It's called the "Green Rush.”
That's the name given to the flood of investment into marijuana startups.
In California, new companies are trying to corner different parts of the medical marijuana market, hoping to position themselves for widespread legalization. Delivery is one hot spot for competition. Companies are jockeying to become the “Uber” of pot.
I'm sitting with Kat Ilera in her apartment, waiting for a delivery of medical marijuana.
Ilera uses medical marijuana to cope with pain and anxiety. She was diagnosed with stage 4 breast cancer last fall. It quickly metastasized to her liver and spine. On Thanksgiving she got surgery on her back, which left her fairly immobile.
Ilera now uses a cane to get around and wears a white plastic back brace. She puts it on to show me what it looks like. “I call myself a stormtrooper,” she says.
Ilera can't twist or bend, so it's hard for her to get around -- to go places like her marijuana dispensary. And that brings us to Eaze.
Eaze is one of the new companies that are delivering marijuana to patients like Ilera. There's also Nugg in Southern California. And apps like Meadow in San Francisco.
Many of the founders of these companies come from the world of tech, like Keith McCarty, Eaze's CEO.
McCarty says, “When I was at Microsoft, I started looking at the next wave of technology and became really bullish on this whole on-demand consumer service category.”
McCarty is following the lead of on-demand delivery companies like Uber. He sees big potential with marijuana. “We are focused on just the medical market today,” he says, “but we definitely have our eye on the recreational market.”
And so do investors. Eaze has received at least $10 million, including money from Snoop Dogg, the rapper with the lyric commanding listeners to “smoke weed every day.”
Companies like Eaze, which want to do more than help medical marijuana patients, are positioning themselves in the medical marijuana market to get ready for when California legalizes recreational use. That seems more likely every day. A poll now shows over 50 percent of voters support legalization, which will almost certainly be on the 2016 ballot.
So if investors get in now and the market for pot blows up -- boom, cash money. It's the California Green Rush. Well, not so fast, says Professor David Ball.
“If it were my money,” Ball says, “I wouldn't be putting it into the Green Rush.”
Ball teaches law at Santa Clara University and has done policy work and research on marijuana. He thinks the hype of these new companies is just that -- hype. Because if cannabis goes legal, a lot could change -- taxes, regulations and, most importantly, Ball says, the price for pot will drop.
“I don't think Eaze or other companies are necessarily going to be able to deliver on the promise of these gigantic profits because they are assuming Prohibition-era prices in a legalized market when those prices are going to fall dramatically," he says.
But there's a bigger problem with delivery. It's been declared illegal in every place that has legalized recreational marijuana. Delivery is already banned in L.A. And it could be shut down throughout California.
That would make a lot of investor cash go up in smoke. Sorry Snoop.
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