Two Retirees Create Marijuana Packaging Business in Colorado

Two Retirees Create Marijuana Packaging Business in Colorado

The NY Times/January18, 2017/Julie Weeks

The legal marijuana business has created a multibillion-dollar industry, including some interesting side ventures and spinoffs, and even unlikely entrepreneurs have found lucrative niches.

Among them are Deb Baker, a retired high school teacher, and Barb Diner, a former marketing executive, who both live in Denver and have been friends for 27 years. The two had found the relaxed retirement life a bit dull, so they would often bat around ideas that might be interesting to pursue and that could supplement their income.

In 2014, the nascent entrepreneurs saw a niche to be filled — child-resistant marijuana containers that would comply with Colorado’s newly mandated regulation.

On a market-research visit to a dispensary, Ms. Diner and Ms. Baker noticed some of the containers used there were made with chemicals that gave off an unpleasant odor. They thought they had a better idea.

“We thought consumers would want to store their edibles or medicines in containers that were F.D.A.-approved to store food in,” said Ms. Diner, “so we looked into making them from recycled plastic milk jugs.”

They decided to start Higher Standard Packaging in the spring of that year, and since then, they have sold nearly seven million units of packaging to Colorado cannabis dispensaries and beyond.

The initial set of products consisted of plain white canisters in different sizes with child-resistant caps, made by manufacturing partners in California. To find customers, they cold-called more than 100 businesses, mainly in the Denver area, and visited them with samples and price sheets.

Within the first six months, the company began selling other items: tubes, child-resistant caps and more recently, child-resistant, single-serving barrier bags (made of heavy-duty plastic that requires scissors to open). But their mainstay remains plastic containers for flower — the term for dried marijuana that is ready to smoke.

Their adult children thought the venture was an “amusing” pastime at first. Now, they are proud of their mothers’ success, Ms. Diner said, and have even helped with technology and market research.

Higher Standard Packaging has about 50 clients, including cannabis dispensaries as well as makers of edibles, concentrates and other cannabis products. Most are in Colorado, but plans are in the works to expand around the United States and into Canada as the legalization of marijuana becomes more widespread.

Higher Standard Packaging containers at the Terrapin Care Station facility, where they were being filled with marijuana on earlier this month. Credit Matt Nager for The New York Times

The cannabis industry is growing rapidly. The market for legal recreational and medicinal marijuana totaled $6.9 billion in 2016, a 34 percent increase over 2015, according to the Arcview Group, a California-based organization that researches and invests in the industry.

Greg James, publisher of Marijuana Venture, a magazine focused on cannabis business issues, said lessons from Colorado could be instructive for future entrepreneurs in states where marijuana laws are loosening.

“Entrepreneurs in states like California and Maine where cannabis has been newly legalized do very well to visit and study what’s going on,” he said.

Marijuana packaging started out as “a glorified version of the plastic bag that people used when it was illegal,” Mr. James said, and has become an important part of the business encompassing issues of safety, transportability and marketing.

For entrepreneurs thinking about joining the cannabis industry, Ms. Diner and Ms. Baker recommend a high tolerance to risk, the flexibility to change course quickly as regulations change and the dedication to meet the needs of the market. Customers will “need you outside the hours of 9 and 5, and you will get calls on weekends. Marijuana grows 24 hours a day,” Ms. Baker said.

In an industry dominated by young men, Ms. Baker, 62, and Ms. Diner, 56, said cannabis sellers used to look a bit askance when the two women entered the store, but, “We would swear a bit and people would relax,” said Ms. Diner.

Now familiar faces, they say the budtenders (retail marijuana sellers) are likely to call out, “The ladies are here!” when the two visit their customers.

Working out of their homes, the “ladies” run a lean operation, buying products as they sell them to take minimal risk. They have hired no employees and taken in no outside funding.

Doing so, they became profitable in their first year and were able to take salaries. The company uses a delivery van that Ms. Baker’s 90-year-old father-in-law gave them as a gift. “That’s making life a lot easier,” said Ms. Baker.

