A 2012 study by the Substance Abuse and Mental Health Services Administration found that 10.2 percent of Washington residents had used marijuana in the past month. Perhaps not since 1933, when prohibition ended in the United States, has a product with such a large existing market become legal to sell for the first time in years.
Despite a short supply of legally grown marijuana, local investors and entrepreneurs are turning a profit with retail marijuana and other cannabis-related businesses in Washington State.
Ward Nelson, Bellingham pharmacist, former Whatcom County Council member, and investor at Top Shelf Cannabis, said despite the risks he couldn’t pass up the chance to invest in a local retail store.
BBJ: Is the retail marijuana business the next gold rush or the next dot-com boom?
WN: I don’t think there’s a startup business you can go into that has such a fast return on its investment. Although, I haven’t seen that yet because we’re rolling return on investment into more products, more lines and more expansion.
BBJ: Is it a risky investment?
WN: It’s a schedule 1 drug, of course it’s risky. The only things protecting us is an agreement between the Justice Department and the State Attorney General, and Congress just recently stating that it would not fund the Justice Department in any actions against people participating in legal operations in Colorado or Washington. Also, you can’t get bank loans. You put your whole livelihood into investment.
BBJ: How did the opportunity to invest with Top Shelf Cannabis come about?
WN: The guy who got the permit is friends with my wife’s cousin. He and I have had discussions in the past about possible business ventures so he knew I was interested in doing something different. He knew I also knew something about business, government, politics and all that.
He was bugging me so much I said why don’t we sit down and talk. I met with them and they wanted me to go in on the business. When I looked at the numbers I thought I’d be kind of stupid not to go in on it.
BBJ: How has Top Shelf Cannabis handled supply challenges?
WN: Without revealing a lot of marketing strategy, what we’re trying to do is grow our business. What we want to do is make sure we capitalize on the return of our investment, but also make sure we’re not overpricing our product so we can keep a consumer base. We’re looking at long-term gains not short-term financial benefit.
BBJ: Is dealing with pharmaceuticals similar to dealing with marijuana for the states’ seed-to-sale inventory tracking?
WN: That’s another reason I’m involved — it is similar to pharmaceuticals. You have to track everything. I understand the tracking and I understand the monitoring and making sure the controlled substances are accounted for.
BBJ: Top Shelf Cannabis was one of the first retailers to open and one of the first to sell edibles. What do you attribute that success to?
WN: Well, all the partners are hard driving, committed to making it a successful business, and doing it right. All those things make for a successful businesses.
We were helped somewhat by the city of Bellingham. It took a little extra coaxing but I think the City of Bellingham wanted to help us out as much as they could. There were a lot of difficulties initially trying to get our permits simply because it was new to them as well as to us. The state was proactive in the regard that they wanted to see at least 20-some retailers and processors, at least initially, to be open so they could say they at least got it started.
BBJ: Will it get easier for Top Shelf Cannabis keep marijuana in stock anytime soon?
WN: I think by October or November we’re going to see some consistent supplies depending on how many more stores open up. That’s dependent not only on the state, it’s also dependent on people getting financing.
BBJ: What have been some of the challenges so far?
WN: The stigma. I told the staff if we’re going to be successful in this business you can’t call it dope, reefers, or whatever. You have to call it what it is, it’s a marijuana product. Don’t call it by slang terms because those are the slang terms that have grown with us ever since the ‘30s when it was declared illegal.
BBJ: With a background as a conservative politician, do you have a hard time dealing with that stigma?
WN: I think most people in this community know that I’m a straight shooter. I’m going tell you what I know works or what I think will work, take it or leave it. there’s people who agree with me and there’s people who disagree, but by and large everyone knows I’m going to be honest with you.
BBJ: Did you support legalization?
WN: No. See how honest I am? There’s several reasons. I’m averse to government saying it’s legal and then killing it with taxes. But it’s legal, and I’ll live with the way it was done.
BBJ: So you didn’t support legalization because of the tax structure?
BBJ: Do you see it as a conflict that you didn’t support legalization and then you turned around and invested in legal marijuana?
WN: The reason I didn’t support it had nothing to do with a moral issue. When I ran for the senate they asked me if I smoked marijuana, I said, “Yeah, didn’t everybody in the ‘70s?” I tell people the honest truth. So I have no problem with people who smoke marijuana. I have a problem with how government runs things sometimes.