Joint Venture

With I-502 now in effect, Seattle has become ground zero for the state’s recreational pot market

Beyond the dollar signs
Not everyone entering the recreational marketplace is motivated by money. Some are longtime marijuana enthusiasts pushing for social change. Others have come to appreciate marijuana’s pain-relieving properties after seeing a chronically ill loved one helped by the plant. Many live in the suburbs, drive minivans and would be hard-pressed to name a Grateful Dead song or demonstrate how to use a vaporizer.

“We grew up with ‘Just say no,’” says Bellingham resident Robi Hawley, 49, who plans to open a cannabis testing lab in Everett when she graduates from medical school this fall. “We go to church on Sundays. We’re those people.”

The Hawleys are still “those people,” only now they’re pro-pot: Three years ago, a difficult-to-diagnose chronic ailment left Hawley’s husband riddled with pain, unable to work and clinically depressed. Prescription drugs didn’t relieve his agony. Only after trying medical marijuana did Hawley’s husband gain some relief and start to reassemble his life. (Below: Seattle attorney Hilary Bricken of Canna Law Group, located downtown, advises local potpreneurs.)

Speaking by phone from the Caribbean, where she’s attending school, Hawley said she and her husband intend to sink their remaining savings into the lab, which Hawley is opening with three other medical professionals. “This is something we feel strongly about,” she says. “It’s not just about making a buck.”

Cale Burkhart shares the sentiment. A longtime fan of “the naturopathic and herbal thing,” the 35-year-old started using cannabis extracts in 2009 to alleviate migraines, insomnia, and neck and back pain. The following year, he developed Vita Verde, a collection of pot-infused topical creams now sold at 45 dispensaries around the Puget Sound region. He’s since added tinctures and edibles to his product line, and will apply for Washington producer and processor licenses this month. His plan: to grow artisan, organic marijuana strains for making his infused products, which he hopes to sell in Seattle’s recreational pot shops.

Burkhart, who lives in Greenwood, is hopeful the new market will boost his income. (“I made more money as a server than I make right now,” the former restaurant worker says.) But raising awareness of the plant and enabling more people to benefit from his products remain top priorities. “I love being a part of the growth of this whole thing and helping to push it out of the shadows and into the light,” he says. “It’s really exciting to be a part of making history.”

The booming ancillary market
Growers, sellers, processors and testing labs aren’t the only ones gathering at Washington’s adult-use starting line. A passel of attorneys, accountants, publicists, insurance agents, business consultants, software developers, security companies, and makers of vaporizers, oil extraction equipment and pot vending machines—many of them based in Colorado, California and other marijuana-friendly states—stand ready to support the budding recreational market. (Left: Brendan Kennedy, CEO of Seattle-based Privateer Holdings, which is reportedly the cannabis industry’s first private equity fund, photographed on the edge of Lake Union near his office.)

By not handling pot directly, these ancillary businesses skirt Washington’s three-month residency rule and Liquor Control Board licensing requirement. (Being a step removed from the plant also reduces the risk of being shut down, or worse, imprisoned by the federal government.)

“A big opportunity is in selling to the retailers,” says Troy Dayton, CEO of The ArcView Group, which brings together investors in peripheral pot businesses. According to Medical Marijuana Business Daily, 80 percent of the nation’s ancillary companies expect to see moderate or significant growth this year. Leafly, a Yelp-style review website for medical marijuana dispensaries and marijuana strains that gets 2.5 million visits a month, is a shining example. “We believe the legal risk is next to zero, intentionally so,” says Kennedy of Privateer Holdings, which purchased Leafly in 2011. “Nothing we do is in violation of any local, state or federal laws.”

There’s also Seattle attorney Hilary Bricken, who has spent the better part of the past three years advising local potpreneurs on how to comply with state and municipal laws. Her firm, Canna Law Group, a division of law firm Harris & Moure PLLC dedicated to the legal marijuana sector, represents more than 100 clients and holds Initiative 502 seminars for cannabis-curious lawyers and entrepreneurs.

During one of the 12-hour workdays she’s grown accustomed to since the Liquor Control Board regulations were released, Bricken kids about marijuana being all she thinks or dreams about. “While that may seem really appealing,” she says, “it’s actually really intense, because the laws keep changing.”

Daniel Williams comes to the Seattle market by way of Denver. His company, Canna Security America, installs alarms, cameras and other security equipment at legal marijuana facilities in a half-dozen states. Medical pot growers and sellers need reliable security, as many are cash-based operations. Washington’s new recreational marijuana rules—which include strict security requirements for state-licensed growers, processors and retailers—are a boon for Canna Security. Wearing a fleece jacket adorned with an innocuous, leaf-free company logo, Williams says he anticipates one-third of his sales originating here in the coming two years.

“Right now we’re just dumping money into setup, employees and training,” he says of the rapidly growing company’s expansion into Washington. He is also looking into downtown Seattle office space (as well as on Queen Anne and Phinney Ridge) and pricing billboards (the Liquor Control Board allows them, provided rules about location, message and not targeting minors are met).

“We want to show people in Seattle we’re there and we’re not going anywhere,” he adds. “It’s going to be a huge new market for us.”