Three years into their business, the pair still rely on personal interaction and a high level of service to find and keep customers. They note that there are websites selling low-cost containers made in Asia, “but we’re resisting that model,” Ms. Diner said.

“The more we can interact face to face with our clients, the better chance we have of identifying their needs, wishes and dreams,” she said. “It’s a time-consuming model but is serving us well.”

Higher Standard Packaging containers. The initial products were plain white canisters in different sizes with child-resistant caps, but the company now makes other products. Credit Matt Nager for The New York Times

Ms. Baker says the success of their approach may also have something do with the fact that “we remind many of our customers of their mothers or favorite aunts, with our reading glasses perched on our noses,” giving out advice.

About half of their business growth comes from referrals and another large percentage comes from the growth of existing clients. “I taught school for 30 years, and there’s an educational component to this as well,” Ms. Baker said.

The personal connections also open the door to collaborations. Marijuana products are coming in new containers including single-use coffee pods, tins, droppers and others, and Higher Packaging is moving beyond its basic white canisters to partner with companies to customize packaging.

The marijuana industry can be a roller-coaster of good news and bad. “Our phones were ringing off the hooks when California legalized recreational cannabis use in November,” Ms. Diner said. A few weeks later though, when President-elect Donald J. Trump said that he would nominate as attorney general Jeff Sessions, a hard-line marijuana opponent, it had a chilling effect throughout the industry and among its investors.

More than half the states in the country have some form of legalized marijuana. But as the industry evolves, its laws change too. Regulations are still in flux, meaning that companies like High Standard need to change their products and stay nimble.

In October 2016, a new law in Colorado required the packaging of all cannabis edible products — such as the chocolate bars and brownies infused with marijuana — to be stamped with a symbol indicating they contained THC, marijuana’s psychoactive ingredient. This was a public safety measure meant to ensure people could distinguish the products from their non-cannabis foods.

Because the edible cannabis makers had to create new production molds for their foods to include the symbol, their business costs increased. As a result, they looked for areas where they could reduce expenses, like packaging. This meant Ms. Baker and Ms. Diner had to put in extra time to find ways to accommodate the changes the new laws required but still offer products that were aesthetically pleasing and economical.

Payment methods are also still evolving in the legal marijuana industry. Although many Higher Standard customers now have checking accounts, Ms. Baker and Ms. Diner used to have to take payments entirely in cash. Their first payment from a Denver cannabis dispensary was typical — $5,400 entirely in small bills and reeking of marijuana.

Worried that their bank would not take the deposit or might even close their account, the entrepreneurs put the money in Ms. Baker’s clothes dryer with some Febreze sheets to remove the smell.

Ms. Baker did not have a safe at home, so the pair hid the money in the freezer until they could take it to their bank. Now they joke about “laundering money” and “cold hard cash” but at the time, carrying around such large amounts of cash was unnerving, Ms. Diner said.

Ms. Baker marvels at how quickly marijuana product suppliers and retailers are embracing innovative ideas with professionalism. At the recent Marijuana Business Conference she attended in Las Vegas, Ms. Baker saw new mechanization products like automatic plant trimmers and bottle fillers, and retail nutrient mixes and low-energy lighting designed specifically for marijuana plants.

“In my day, a pot convention was six people hanging out in a college dorm room,” she joked.

A version of this article appears in print on January 19, 2017, on Page B4 of the New York edition with the headline: A Pair of Retirees With a Safe Place to Keep Your Pot.

 

 

 

Mexico Begins Importing Medical Marijuana As Views on Therapeutic Cannabis Evolve

Mexico Begins Importing Medical Marijuana As Views on Therapeutic Cannabis Evolve

LA Weekly/December 23, 2016/Alicia Lazano

HempMeds, a subsidiary of Medical Marijuana Inc., has formed the first cannabis-based export partnership to Mexico, Brazil, Paraguay, Argentina and Chile with its export of Real Scientific Hemp Oil and its THC-free counterpart, Real Scientific Hemp Oil-X. The plants for these treatments are grown in northern European microclimates and claim to be free of pesticides and herbicides.

