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The Greed Rush: Venture Capital Enters Cannabis 

Wednesday, Apr 20 2016
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By Val's count, 150 WAMM members have died in the past two decades — from AIDS, cancer, old age. Seventeen of them, some of whom lived out their last days here, are buried on the highest point of the property. Rather than deal with county authorities — and doom friends' bodies to a pauper's cremation — she learned burial prep.

Earlier in the day, a work party had set out from the west side office to the hillside, where brush was cleared, holes were dug, lunch was served, and weed was smoked. Everyone who came out — one man in a wheelchair, another woman walking slowly with a cane — was a WAMM patient. One, a man in his 50s who introduces himself as John, says he uses WAMM's cannabis to replace the pharmaceutical he uses to treat severe colitis, after the pills he relied on jumped in price from $19 for 60 pills to $249 (in a scheme similar to Martin Shkreli's).

"I couldn't afford that," he told me. "WAMM literally saved me."

For a while, most medical marijuana collectives in the state operated in a way similar to WAMM. You would see indigent or disabled people working behind the counter — and someone broke or sick could walk in and expect to receive something, sometimes as much free weed as they needed. (To this day, while Medi-Cal and Medicare are good for pills, no healthcare coverage subsidizes medical cannabis.)

Val has to leave the house because it is no longer hers. She owned the land and the house jointly with Mike — but the couple divorced in 2014, and Mike wanted to sell. With the land and house appraised at $1.86 million, Val needed $1 million or so to buy him out and keep the land. An online fundraising campaign fell way short. That meant entertaining investors.

"I got offers," she says. "'I'll give you $1 million if you just let me sneak pot out the back.' People wanted the WAMM name, definitely."

"Yes," she nods. "I could have had the land if I would have sold out."

WAMM's garden at least will stay on the land for another year under a "generous" deal with the new landowner. After that, its future is unsure — as it would be even if Corral had bought the land. Under the new state rules, which did away with the classic cannabis nonprofit collective model, cannabis businesses cannot be vertically integrated monopolies. Under MMRSA, there are licenses for growing, for transporting, for selling, and for distributing. But you cannot have one of each, and you can only have a state license if local law allows the activity. There are some temporary exceptions, but the message is clear: Integrated operations will be broken up.

"It's hard to say what will happen to WAMM," says Corral, before she launches into an angry monologue. "MMRSA is about gross commercialism. There's nothing for patients. They don't talk about patients. They just talk about customers."

When I leave, well after sunset, she loads me down with gifts: fresh-baked sourdough bread, a few redwood saplings, bamboo plants "you can just stick them in the ground, and they'll grow," she says, and some of last year's harvest. It smells — and smokes — exquisite.

Both Corral's generous attitude and her bitter complaint are familiar among fellow members of cannabis' old guard, who are finding themselves squeezed out — whether by changing circumstances, changing law, or a change in the savvy and ability of the competition. But "compassion" has also been a crutch used by subpar dispensaries, who might give away a schwaggy joint to a Vietnam vet and then trumpet their commitment to social justice, while selling mid-grade weed at full price to everyone else. These days, there is also little patience for that line. WAMM was exceptional; it was also the exception.

"The reality is, it's about the bottom line — it always has been," one industry insider snarled. "Fuck you guys and your compassion."


Weed's new wave looks a lot like David Hua. The 34-year-old son of recent Chinese immigrants who ran a Chinese restaurant in small-town Pennsylvania — "My friends would supply the weed, and I would bring the Chinese food," he says — Hua wears the Silicon Valley uniform of jeans, chunky New Balances, and a T-shirt bearing his company's logo under a gray hoodie.

Gregarious, and possessing a quick smile and a childlike excitement that dissolves his face into a giant grin, Hua's 18-month-old startup just closed a $2.1 million funding round, winning investment from Justin Kan, the founder of Twitch and a partner in Y Combinator — which gave Meadow seed funding last year — former SV Angel managing director David Lee, and Reddit co-founder and CEO Steve Huffman (with whom Hua camps at Burning Man). When we meet a few days before the funding round is announced, in the industrial warehouse space that serve as Meadow's offices, he whips out a big jar of weed to show it off like a baseball card collection. (I decline a puff off the fatty he rolls as we talk.) He's relaxed enough to nerd out with me over Star Trek trivia, even though his wife is due to deliver their first child — a girl — later that day, but immediately turns serious when talking about his company, which is enjoying considerable success.

A born salesman who was so successful selling Cutco knives in between summers at college that he was running his own Cutco franchise at 19, Hua filled a key role at Sincerely, a startup that turned smartphone photos into birthday cards. Hua is also an avowed stoner. After the company was acquired, he had an inkling a weed venture would be next. He attended a cultivation class at Oakland cannabis college Oaksterdam University, where he met like-minded people — dispensary owners upset with terrible business management practices, and consumers tired of unreliable and insecure delivery.

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About The Author

Chris Roberts

Bio:
Chris Roberts has spent most of his adult life working in San Francisco news media, which is to say he's still a teenager in Middle American years. He has covered marijuana, drug policy, and politics for SF Weekly since 2009.

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