Blues Traveler’s Brendan Hill on the Present & Future of the Pot Industry

Brendan Hill is the drummer for Blues Traveler, a Grammy-winning U.S. band led by famed singer and harmonica player John Popper. Some people know them for their Top 40 singles “Run-Around” and “Hook”—which boast millions of YouTube views—others, for that time they played Woodstock; and another big bunch, from that time they opened for the Rolling Stones.

However, this is not a story about Hill’s musical career, but about his foray into the cannabis industry.

Paper Meets Leaf

Back in 2013, the drummer and a partner decided to start a project in the marijuana space. The idea finally became a reality in 2015, when they opened their own licensed recreational and medical cannabis retail store, Paper & Leaf. Its sole Bainbridge Island, Washington, location managed to position itself as one one of the top grossing cannabis retailers in the state in 2015, selling an estimated $2.8 million—before paying about $1 million in taxes.

Benzinga’s Javier Hasse recently had the chance to chat with the rock-star-turned-ganjapreneur, who shared his story and thoughts about the cannabis industry.

Changing The Stigma

Paper & Leaf is “trying to change the stigma of cannabis retail shops,” Hill explained. “We like to call them access points rather than dispensaries.”

Since marijuana is recreationally legal in Washington, Hill and his partner are “trying to make it feel more like a boutique wine shop or someplace where anybody over the age of 21 is welcome.”

Javier Hasse: How do you deal with finances in an underserved industry like cannabis?

Brendan Hill: When we opened in June of 2015, there were a couple of early players in the closed-loop payments system. Since marijuana is still considered a Schedule 1 drug on a federal level, most of the national banks and credit card issuers don’t allow payments using their services.

So, Paper & Leaf experimented with one of the early players. It was still very early and a little bit corky, and we found that it slowed down our point of sales experience at a customer level. It was a little bit invasive for clients, as they had to attach their bank accounts and they had to go outside of the store to complete transactions […] and get prepaid cards. However, some newer services like those using blockchain seem to be solving many of these issues.

JH: Which are, to you, the largest financial implications of legalization?

BH: In the early days, with Initiative 502 being passed […] between the passage and the implementation, which was about a year-and-a-half, there was this kind of land-grab for warehouse space for growers [because] in Washington you can’t grow all year round.

As for Proposition 64’s passage [legalizing recreational cannabis in California], I think you are going to see a lot of warehouse space being either bought or rented out at a much higher markup, probably two to four times the going rate, [but] just in those areas where the city and state will allow it. I think it’s a bit similar to the old railway going through the middle of a wasteland: people would buy up land hoping that the railroad would go through part of their land.

Moreover, [legalization in California should result in] huge revenue from the taxes on cannabis. And those will be put to good use, for education and infrastructure, like they have been in Washington State.

JH: Do you see big players coming into the industry?

BH: Since marijuana is still illegal on a federal level, big players like tobacco companies, pharmaceuticals and beer makers are probably going to stay out just until there’s a little bit less risk. This will allow mom and pop, smaller businesses, craft cannabis growers and retailers to take a foothold.

However, when Microsoft put forward that seed-to-sale software, they actually came out openly to say that they feel like the industry can benefit from a great product from them. I think that was a big step.

There’s a lot of fear of missing out in this industry. So, it’s interesting to see who’s going to jump in fist. I think the beverage, tobacco and pharmaceutical industries all are nervous about cannabis […] but I think they will be coming in […] And I think that’s great, because when these big industries come in, they just legitimize what everybody else is doing and it will help us, in the long run, with our bottom line, because I’m sure someone like Philip Morris will not put up with not being able to deduct their expenses for retail and growing, which is the case now.

Quotes have been very slightly edited for clarity.