This very special episode of The Profit won’t see Marcus Lemonis investing his own money to rehabilitate a small business, as is his custom, but doing something else entirely. He’s traveling to California to learn everything he can about the legal marijuana industry. That’s right: For one night only, our beloved Business Dad is moonlighting as Weed Dad.
Desert Hot Springs, ugly stepsibling to nearby Palm Springs, filed for municipal bankruptcy in 2001 and came close again in 2014. But since it became the first city in Southern California to allow industrial-scale indoor marijuana farming, the town has been thriving. The Mayor of Desert Hot Springs explains that the town — which costs $15 million a year to run — is on its way to collecting $50 million annually in pot taxes alone. Marcus pays a visit to Canndescent, one of the weed businesses headquarted in Desert Hot Springs. Make no mistake, this is a big moment. “I’ve never smoked pot — in fact, I’d never even seen pot. I walked into Canndescent and suddenly found myself surrounded by it,” explains Marcus, who is very likely too pure for this wretched world. His review: “Very fragrant.” Under federal law, of course, all of this is still illegal. But Canndescent will soon be selling $75 million of weed a year, which qualifies as let’s-not-worry-so-much-about-the-federal-government money. For now, they reap a harvest worth $195,000 every 10 days.
CEO Adrian Sedlin, a Harvard Business School graduate, wants you to see Canndescent as a “luxury brand.” If Adrian were a character on, say, Entourage, you would think, “Hmm, this is a bit much. Pull it back.” But such is Adrian. Eyes nearly popping out of his skull with delight, he gestures with an enthusiasm that makes me think he should find himself a time slot on QVC, if not at the next Goop wellness summit. “Call us the Courvoisier of cannabis. The Hermès of cannabis,” he says. Congrats on gentrifying weed, Adrian. Their logo looks, confusingly, like the Tory Burch medallion, which on second thought is probably not a coincidence. Canndescent comes in just five varieties, named for the moods they’re designed to evoke: Calm, Cruise, Create, Connect (pretty sure this is the sex one; you knew there was going to be a sex one), and Charge. Marcus appreciates their high-end “Whole Foods–esque” packaging, but he’s not convinced this is really a better product than the market’s cheaper alternatives.
Best friends Cindy Pinzon and Leone Posod (an ex-police dispatcher) operate the edibles business Treat Yourself, churning out vegan, gluten-free, weed-infused toaster pastries. “Very California,” Marcus observes sagely. They bake, package, and deliver it all themselves, out of a tiny kitchen in Orange County. The tarts cost $1.27 to make and retail for twice that, but the women can only produce 30 an hour. Marcus worries they won’t be able to compete in the massive edibles market. And though he loves their name and their logo, he’s not thrilled that their packaging prominently advertises that the goodies are “great for menstrual cramps,” among other things. “Why did you choose to alienate men from the product?” Marcus asks. Daaaaad, you’re embarrassing me. I do not know how to business a business, but I do know this: All things are for men. Let one thing kind of be for women. A single bite of weed Pop-Tart is not going to fell anybody’s mighty oak tree of masculinity.
There is hope, though, according to some impromptu math Marcus performs on his iPhone calculator. Of the 8 million people who voted yes on Proposition 64 — which will legalize the sale of recreational marijuana in California as of 2018 — if one third of them were to buy edibles, that’s 2.6 million potential customers. And if one percent of those potential customers bought one pastry a week for a year, that’s nearly $3.5 million in sales. That seems like a bit of stretch to me, but I want to believe.
Business Dad steels himself to visit MedMen (wow, these guys are gonna be so bummed when they find out there was just this TV show called Mad Men), one of Los Angeles’s more than 1,000 dispensaries. “I’m honestly a little nervous … I don’t know if I want anybody to see me going in,” he tells the camera. Marcus isn’t sure whether to call it a “pot store” or a “marijuana store.” Says CEO Adam Bierman, “You can call it whatever you want. I call it the future.” Well. The vibe is very Apple Store, with iPads everywhere and clever little displays that allow shoppers to smell the strains of weed before they buy and even examine them with a magnifying glass. “More style, less stigma,” Marcus says. Not only does this particular location (they have five in Southern California and four in New York) make $15,000 a day, but MedMen has its own cannabis industry private-equity fund, flush with $60 million from investors. And not only not only that, they’ve also cut out the middleman, saving on the $1,500 to $3,000 a pound they might pay an outside supplier by growing their own pot for under $1,000 a pound — and, using data from the retail side, they can easily adapt their production cycle to the demands of the market. After seeing how “slick” and “lucrative” this business is, Marcus finds himself rethinking some of his hesitations about the marijuana industry. “This is a real business with a real retail footprint,” he says. “You may not like it morally, but you definitely have to pay attention to it.”
Treat Yourself’s Cindy and Leone have landed a pitch meeting with MedMen, before which Marcus gives them a “pep talk.” Head buyer Josh tries an unmedicated sample and finds it “delicious.” But he, too, is put off by the menstrual cramps language, suggesting “more delicate words” instead. (How about “angel whispers across one’s pelvis”?) They’ll have to wait and see.
Next, Marcus is off to Berkeley to check out the weed-delivery service StashTwist. Founder Andrea Unsworth, an MBA and a former financial analyst for Moody’s, argues that it’s actually to her advantage to be a woman in this industry: “I think it’s just natural. We’re healers. You go to mom when you’re sick.” (Whatever you do, Andrea, don’t mention menstrual cramps.) Marcus joins Matt, a young man wearing a T-shirt that says “Pet Cats, Hail Satan” that somehow goes un-commented on, on a delivery. Their client is an upbeat 40-something woman, a mom who orders from StashTwist twice a week to alleviate her pain from an autoimmune disease. We also learn that, after expenses, Andrea’s business clears a tidy $7,000 a week. Marcus is impressed. He’d invest in her in any other industry, just not this one.
After stopping by a dinner party for owners and operators of the indoor weed farms in Desert Hot Springs — catered with, ha ha, “enough high-grade pot for a Grateful Dead tour” — Marcus visits CLC Brand Labs and its CEO Dan Osborne. Dan has poured a lot of money into this business (a lot), but the good news is he’s projected to make $22 million in 2018. Marcus must wear safety sunglasses and an enormously wide-brimmed hat in the intense light of the grow rooms, and for this I feel very blessed. “You realize you’re in a room filled with what the federal government considers illegal?” Marcus asks the company’s lead grower, Jeanette. “Yeah,” she laughs. “And I think that’s what makes it more exciting.” Dan himself is an interesting guy: He smoked weed in high school, but gave it up for a decade while he was serving as a minister and raising his kids. Oddly, he voted against recreational use — he doesn’t want his children and grandchildren getting high. Now Dan’s son-in-law won’t speak to him because of the pot he grows, which means he can’t see the grandkids he’s so eager to protect.
Last, but I guess not least, Marcus dips a toe in the world of “black-market pot.” He sits down with an entrepreneur who goes by “Zach” — he wouldn’t call himself a drug dealer “because it’s just weed” — who is shot from behind to preserve his anonymity. Zach and his partner net $60,000 a year each (tax-free, obvs), but after 12 years, Proposition 64 might put him out of business. He’ll have to get a “real job” soon. Okay, good luck, Zach!
We have just enough time left for a happy ending: Cindy and Leone get their treats onto the shelves at MedMen after all. Congratulations on your success, and may all your THC-infused (and menstrual cramp–free) dreams come true.