As millions of marijuana aficionados light up Wednesday at 4:20 p.m. in celebration of “Weed Day,” many are blissfully unaware of the increasing interest that investors with deep pockets are showing in their favorite psychoactive herb.
A green rush is on in the marijuana industry, with legal sales of cannabis rising by a billion dollars or more each year nationwide, according to one report, and venture capitalists pouring millions into marijuana enterprises ranging from computer software and social networks to storage bags, vaporizers and insurance.
The economic trend, which has some North Coast pot growers worried about competition from corporate giants, is already playing out in Santa Rosa, where the City Council voted in February to allow commercial cultivation in industrial areas, a move that could greatly expand the scale of medicinal pot operations.
Joe Rogoway, a Santa Rosa attorney for the cannabis industry, said investors are buying and renovating warehouses intended for marijuana cultivation, creating jobs and boosting payrolls that have a ripple effect through the local economy.
“There is a significant amount of capital going toward the cannabis industry,” Rogoway said. The investments range from smaller family-owned operations and personal savings to dollars poured in by venture capitalists, he said.
The activity has accelerated in the wake of California’s recent moves to regulate and tax medical marijuana. Industry observers see that framework as a potential predictor of the regulatory landscape that could take shape should state voters approve recreational pot use come November.
Sonoma County could have a significant role in the booming business, industry representatives said.
Mara Gordon, founder of Aunt Zelda’s, a manufacturer of three cannabis-based medical products in Bodega Bay, envisions the county as the “medical cannabis center of the world,” strategically situated between the Emerald Triangle pot growing region to the north and the urban Bay Area.
Capital investment is crucial to startups in any business, said Gordon, a former process engineer for Safeway. But she’s also wary of medical cannabis investors intent on a quick buck, a type she refers to as “hemp hustlers.”
“The last thing we want to become is Colorado, which is basically Las Vegas (for marijuana users),” Gordon said. Colorado and Washington voters were the first to legalize marijuana in 2012.
The expansion of the industry presents other risks to longtime local growers, said Tawnie Logan, executive director of the Sonoma County Growers Alliance. She is concerned that businesses with “no connection to the community” will buy up chunks of land for pot farming and gain a competitive advantage.
One of the marijuana legalization measures vying for a spot on the November ballot sets no limit on the size of a growing operation effective in 2023, she noted.
“People are salivating over the California marketplace,” said Hezekiah Allen, head of the nearly 500-member California Growers Association, which also wants to protect the current operators of an estimated 50,000 to 60,000 farms. “The product is already putting people to work in communities every day.”
The value of the state’s medical marijuana industry has been estimated by state officials at $1 billion, though pot investment promoters say it is far higher.
Legal sales nationwide hit $5.7 billion in 2015, up from $4.6 billion the previous year, according to a market report by The ArcView Group, an Oakland-based cannabis investment and research firm. Its website touts cannabis as “the next great American industry.”