The California-based company’s partnership with Mexico — an ally of particular interest thanks to cultural and historical ties that date back centuries — was solidified earlier this year when Cofepris, the Mexican health department, approved the country’s first permit allowing the import of hemp-based CBD oil across its border. The announcement came after years of intense pressure on Mexican authorities from medical marijuana allies and advocates pleading on behalf of two families with children who have severe forms of epilepsy. Recently, Mexico also eased up on its no-THC stance and passed the country’s first medical marijuana legislation. Many in Mexico see the move as a step toward eventually legalizing pot in a nation drowning in drug violence.

“Despite the terrible cartel violence, the regulatory authority in Mexico saw the potential for CBD,” says Stuart Titus, CEO of Medical Marijuana Inc. “Today we remain the only legal, cannabis-based products allowed into the country.”

The road to Mexico’s evolving stance on marijuana begins with Alina Maldonado Montes de Oca, a young girl from the small town of San Andres Tuxtla in the state of Veracruz. She had her first seizure when she was just an infant. They increased almost immediately, peaking at 25 to 40 small attacks per day, with grand mal seizures striking up to twice per week. Doctors found that she had hypoxia, an oxygen deficiency to certain parts of the body, which affected her brain development and caused both epilepsy and infantile cerebral palsy. Maldonado was treated with 14 different kinds of medication, each one with an array of painful side effects, including liver damage and gastritis.

Eventually Maldonado’s father came across a similar case in the United States that was treated successfully by CBD. Cannabidiol has been gaining traction stateside as an alternative to harsh drugs after several American studies showed that it can drastically reduce the number of seizures in small children with Lennox-Gastaut (LGS) and Dravet syndromes.

But in Mexico, cannabis-based treatment is viewed with suspicion and remains highly taboo. So when the Maldonado family discovered that another Mexican family had a child with the same kind of disorder, the two families combined their efforts and participated in a series of congressional hearings in Mexico City in January. On Feb. 1, 2016, they were rewarded when Cofepris granted permits for the little girls to receive CBD treatments from abroad.

“We are very humbled to have this opportunity,” Titus says. “Our products seem to work when traditional medications haven’t been able to control these seizures.”

Conditional permits for CBD are not unprecedented — a Mexican judge sanctioned similar treatments last year to a third girl — but the medication is strictly regulated. All imports must be free of tetrahydrocannabinol (THC) and contain no psychoactive properties. In other words, they cannot get patients stoned. Brazil has a similar arrangement with Medical Marijuana Inc., whose hemp oil was first allowed in the country in 2014 on a case-by-case basis for the treatment of chronic pain, epilepsy and Parkinson’s disease.

“We helped educate the government [in Brazil] and, going further, the government saw this product actually helped control these seizure disorders. Since there wasn’t a good pharmaceutical medication, the regulatory officials declared it would be inhumane to keep these products from the patients,” Titus says.

HempMeds now is treating approximately 1,500 families with epileptic children in Brazil, comprising approximately 40 percent of juvenile patients, Titus adds. Brazilian authorities also have approved the import of marijuana-based treatment for a woman with Zika virus.

The idea that cannabis-based products are making their way into countries historically tied to drug trafficking is an irony not at all lost on Titus, who traded in a career on Wall Street to become first a physical therapist and now the CEO of the U.S.’ first publicly traded marijuana company.

“Here we’ve developed a reverse cannabis pipeline,” Titus says. “But it’s been very interesting — even some of the elite people in Mexico are underground cannabis connoisseurs. They all love the best American-grown cannabis.”

Part of the allure in spreading operations throughout Latin America is the region’s cultural connection to alternative medicine. Unlike the United States, where big pharmaceutical companies largely determine which treatments are in vogue, doctors south of the border regularly prescribe homeopathic cures to their patients. That marijuana comes mired with a bad reputation is just one more obstacle to overcome in a global economy already becoming more weed-friendly.

“It’s been years that we’ve been fighting for acknowledgment and approval and recognition of the medical and therapeutic uses of cannabis, and today we finally have something,” said Lisa Sanchez, director of drug policy for Mexico Unido Contra la Delincuencia, a group working to curb crime.

