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U.S. NEWS Thursday 21 december 2017

Big vs. boutique: Battle brews in California weed business

By MICHAEL R. BLOOD to over-the-counter sales. An illegal industry that op- local governments are free California Growers Associa-
Associated Press The company’s ambition erated in the shadows and to impose restrictions, how- tion, an industry group, said
ADELANTO, Calif. (AP) — also points to an unfolding the loosely regulated medi- ever. Last week, California corporate-scale compa-
Drive by the High Desert nies with a lock on the sup-
Truck Stop, turn down a rut- ply chain have the poten-
ted road by the bail bond tial to tilt the market in their
signs, slip behind a steel favor.
fence edged with barbed “The more steps in the sup-
wire, and you can glimpse ply chain you control, you
the future of California’s can control pricing,” he
emerging legal pot indus- said. “It’s artificial.” To Eck-
try. enweiler, size is strength.
In a boxy warehouse While manufacturers buy-
marked only by a street ing pot on the open market
number, an $8 million mari- will have to contend with
juana production plant inevitable price swings,
— a farm, laboratory and growing in-house will buf-
factory all in one — is ris- fer the company from
ing inside cavernous rooms those ups and downs, he
crisscrossed by electrical said. The same is true for
cables. transportation — doing it
Not far off, a retail shop is yourself saves money. And
planned to sell edible, thin having a stake in a dispen-
strips infused with cannabis sary, to be run through a
extract and powerful con- contractual relationship,
centrates known as resins would provide access to
that also will be shipped to shelf space. On a tour of
stores around the state. the partially completed
California has long been Brad Eckenweiler, chief executive of Lifestyle Delivery Systems, poses for a photo while holding site, he points to rooms that
known for its boutique pot cannabis buds from his freezer that will be used to manufacture concentrates in Adelanto, Calif. will one day house multi-tier
market, producing world- Lifestyle is what’s known as a “vertically integrated company,” with a hand in every aspect of the platforms of pot plants, and
famous buds on small plots business, from producing organic seeds to transportation and over-the-counter sales. pulls open a freezer where
(AP Photo/Mike Blood)
in the so-called Emerald Tri- stacks of packaged pot
angle, north of San Francis- rivalry: a battle of size. cal one are facing rapid issued its first commercial buds are ready for produc-
co. Broad legalization starts Some fear corporate-lev- change now that the legal- licenses, and they show tion. “I’m not saying you
Jan. 1, and this will be a test el businesses will eventu- ization of recreational pot is others intend to get a foot- couldn’t have a good busi-
of whether bigger is better. ally doom mom-and-pop arriving, with new govern- hold in various sectors of ness model as a cultivator,
“It’s not going to be a cot- growers and sellers, much ment rules and taxes and a the market, picking off mul- as a manufacturer, as a
tage industry. We’re not as Big Tobacco dominated flood of investment dollars. tiple permits for transporta- transport distributor or a dis-
doing it at a craft beer its market. “As we have a Lifestyle Delivery Systems tion, manufacturing and pensary. But we’re going to
level,” says Brad Eckenwei- lot of the Wall Street and Inc. is a publicly traded retailing. Helena Yli-Renko, have the benefit of being
ler, chief executive of Life- the other big money bear- company in Canada, val- director of the Lloyd Greif all of those,” Eckenweiler
style Delivery Systems, the ing down on the No. 1 ued at about $45 million. Center for Entrepreneurial said. A freeway ride and a
Canada-based company marketplace in the world Two years ago, a state com- Studies at the University of world away in Los Angeles’
behind the venture on a right here, I think the only mission recognized that Southern California, said San Fernando Valley, in a
dusty industrial strip 90 miles way the small operators small operators could be size might be an advan- small, gated warehouse
(145 kilometers) from Los are really going to have a vulnerable once the door- tage but she sees opportu- amid scrapyards and ga-
Angeles. In the new mar- chance is if we really do way opened to legal sales. nity for specialists, such as rages, Hultstrom tends his
ketplace, Lifestyle is what’s kind of band together,” But temporary state rules companies that develop crop. Organic plants at dif-
known as a “vertically inte- said Erik Hultstrom, a Los issued last month placed new extraction technolo- ferent stages are arranged
grated company,” with a Angeles cultivator. For now, no limit on most cultivator li- gies or provide monthly in regimental rows in sev-
hand in virtually every as- the shape of California’s censes, potentially opening subscriptions, like wine eral rooms, fed by water
pect of the business, from new market remains largely the way for vast cannabis clubs. But Hezekiah Allen, circulated through plastic
producing organic seeds unknown. farms. State regulators say executive director of the piping.q