Medical marijuana businesses see opportunity in Mass.
DENVER — Kayvan Khalatbari rings up more than $1 million in annual sales at Denver Relief, the medical marijuana dispensary he runs out of a downtown storefront, and business keeps getting better.
But rather than opening an additional store, Khalatbari, 29, is expanding in a different direction: He has been devoting more time to doing lucrative consulting work for about 15 fledgling cannabis entrepreneurs who are interested in setting up shop in Massachusetts.
Denver Relief is one of several companies in Colorado — the epicenter of the nation’s medical marijuana industry — eager to capitalize on the expected “green rush” as Massachusetts’ medical marijuana program gets off the ground this year.
There is lots of money to be made by the ancillary businesses — including consulting, accounting, law, and marketing — as well as in the treatment centers.
“There is a great opportunity here in Massachusetts,” said Khalatbari, who charges $250 an hour for his services.
Tripp Keber, widely considered the king of cannabis-infused products, is also looking East. His Dixie Elixirs & Edibles enterprise earned more than $1 million in 2012 by selling medicated carbonated beverages, infused edibles such as chocolate truffles and fruit lozenges, and other items to roughly 500 medical marijuana dispensaries in Colorado, where medical marijuana has been legal since 2000.
Keber projects his company’s sales will more than triple this year as Dixie Elixirs strikes deals in Arizona, Washington, D.C., Connecticut, and Massachusetts. He is in discussions with six Bay State entrepreneurs, including one in Nantucket, to license the brand and technology.
At Dixie’s Colorado headquarters, molecular biologists wearing white lab coats work with mechanical engineers, chemists, food scientists, and a chef to create dozens of products in a Willy Wonka-like setting. They concoct a rainbow of elixirs, including sparkling pomegranate sodas formulated with up to 75 milligrams of THC (the active ingredient in marijuana) per 12-ounce serving and mandarin orange-flavored energy boosters with about 60 milligrams of THC and as much caffeine as a cup of premium coffee. The standard dose is about 10 milligrams, so such products are not intended to be single-serve.
Keber has more than 40 employees after acquiring four medical marijuana businesses and is negotiating to take over two more. To support the growing empire, Dixie has hired three law firms, five consultants, a graphic designer, and a security company.
“Medical marijuana has created a cottage industry. This business is growing exponentially,” Keber said during an interview in his office, where he proudly showcases Dixie’s most recent honor: a fake marijuana leaf in a snow globe emblazoned with the words “Most Valuable MMJ Business,” awarded by local cannabis consultants. (MMJ is industry shorthand for medical marijuana.)
“Two to three years ago, we couldn’t get someone to return our calls,” Keber said. “Now, on any day, we have three to five vendors calling, e-mailing, or knocking on our door wanting to do business with us.”
When states start medical marijuana programs, the business impact extends far beyond dispensaries and cultivation operations, said Chris Walsh, editor of the Medical Marijuana (MMJ) Business Daily, a trade publication based in Denver. Many other types of companies crop up to provide services, including hydroponics shops, software firms, and packaging vendors. For instance, MMC Depot, a Colorado company that sells high-end glass jars and colorful plastic prescription bottles to hold marijuana, is interested in opening an East Coast branch in Boston.
“These other businesses generate millions of additional dollars in revenues and put more people to work,” Walsh said.
In Denver, Brian Vicente has built a law practice around medical marijuana. He helps start-ups across the country cope with local laws, negotiate leases, draw up mergers and acquisitions, and — if needed — represents them in court.
The company is doing so well it recently moved from a modest office — with waiting room magazines that included The Hemp Connoisseur and High Times Medical Marijuana — to a brick mansion across the street.
Vicente’s firm has doubled its space and shares some with other medical marijuana firms. He was one of the first Denver professionals to set up an office in Massachusetts and hire a full-time lawyer, based in the Financial District, who helped organize the recently formed Massachusetts Medical Marijuana Association.
He estimates Massachusetts could enroll more than 100,000 patients within two years — similar to the patient base in Colorado.
“We know this issue is going to be big, and we want to help it grow in the right direction,” Vicente said.
For people considering entering the business, this warning: Expenses can add up quickly. For example, full membership in the Medical Marijuana Association costs $300 a month. A recent event was held at the Omni Parker House in Boston to launch the group and introduce the National Cannabis Industry Association, which costs at least another $100 per month. The seminar that followed (priced at $199 to $299) featured Khalatbari of Denver Relief as well as Vicente.
Donna Rheaume, a former spokeswoman for the Massachusetts Department of Public Health who recently started the company Medical Marijuana Public Relations, attended to make connections and market her services, including media relations, branding, website development, social media, and community events.
“It’s a brand-new industry in Massachusetts, and it’s an exciting time from a public health perspective and business perspective,” Rheaume said. “There is an opportunity for small businesses — everything from security companies to contractors to electricians and accountants.”
A different group, DispensaryPermits.com, hosted a daylong medical marijuana conference Saturday called the Green Rush. It cost $250 and included speakers such as Cheryl Shuman, a celebrity and media expert, who, according to the conference description, “showcased today’s hottest legal cannabis products on ‘The Ricki Lake Show.’ ”
Another marijuana extravaganza hosted by the National Cannabis Industry Association is planned for March 16 and will cost $250. The symposium will feature Blue Sage Microbes, a leading provider of soil nutrient systems for industrial-scale medical marijuana cultivation; a panel discussion of ancillary businesses; and a presentation of MMJ Business Daily’s Business FactBook 2013.
“You’ve got to be fast in this industry,” said Walsh, the editor. “Competitors are coming from everywhere.”