Tuesday, June 19, 2018
Business

A bottle of juice for $55? How one start-up is testing the limits of D.C.'s marijuana law

WASHINGTON — David Umeh's rented SUV yanked to a halt in front of the glass-and-steel facade of CityCenterDC, glitzy home to Gucci and Dior and Hermes and the next customer of the marijuana revolution.

A young woman slid out the passenger side and strode up to a man still dressed in the sharp gray suit of a Washington nine-to-fiver waiting outside the center's tony apartment building. He grinned as she handed him a bottle of apple juice with lemon and mint, for which he had shelled out upwards of $55. "Fresh-pressed," she told him, sticking to the script that Umeh had taught her.

And then she slipped him the green paper sack that held what the man had probably really wanted all along: a few pungent grams of District-grown bud, a "gift" from Umeh's company, HighSpeed, for his patronage.

You know, thanks for being a loyal customer and paying $55 for apple juice and whatnot.

Since January, HighSpeed has been hawking, according to its website, "the finest cannabis (and cold pressed juice) delivered in record time" — its explicit sales pitch just part of the new world order under the city's Initiative 71.

That tepid, neither-here-nor-there measure, implemented in February 2015, made it legal for anyone 21 or older to possess up to two ounces of marijuana. You can grow as many as six plants. And you can "transfer" — without payment — up to an ounce of weed to another adult.

But here's the rub: Unless you have a medical marijuana card, you can't buy it.

And that creates a strange gray area that has lit a fire under entrepreneurs like Umeh, who sees dollar signs in the loophole 71 left behind. Which is: If residents can't buy or sell pot, and have no inclination to grow marijuana in their already slightly funky apartments, how can they get it?

Why, through that "transfer" clause, say HighSpeed and others.

HighSpeed customers pay for jalapeño or charcoal lemonade, or just plain OJ, then decide whether they want "love" for $55, or "lots of love" for $150. What exactly that buys you is deliberately left unclear. (If you want just juice, well, you can get that, too: It'll set you back $11.)

"We are a juice-delivery service," Umeh insists. Every day, he says, at least 40 orders come in, proof that the stigma around marijuana is rapidly going up in smoke.

On April 20, or 4/20, the national holiday of stoners everywhere, at least eight drivers carrying precisely the amount of "love" they are allowed to legally possess made the rounds, dropping off bottles and little green sacks bearing indica and sativa — the two primary cannabis strains — homegrown in the capital city.

Shad B. Ewart teaches a class on entrepreneurship in the emerging cannabis economy at Anne Arundel Community College. The challenge for the companies hoping to cash in, the business professor likes to tell his students, is finding "islands of legality in a sea of illegality."

Go on, search for Washington on the marijuana-locating website Weedmaps. It will pull up a handful of services, from dispensaries to doctors to delivery companies, convinced that they've found their island.

Over his head

"You know when you get thrown in the 12-foot pool, and you're in third grade?" asks Umeh.

That's what it's like to be David Umeh right now. A man in over his head. And a man determined not to drown.

We're settled at a conference table in the co-working space Impact Hub, which, like other such spaces, is one-part office, one-part social gathering ground for millennial go-getters and start-up employees. Umeh, a 25-year-old Californian, tends to wear ballcaps, eat Chipotle and haul his MacBook around in a hipster-endorsed Herschel backpack. He fits in perfectly.

"They love me here," he says. (Yeah, of course they do.)

Outside Impact Hub's sandbox, the city has quickly proved to be the deep end for Umeh.

Since a publicist contacted local media outlets earlier this month, the demand has been so great that it has drained HighSpeed of its inventory nearly every day. Umeh has had to shut down orders simply to catch up on deliveries. Customers are tweeting at the company, wondering where their weed — oops, juice — is.

And some of the local pressed-juice brands that he has been delivering as demand has surged are unamused to see their bottles on Instagram next to marijuana. Ann Yang, co-owner of Misfit Juicery, which Umeh was buying retail and delivering to his customers last week, said that she explicitly told Umeh that her company didn't want to partner with HighSpeed because of the fuzzy legality of its business model. Umeh says he doesn't believe that he is doing anything untoward, but said that he's already making preparations to press his own HighSpeed-branded juices.

D.C. is a far cry from Oakland, where Umeh launched HighSpeed last summer and where what is and isn't legal is far clearer. HighSpeed was just one in a sea of medical marijuana delivery services there. "My first customer," he says with a touch of pride, "was a guy in a wheelchair."

But Umeh also found California, where medical cannabis has been legal since 1996, saturated, all the nuggets of the marijuana gold rush already snapped up.

Friends from Virginia's Hampton University, which he attended for a few years as an economics major, told him that Washington's law could open up another sort of opportunity.

It would, however, require "a pivot," Umeh recalls. He couldn't deliver medical marijuana. But he could sell juice.

And maybe he could gift cannabis.

Different takes

There are others like Umeh, of course, trying to fly clear of the D.C. law, flout it, or something in-between.

This month, CakeLove founder Warren Brown, a former Food Network celebrity chef, teamed up with two food truck entrepreneurs to announce their entry into the marijuana edibles market. They've said that their market will be the city's highly regulated medical dispensaries, which serve a few thousand customers doctor-approved to use pot for pain management and other reasons.

Last year, Kush Gods rolled luxury cars emblazoned with cannabis leaves into busy neighborhoods, offering "gifts" in exchange for "donations." It was ultimately targeted by D.C. police, which said Kush Gods was basically just selling marijuana. (Company founder Nicholas Cunningham pleaded guilty to that charge last month.)

That exchange of money for drugs seemed like a clear quid pro quo, says Ewart. What HighSpeed does isn't quite the same, but Ewart isn't convinced of its long-term viability.

A few weeks ago, Ewart ordered a jalapeño lemonade with a side of "love" from HighSpeed. When Umeh himself turned up at his door days later, the professor invited him to suburban Annapolis to talk to his class.

Asked what he thinks of HighSpeed's business model, Ewart sighs. Umeh has had to find sources for the marijuana he gifts, and then he must cut deals that can't involve any exchange of money. How, Ewart wondered, can he maintain that as his customer base blooms?

Umeh, he says, is "kind of pushing the envelope here, but he's pushing the envelope because the District of Columbia has left this a mess. There is a gray area here, and so you're having these entrepreneurs attempt these things."

But $55 juice?

"I think they're on the edge of what's legal," says Ewart. "Where's the limit?"

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