High Times Magazine – 10/1/2016
Warts and all, the United States is still the land of opportunity. The settlers of the American West knew that. Most migrated to new territories because the prospects for building a better future where they came from were few and far between, or because the lure of adventure simply dwarfed the comforts of home.
The dream of owning land, or of reinventing oneself, roused the pioneer spirit in America. Once awakened, it was infectious, and America has never had a shortage of adventurers.
There are parallels with Colorado’s cannabis industry. When voters passed Amendment 20 in 2000, the state constitution was changed to allow the use of medical marijuana by doctor-approved patients. People began to dream—not unlike considering the opportunity to board a wagon train heading west: Is there a better life out there? Could an actual cannabis industry be created?
Not right away. The industry needed a safe trail, one relatively free of danger. So during the first few years of legal medical marijuana in Colorado, the new cannabusinesses operated cautiously.
“When we got started back in 2007, we were just caregivers,” recalls Jake Salazar, the CEO of MMJ America, one of Colorado’s premier dispensary chains. “We were growing small amounts of plants, doing business with two dispensaries. There were only about 1,200 patients in the entire state.”
But the proverbial door marked ”opportunity” swung open for Salazar—and a whole lot of other people—in 2007, when a Denver district judge ruled that caregivers could not be limited to just five patients and that the new law allowed caregivers to “dispense.” Colorado’s Green Rush was on!
Salazar was already an experienced entrepreneur. A native of Boulder, he grew up excelling in sports and earned a full baseball scholarship to the University of Northern Colorado. But life threw him a curveball: In his third year there, he blew out his knee.
“I always loved weed—even as an athlete, it was my go-to thing. But it was the laws surrounding cannabis that got me interested. I knew that this industry was only going to advance.”
At age 22, business became Salazar’s new ballpark. He opened a Benihana franchise, which thrived, and sold it five years later at a huge profit. “It was my first introduction to business,” he says. “How to run it, how to sell it.”
Salazar is defined by his energy. He’s got the sparkplug mentality of a baseball middle infielder: tuned to the action and quick on his feet. By his mid-20s, he was running his own real-estate company, though he was increasingly intrigued by the cannabis industry. “I had a couple of friends who were really good growers,” he explains. “I always loved weed—even as an athlete, it was my go-to thing. But it was the laws surrounding cannabis that got me interested. I knew that this industry was only going to advance.”
By 2009, the number of medical marijuana patients in Colorado had grown to 20,000. Then, in October of that year, the US Justice Department issued a policy memorandum (known as the “Ogden memo”) stating that those who used cannabis for medical purposes and those who distributed it to them should not be targets of federal prosecution.
That pretty much opened the Oregon Trail for cannabis entrepreneurs and dreamers in Colorado and elsewhere. By the following year, the number of medical marijuana patients in the state surpassed 100,000, and hundreds of dispensaries were in business to serve them.
For Salazar and his partners, the journey began when the dispensary that had been purchasing their medicine decided to play hardball. “They tried to put the squeeze on,” Salazar scoffs. “They demanded a lower wholesale price and threatened to yank our patients away from us. So, instead, we opened our first store in Boulder.”
It was a small operation, with Web advertising only, but it flourished. As the industry took root, MMJ America began working with other businesses that were helping to draw up the legislation governing them.
“We began to build a business model based on multiple store locations and a larger cultivation,” Salazar says. “We dipped into our own pockets and brought on working partners, and over the past six years, we’ve worked together and expanded. We’ve now got seven stores in Colorado and another in Las Vegas, just off the Strip, with 40,000 square feet to grow in.”
MMJ America also offers consulting services in other states where the laws permit grow operations and cannabis commerce. But the current crown jewel of MMJ America is its sprawling greenhouse in Denver, a 60,000-square-foot facility on 3.2 acres. It was once Dardano’s Flowerland, Denver’s oldest garden center. When it closed, MMJ America took over the property. Suffice it to say, the flowers growing here are now in great demand.
MMJ America found itself in the winners’ circle repeatedly at this year’s Colorado Cannabis Cup in April.
The space is also being converted into an interactive attraction for the public to visit, with a retail space as well as viewing areas of the impressive cannabis garden.
One of MMJ America’s foremost goals has been to expand into the genetics game. “In 2011, it became an important part of our business model,” Salazar says. “Before that, we were running everybody else’s stuff and really didn’t understand the breeding process. So we just dipped into High Times, read about these breeders—where they lived, how to get a hold of them, like the Amsterdam guys who’ve been doing this for 20 years. We started flying around the world, finding these breeders and learning from them. We wanted to be a one-stop shop. We didn’t want to outsource it; we wanted to do it ourselves.”
Salazar credits his lead grower Malek as the force behind the thriving Vault seed bank. Malek leads a gardening crew that nurtures the 18 strains found in the Vault’s portfolio.
“It’s almost five years now,” Salazar says. “We really didn’t enter any Cannabis Cups with the Vault genetics until 2013, and that was when we really started gaining some notoriety. At the Cannabis Cup in Amsterdam in 2014, with our grower friends in Amsterdam running our genetics, we took home three Cups. That was a huge deal for us, because we don’t sell seeds on the international market; we sell them only in our brick-and-mortar stores.”
MMJ America found itself in the winners’ circle repeatedly at this year’s Colorado Cannabis Cup in April, taking top honors for both Best Indica (Larry Walker OG) and Best Indica Concentrate (Cherry Kush Live Resin Batter). The company also saw three of its entries win second-place medals—Tora Bora for Best CBD Flower; Tora Bora Curese Resin Sap for Best CBD Concentrate; and Peach Ringz Micron 90 for Best Non-Solvent Hash. It also grabbed third place in the Best Sativa Flower category for J-Walker.
“What really made you money? Were you watching the actual nuts and bolts of your company?”
In the dynamic new cannabis industry, national brand-name recognition has become the goal. For Salazar, it’s a near-obsession.
“I have a dual role as CEO,” he explains. “First, we want to expand the brand and the business model of MMJ. Second, we’ve created a company out of Delaware called Blue Label Holdings, to which we’ve licensed all of our branding with all of our trademarks. This includes our standard operating procedures, our genetics, and all of our findings through DNA profiling and genomic research. We now market this consulting company across the country. We offer a full-package deal where we come in and lobby high-level politicians and help create regulation. We’ve already been brought in by government agencies and consulted on laws. But we help individual investors, too, who want to help move their markets forward. We’ve been brought in to consult on people’s cultivation operations and people’s brands. Generally, once we work them, people realize that this is a really good brand.”
However, he’s quick to point out that dreams and good intentions only go so far. “A lot of companies borrow money; they look at investor money as profit,” Salazar observes. “That’s because they’ve never had that kind of money in their accounts before, so they don’t know how to act. They’ll go out and overspend. But what really made you money? Were you watching the actual nuts and bolts of your company? Were you watching your payroll? Were you watching your taxes? Were you watching what you spend on advertising? Were you actually paying attention to what your bottom line is? Do you know what your price per pound is, especially if your yields fluctuate? Do you watch your balance sheets and your P&Ls? This is all Business 101 stuff. Keeping your attention focused on these essentials is the key to success in this industry—or in any industry.”