Titus first came across medicinal marijuana while treating athletes recovering from sports injuries in North Carolina. Since then, he has been increasingly interested in alternative medicine and botanical solutions. He says “Latin America’s connection to nature” is something we in the north should seek to emulate. “All modern medicines came from plants,” he says. “We’ve moved away from that and now only look at synthetic medicine. It’s a shame.”

Why Marijuana Marketing Will Be Bigger Than Ever This Year

Why Marijuana Marketing Will Be Bigger Than Ever This Year

Ad Week/January 3, 2017/Janet Stilson

The cannabis business had some big wins during last year’s election. Now, that’s stimulating predictions of major greenback growth along with ever-more sophisticated marketing strategies on the part of cannabis companies.

In November, citizens of four states—California, Massachusetts, Maine and Nevada—voted to approve recreational cannabis usage for adults 21 or over. They join four other states where the drug can be used recreationally: Alaska, Colorado, Oregon and Washington, along with the District of Columbia. Meanwhile, voters in Florida, Arkansas, North Dakota and Montana also approved the legalized use of medical marijuana. All told, 28 states have opened up to medical usage.

Given all that activity, Matthew Karnes, founder of the marijuana financial consultancy GreenWave Advisors, predicts that the legalized U.S. industry will grow from $6.5 billion in sales during 2016 to $30 billion in 2021. He estimates that by 2021, marijuana marketing will total $75 million.

Agencies are clearly picking up on the opportunity. Marijuana Business Daily has a directory that lists about 170 advertising, public relations and marketing agencies that are drumming up business nationally. A host of others are focusing on business in specific states.

The budding industry has come a long way over the past several years. “In 2011 and 2012 branding was very unsophisticated. There weren’t a lot of companies that paid attention to that part of their business,” said Chris Walsh, editorial director of Marijuana Business Daily. “We’re starting to see it catch up to the rest of the business world.”

So far, the industry has remained very localized. “I’m in the Bay Area, and when I go down to Southern California, if I go into a dispensary, it’s a whole different set of products,” noted Amanda Reiman, manager of marijuana laws and policy at the Drug Policy Alliance.

Among brands just starting to migrate to multiple cities is Flow Kana, a distributor that partners with small marijuana farm businesses in the Emerald Triangle, as the three big pot-growing counties in Northern California are known. “They recognize that the brand is the Emerald Triangle,” Reiman said. “Really, what people want to know is, ‘Is this coming from the Emerald Triangle?’ the way they want to know ‘Is this wine from Sonoma?'”

As with its campaign in the northern part of the state, Flow Kana used out-of-home media like buses and billboards in Los Angeles. In addition, it leveraged the Facebook ad platform. “We’ve had our fair share of ads denied and had to go back and forth a bit,” said Adam Steinberg, co-founder and head of business development at Flow Kana. The social site nixed messages with “typical stoner language” and links to cannabis sales sites.

Most traditional media companies have spurned the industry’s ads. But Joe Hodas, CMO of Dixie Brands, which sells edible and topical products in four states, reported that new cannabis-focused companies with print and online opportunities are constantly contacting him. “The No. 1 fastest media platform in this industry is print,” he said.

Dixie has gone a different route from its competitors by creating a Secret Society of Budtenders program aimed at salespeople in dispensaries. It rewards them for their efforts to guide customers to their products with gifts like concert tickets.

Another company seeking to position itself as a national (and international) brand is California-based Whoopi & Maya, owned by Whoopi Goldberg and her partner, Maya Elisabeth. The company is working widening the typical cannabis-consumer demo beyond young men to women and older adults with its medicinal products. Whoopi & Maya only uses online marketing via the company’s own site and nonadvertising postings on Facebook and Instagram, said Evan Nison, CFO of the company and founder of his own cannabis PR firm, NisonCo.

For these companies, nationwide domination might still be a ways off: The states that recently voted to open their doors to recreational use of marijuana won’t allow sales to begin until 2018, and it’s still unclear how the new Trump administration will affect the business. But Hodas says he remains hopeful that marijuana marketing will continue to become ever more sophisticated.