Intrigued by the promise of California’s medical marijuana system, Bedrick founded a company last year that develops ATM-style vending machines that would be installed in dispensaries.
His business plan has yet to be accepted by California regulators, but for Bedrick that’s OK. He’s now trying to get in on the front end of a 21st Century gold rush in Arizona, fueled by the recent passage of Proposition 203, Arizona’s medical marijuana initiative.
Just a few weeks after the come-from-behind victory of Prop. 203, Bedrick finds himself among hundreds of entrepreneurs and business owners looking to capitalize on Arizona’s soon-to-be burgeoning medical marijuana industry.
While the state Department of Health Services will be mired in the process of drafting regulations for the industry over the next four months, it’s not stopping businesses from forming and pitching products and services that may never be approved by state regulators. And competition is already getting fierce.
Marijuana transport companies, specialty attorneys, insurance agents, security firms, a publishing company and people who want to grow and dispense the drug are among those looking for a piece of the action. At least two large California companies are planning to open schools here to train entrepreneurs looking to break into the business.
The Arizona Corporation Commission has already put a freeze on 77 business applications for medical marijuana-related firms, which will not be processed until the law becomes official after the Nov. 29 canvass.
If Bedrick’s machines meet the standards for security and patient and product tracking, Bedrick would have an immediate and state-certified business.
“If that’s the case, then clearly it would put Kind Clinics front and center,” Bedrick said of his company. “We would have the licensed technology that can fill that role for the state, if (the state) says we need an automated system.”
Bedrick emphasized that he’s not pursuing his endeavor solely out of a personal financial drive. He claims his larger concern is helping to establish a well-regulated system that promotes ease of use for patients and a level of comfort from the community and lawmakers.
But Bedrick’s professed caution-over-profit doesn’t seem to be shared among all those who are jumping into the industry.
Al Sobol, a longtime marketing professional, saw Prop. 203 as a great way to leverage his business acumen and get in front of the wave of entrepreneurs who would undoubtedly try to enter the marijuana industry.
Sobol has set up a series of classes for people interested in getting into the dispensary or cultivation business, and is filling them fast, even though the Health Department has yet to release even the first draft of proposed regulations.
Sobol said he has enrolled 500 people in 10 days for his $100 introductory class called “Initiative 101.” On the whiteboard at the front of the classroom, his business-minded attitude was spelled out in large letters: “From seed to success.”
After the introductory classes, he’ll be offering more expensive and specialized classes in every aspect of the business from security and horticulture to doctor liability and law-enforcement relations. Once Sobol gets a set of clients that he believes are qualified and dedicated enough to open their own dispensaries, he intends to charge them $5,000 to $65,000 for his consulting fees.
The only guarantee he can offer for those costs is that people will be fully prepared to apply for a dispensary or growing license when the Health Department begins accepting them.
“Right now, we’re rolling out, doing it all and knocking over everybody in our path,” Sobol said after a classroom full of students trickled out of his north Phoenix office.
“I recognized the opportunity months ago. Everybody else had the same opportunity, but they just didn’t work on it or realize it. Now they’re all saying, ‘(expletive), that guy Al was right.’”
At one point during a recent “Initiative 101” class, Sobol flatly told the 17 attendees where his motivations lie.
“I’m in this to make money,” Sobol said.
The Joint Legislative Budget Council estimated that there will be about 66,000 medical marijuana patients and caregivers within the first three years of the program.
Sobol said he intends to organize a coalition of dispensary owners in Arizona called the Arizona Association of Dispensary Professionals, which will provide ongoing access to the services dispensaries will need as they continue operating in the future, such as legal services, insurance and security.
But while the health department hasn’t released even proposed regulations yet, Sobol already has critics and competitors.
Jason Medar, who owned two dispensaries in Orange County, Calif., moved back to Phoenix in 2009 and has been preparing to launch a coalition for dispensary owners of his own, called the Arizona Association of Dispensaries, which would offer services just like Sobol’s.
“We’ve fully developed a really successful business model that we know works,” Medar said. “Frankly, what Sobol is doing is misleading. It’s misleading to give any guarantee that he’s going to get you a dispensary license.”
Medar said that his association will focus more on the needs of dispensary owners and physicians looking for information from people with experience in the industry, and less on making money in providing those services.
Medar said his association will differ from Sobol’s because he wants to give the same sort of information without the hefty price tag.
But while entrepreneurs like Sobol and Medar are already competing over portions of the industry from inside Arizona, large, well-established organizations in California are eyeing the opportunities here.
Oaksterdam University, the oldest school dedicated to the medical marijuana industry, is planning to begin offering classes in Arizona starting in the spring.
Dale Sky Jones, executive chancellor for Oaksterdam University, said her organization has helped launch medical marijuana industry leaders in California and Michigan, and they intend to do the same in Arizona.
Like Sobol and Medar, Sky Jones said Oaksterdam University’s curriculum is designed to help anyone interested in any part of the medical marijuana industry, including dispensary operators and cultivators, but also the ancillary businesses like transportation and bakery services.
What Sky Jones said Oaksterdam University focuses on most is teaching discretion and compliance, which is tricky, she said, when people are trying to run legitimate businesses while servicing an industry that inherently breaks federal laws.
“You can’t take this lightly. It’s a dangerous field to be in,” Sky Jones said.
Along with Oaksterdam University, the Cannabis Career Institute, which was founded by one of Sky Jones’ former students, operates in many of the same ways in southern California, and is planning to offer classes in Arizona for those looking to get into the business.
Robert Calkin, president of the Cannabis Career Institute, said his organization has been very successful at training not only dispensary owners and cultivators, but also marijuana transport companies, accountants, attorneys, insurance agents and chemists who have wanted to develop the specialty needed to serve the dispensaries and cultivators.
“We’re not just talking about people who want to grow and dispense. There are so many different aspects and ways to expand in the known industries,” Calkin said.
The Cannabis Career Institute has already announced initial seminars in Phoenix, Flagstaff and Tucson in January, and plans to continue offering their services afterward.
Shadi Zaki, who worked in real estate development since he moved to Arizona five years ago, said once he saw that Prop. 203 was going to pass, he gave up on his former career and will be working full-time to launch The Green Leaf AZ, a magazine dedicated to the medical marijuana industry in Arizona.
The magazine will offer dispensary and physician directories as well as original editorial content in each issue. Zaki said the ad sales are already showing enough revenue to support several issues.
Zaki said the key to his magazine’s success will be getting into the industry early.
“There’s a first-mover advantage right now,” Zaki said. “If you can get to market quickly, you can almost corner the market.”