Marijuana dispensaries look to venture capitalists for seed money
So it’s true what’s been said about plastic all along: It’s worth the investment.
Ross Kirsh, in Las Vegas for the Champs Counter Culture Trade Show this week, hasn’t hit the big time just yet. But he has sold more than 500,000 childproof bags in the past two months to medical and recreational marijuana dispensaries in Colorado.
All thanks to a tiny pair of green plastic hooks that come together with a coordinated push of the thumbs, a mechanism he plans to patent.
But Kirsh, 30, a New York native, said his company, Stink Sack, couldn’t have done it without the financial help of the ArcView Investor Network. It’s a growing group of venture capitalists who are in town for the National Cannabis Industry Association conference this week.
In the absence of bank loans, these kinds of groups could be the financial key to future dispensary owners in Nevada, said Reggie Burton, an ArcView spokesman.
“If somebody wants to get started, if somebody has an idea for a dispensary, this is the place to get your feet off the ground, this is the group to turn to, this is the place to let people know what you’ve got in mind,” Burton said.
Kirsh is an example of that.
Late last year, the group lent Kirsh $80,000, enabling him to fly to China and have the bags manufactured in a city two hours north of Hong Kong.
Today, Kirsh plans to ask the group for an additional $50,000 loan to expand staffing and his sales team.
He will have about five minutes to convince them in a pitch forum — similar to those seen on the “Shark Tank” TV series — at Meet Las Vegas on South Fourth Street.
And he’s not going to be the only one making a pitch. He will be among the dozen entrepreneurs who will push their latest inventions and business blueprints to more than 100 investors.
“To be frank, I’m having a hard time keeping up with the demand, and I’m hoping they’ll come through for me in the clutch again,” said Kirsh, who has been going gangbusters on the childproof bags since late last year, when Colorado made it a requirement that all marijuana sales come with child-resistant accessories. “But in the end, it’s all about cash flow.”
Because medical marijuana is illegal in the eyes of the federal government, FDIC-insured banks aren’t providing the sort of traditional loans that are readily available for startups. And that can make life difficult for Ramen Noodle-eating entrepreneurs like Kirsh, whose three-year experience working in China landed him in a perfect position to do business in Colorado.
All the Syracuse University graduate needed was the backing, which is where ArcView comes in. Its purpose is pairing up investors with people like Kirsh. And since Colorado and Washington state legalized recreational marijuana, it has seen an uptick in its membership.
It has grown from 25 members last year to 125 today, said Burton, adding that each investor must invest at least $50,000 and pay an annual membership fee between $3,500 to $5,000.
Tech entrepreneurs, angel investors, venture capital firms, real estate moguls are just a few of the growing list of members, with some proving to be among the largest donors to marijuana policy efforts in certain states across the country.
They lend the money to the people on the ground, then sit back and monitor the bottom lines, Burton said.
One lucky recipient on a much grander scale than Kirsh is Andy Williams, whose company, Medicine Man Denver, received a $1 million loan from the group last year.
Williams, a former industrial engineer, built a 20,000-square-foot facility — known as the “Costco of the marijuana industry” — near the Denver International Airport and now, with the infusion of ArcView money, plans to build another one.
Since Colorado legalized marijuana for recreational use late last year, Williams said the price per pound has skyrocketed, from “$2,500 to $6,000.
“It’s all about demand, and the demand has gone way up,” he said, adding that his facilities are big for a reason: He has a grow house and a retail front.
“And like Costco,” he said, “I’m never going to run out of merchandise, and I’m going to offer it at a reasonable price.”
He still has to pay back the loan by 2016.
“Nevada is next up,” he said. “You just watch and see. It’s only a matter of time before it legalizes marijuana on a recreational basis.”
Whether the cities of Las Vegas and Henderson get on board and adopt ordinances to comply with the new state law remains to be seen. The new law authorizing 66 dispensaries, 40 of them in Clark County, will take effect on April 1, when the state issues the final guidelines.
The Clark County Commission has advised its staff to start preparing for the application process, but it’s the only governing entity in the county to do so.
Contact reporter Tom Ragan at tragan@reviewjournal.com or 702-224-5512.
