Big Pot Or Not? Colorado Companies Set Up in Massachusetts


money and marijuana, cannabusiness

Photo: Lochfoot

Most young companies would love to have O.PenVape’s success. Since starting out in 2012, the Denver-based firm’s products have been available in California as well as in Colorado.

Sales are strong enough for O.PenVAPE to make what they insist was a very serious bid for the naming rights to the home stadium of the Denver Broncos—what would have been a $6 million-a-year-commitment. Possibly because O.PenVAPE makes cannabis oil pen cartridges, stadium authorities passed on that one, leaving the company free to focus on further expansion. 

And now that Massachusetts has legalized recreational cannabis, O.PenVAPE is headed east. The firm’s parent company, OrganaBrands, has inked a licensing deal with a Massachusetts cannabis provider, the Boston Globe reported. Other Colorado companies want to follow suit and expand into other states, becoming national cannabis brands, the New York Times observed.

Is this Big Pot?

Some industry analysts bristle at the term and insist that these companies are just bit players compared to Wal-Mart and Philip Morris.

“The notion that there are these gigantic, big-money players running in to take this whole thing over is just a fiction,” declared Kris Krane, president of a Boston-based marijuana investment and consulting firm in comments to the Globe

Indeed, the newspaper’s article on the matter began with the declaration that “‘Big Pot’ is not coming to Massachusetts,” a conclusion based on the very real facts that federal regulations, banking restrictions and a whole host of other problems peculiar to cannabis make it a forbidden zone to the multinational conglomerates most people think of when pondering “Big Business.”

But if this isn’t Big Pot, what is it? The biggest pot, at least.

Though California and its 38 million people represent the biggest market and, when you consider medical cannabis’s two-decade history, the oldest, Colorado appears to have a monopoly on large weed firms. The biggest chain of dispensaries, with 14 locations, is Colorado-based. 

Since cannabis companies can’t send product across state lines, going national for a weed firm works like this: A brand with big-enough name recognition and serious resources can contract with providers in other states or set up subsidiaries that act more or less independently. Only the name is licensed, and presto! You get California and Massachusetts-based products using the name of the Colorado firm.

Other brands pulling this trick include Dixie Brands, another Colorado company, which makes THC-infused “Dixie Elixirs.” Those, too, have appeared in dispensaries on the West Coast—Dixie Brands will soon be available in Nevada, Washington, as well as medical-only Arizona, the location of legalization’s only loss at the polls last week—but now that recreational cannabis has gone east in Massachusetts and Maine, there’s a whole new open region in which brands can compete to be the first in consumers’ minds.

Some local multi-state brands are already in business on the East Coast. There’s a dispensary company with locations in both New York State and Massachusetts, but as far as the “Coca Cola of weed” is concerned—as in a brand name recognized by consumers across the country—West Coast companies have a definite leg up.

Not every expansion plan has succeeded.

Oakland, California-based mega-dispensary Harborside opened up a location in Portland, Oregon once the city’s recreational cannabis marketplace opened up, but sales weren’t strong enough for Harborside, which has since sold the location to another company and exited that particular market. Krane, the Boston analyst, told the Globe that it is “extremely challenging” for weed firms to expand to other states and requires significant capital, as well as the willingness to “re-create” a business in another state.  

That’s all true, but it is obviously doable—and apparently lucrative enough to want to do it again and again. Just how massive the market for cannabis products will turn out to be is a matter of debate, but every analyst seems to agree that it’s a question of degrees—as in a degree of billions. 

Sales of cannabis and cannabis-related products could ring up to as high as $6.5 billion in 2016 alone, according to GreenWave Advisors, a New York-based firm, with growth up to $30 billion by 2021 provided cannabis or cannabis-derived products are “legalized in all 50 states in some capacity.” That bullish scenario is not particularly likely—legal weed in Texas?—but there’s no doubt room for some serious growth. 

And like any good entrepreneurs—especially entrepreneurs with an open field in front of them—Colorado companies will be there.

You can keep up with all of HIGH TIMES’ marijuana news right here.

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