under his ass.

What the hell is the holdup, man?

Remember what I was telling you about failure? Failure is so endemic to the human species that even if you're not the one failing, you can pretty much count on those around you failing. It's virtually impossible to guard against such a happenstance. Most times you just can't see it coming.

Contractors do a lot of their business on credit. They buy tons of supplies in expectation that their clients will cut them a check in the next week, the next month, the next year. If a customer's slow or the customer goes belly-up, the contractor's got no choice but to default on everything
he
owes. To compound the problem, in the wake of the housing crisis, a lot of tradespeople—carpenters, electricians, plumbers, and the like—were pulling up stakes, moving out of the city, or else transitioning to new jobs. Sam was short on men, short on cash, short on supplies, short on answers.

Months passed.

I knew something was wrong. It was obvious. I called Mr. Pink when I finally got the news I knew was coming. Our contractor was going out of business, another terrible casualty of a tanking worldwide market. Sam was supremely sorry, but he just couldn't make good on the job. Yes, he'd taken a lot of our money—our
investors'
money—but he couldn't pay it back. He'd spent it all trying to keep another job afloat, and that would come back to bite him in the ass later. That would be his cross to bear in court one day.

It was looking ugly.

Picture Mr. Pink and me sitting in his study, holding our heads.

Picture Mr. Pink grilling me on what we were going to say
this time around
to our landlords, not to mention our investors and creditors.

Holy shit, we thought, we're about to lose it
again.

There was just one shining light in all this. Brandon and Kim had worked wonders with the grow next door. Brandon possessed the greenest of thumbs, and he had a knack for sourcing some fantastic strains, like SkunkBerry which was a cross between two standard marijuana strains, purple skunk and blueberry. But they came together beautifully and would one day help us win acclaim for our company. Another great strain Brandon mastered growing for us was the famous sativa, Jack Herer, named after the late but well-regarded cannabis activist. When you take a puff of Jack Herer, you feel like you've just downed a couple of Red Bulls and you're ready to stay up all night talking with friends you haven't seen in years. For me personally, it's like one too many cups of coffee, but it's a fine strain nonetheless.

Our harvests, even with the twenty-five lights we had, were increasing. One rule of thumb in the cannabis business is that each light will generate about 1 pound of product every other month. Or, to put it another way, ten lights would yield 5 pounds a month. Only, in Brandon and Kim's hands, each light was yielding about 1.3
pounds every other month—a substantial bunch of buds! Suddenly we had about $40,000 a month coming in the door. Understand: This was not our profit, just the revenue stream. But those harvests helped us stay afloat and lessened the sting of our diminishing bank account.

Some days I'd go down to the grow and stand there, drinking in the nearly tropical moisture and the glistening leaves and the sweet smell of those buds, and I'd feel my blood pressure drop. There is something transcendent about simply being in the presence of plants with which you are so inextricably bound. After so many years of being detached from the meaning of working with Nature, this experience had become magical for me. I was awake, alive, and thriving when I was around the plants. I imagined I could feel them growing. Hell, when I was around them, I felt I was growing, too.

I love you and support you, I'd tell those plants. If you guys keep living and producing, we will make it.

The plants stared back at me wordlessly, not acknowledging a thing about my dilemma. But they kept growing.

A thought occurred to me: Some months ago, we'd made a sizable payment to Sam's electrical subcontractor. Sam was going out of business, but the electrician probably wasn't.

More lights equals more pounds.

More pounds equals more money.