Mainstream cannabis comes to Colorado

Celebrities bring big money and big names to a capped marijuana industry

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On Nov. 9, Colorado’s weed scene gained its capstone endorsement — Snoop Dogg launched his very own line of marijuana products including flower, chocolate bars, shatter, wax, drops and other candies.

Although there is talk of other celebrities launching high-end cannabis product lines in Colorado — from Freddie Gibbs to Willie Nelson to Bob Marley’s family — the first cannabis launch and surrounding media storm goes to Snoop Dogg. Ever since he came onto the hip-hop scene in 1992 as a featured artist on Dr. Dre’s The Chronic, Snoop Dogg has been an advocate and unofficial spokesperson for marijuana, and his place amongst its emerging industry seems natural.

“Since I’ve been at the forefront of this movement for over 20 years now, I’m a master of marijuana,” said Snoop at the brand launch event. “Leafs By Snoop is truly the first mainstream cannabis brand in the world, and I am proud to be a pioneer.”

The frontier he enters with Leafs’ launch is a complicated landscape of a new industry rife with economic and regulatory inconsistencies. For most entrepreneurs, the money, resilience and network required to succeed are not enough to outweigh the risk of a cannabis business. But for Snoop, a celebrity with lots of brand equity and money to leverage, the road is paved with green.

The scrupulous strategic planning preceding the launch signifies that Leafs’ Colorado retail is only the first in a bigger, national or international effort. In February 2015, Snoop Dogg was listed as the managing member of a Los Angeles-based VC fund called Casa Verde Capital, L.P. The fund has raised about $25 million to invest in new agriculture, wellness and research.

In September 2015, Snoop launched a website called Merry Jane that heralds itself as “the definitive cannabis resource on culture, news, food and style dedicated to expressing a new cannabis mentality.” The website also happens to be the perfect place to push content and marketing for Leafs by Snoop.

Behind savvy business moves and launch parties lie implications for Colorado’s weed economy. The influx of venture capital to the emerging industry will provide both short-term and long-term fiscal advantages for the state in terms of job creation, revenue and tax income. But the big money from mainstream brands trickling into the state clashes with the regulations in place to encourage slow growth and ensure that the money and accountability stays local.

Because Snoop is not a Colorado resident, he cannot grow or sell cannabis in Colorado. Requiring that marijuana businesses be owned and operated by Coloradans is meant to act as a control on the industry to keep supply in balance with the unpredictable demand of the new market.

Instead, Snoop is partnering with LivWell, a chain of 10 medical and recreational dispensaries across the state, to grow all of the flower for Leafs indefinitely. LivWell’s short history is rife with controversy, including an incident in which they allegedly gave out infused samples in place of plain chocolates and a lawsuit, filed in October, accusing the company of using harmful pesticides in their grow operations. LivWell has yet to be penalized for either incident.

And, for two years, a Denver moratorium aimed at controlling industry growth has allowed only existing medical marijuana businesses to open recreational dispensaries, grow houses or edible manufacturers. That was set to expire Jan. 1, a prospect that has had eager entrepreneurs and investors lining up. But talk of extending the moratorium for two more years has recently put a damper on such plans.

The extension is backed by many established industry businesses that lobbied to keep new competition from joining the scene.

Michael Elliott, executive director of The Marijuana Industry Group, said in a press release that current industry players support expansion of the industry based on market demand. “The marijuana industry has helped spark an economic boom in Denver but at this point it appears the number of businesses is in line with market demand.”

But the reality of the moratorium is that as new startups are kept out of the emerging industry, established businesses like LivWell will continue to grow as they align themselves with the new wave of mainstream marijuana trickling into the state. You can keep out the little guys with moratoriums and regulations, but they are no match for the brand equity contributed by a celebrity endorsement and the 25 million dollars of venture capital funding that the star brings with him.