The Legal Cannabis Business: A Talk with Mike “Zappy” Zapolin

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Reality Sandwich recently interviewed Mike “Zappy” Zapolin, a pioneer in cannabis entrepreneurship. Zappy is the CEO of Zappy, Inc., a vertically integrated cannabis company that focuses on both medical and consumer applications. In 2011, Zappy co-founded Growlife, Inc., a leading cultivation facilities service provider for organics, greens, and plant-based medicines.

Join Mike “Zappy” Zapolin for the live, interactive video course, “Cannabis 2.0: Making it in the Emerging Marijuana Industry.” Experts are now entering the legal cannabis space: scientists, doctors, and seasoned business executives.  The cannabis business is changing from a group of people who were willing to break the law and “deal drugs” for cash, into licensed companies with banking relationships and publicly traded stocks. Along with Zappy as host, the course brings together leading experts in the marijuana industry, including: Craig Ellins, Dr. Cindy Orser, Ph.D, David kaplan, Eq., LL.M., Brett Schneider, and Max Montrose. This 5-part Evolver webinar starts August 7. Click here to learn more.


What drew you to get involved in the cannabis business?

I’ve been waiting 20 years to get into this industry in a professional way. I believe there’s not many chances in a lifetime for someone to get the opportunity to step in at the very beginning of an industry. Think about the automobile or the computer. This is one of those moments. But it’s even more significant because in those industries, even if you got in at the beginning there were already large established players in the space. But in the cannabis market there is no market leader, there are no brands. It’s the most exciting moment in business history ever! I’m building Zappy incorporated into a nutraceutical marijuana company that can heal millions of people.

Who are the people who are now getting involved in the cannabis business? What kinds of backgrounds do they have?

What’s exciting about the industry right now, and the reason I refer to it as the cannabis 2.0 moment, is that now professionals from other fields — like scientists, doctors, entrepreneurs — are getting into the space. It’s going from a closet industry into a massive medical and recreational industry.  We’ve never seen anything like this. The demand is already there, but the business services, the product, things like that are only now coming out into the open market.

Even more exciting: though it seems like everyone’s jumping into the space, that’s not the fact. A lot of people who would like to enter the industry aren’t doing so because the product is not fully legal, it’s somewhat taboo. Also, many of these people have never touched the product, or had anything to do on the business side with the product. So it’s a moment where people getting into the business have the advantage right now, and you have a dramatic advantage going forward.

Will the cannabis business be dominated by big players with deep pockets and political connections?

At some point in the future some very large players will enter the space, but there’s always going to be massive opportunities. For example the tobacco companies will get into the space, and their products will be similar to the Julio and Gallo wines, the two Buck Chuck wines. But consumers are always going to want a better product, a more sophisticated product. Similar to the wine space, you’ll see the $10 wine the $25 wine, the $100 wine and the $1,000 wine, and so on.

This is also going to dramatically change the pharmaceutical space, because of nutraceuticals. There are hundreds of cures for major diseases that are curable by some of the attributes and energies of the cannabis plant. Even when the large pharmaceutical companies jump in and start to use CBD’s, the cannabinoids, and the attributes of the plant, there will still be lots of opportunity for new product development and brands to play a roll.  These large companies will also be acquiring the early players, so if you are in a position where you’re in the industry and moving forward, there’s a high probability that you will be bought out for a significant multiple at some point in the not-too-distant future.

What kinds of jobs are becoming available in the legal cannabis business?

Job growth is massive in this industry. I was recently in Denver, Colorado, and I could see the economic impact that this was having. It seems like everybody who wanted a job could have a job, whether that was working at the dispensary clipping plants, working in the service industries. It was a new economic boom and the job growth from this sector will be fantastic.

Are there opportunities outside of retail for new cannabis-related business? Which are the most interesting?

Some of the most interesting are on the medical side of the house, where the different cures that are released and are proven will be blockbusters. People are going to want different types of product and all types of delivery systems.  Each new state that comes online opens up all kinds of jobs for everyone who wants to service this industry, whether you’re in the marketing space, in the building and real estate space, in the packaging space. These are all going to be accelerated by this industry.

How do people who want to start small independent cannabis business get one in motion?

The most important thing is to get educated. It’s so early right now that a little bit of knowledge can put you at the forefront of the industry. My advice is to simply get involved — now. It’s like getting into the oil, automobile, or the computer industries early. It didn’t really matter what you were doing, or what part of the industry you were in. If you were early, you did really well.

How challenging are the legal hoops that a potential cannabis business has to leap through?

The business challenges are really not very significant. It’s important to comply with the laws of the individual state that you’re in. But as long as you’re doing that, setting up a business, getting rolling is not difficult at all. The question is simply whether you want to handle the actual product, or if you want to support the industry. If you’re not growing product and handling product, there’s little barrier to your business being successful, if you want to handle product, grow or process it, there’s some minor hoops to jump through related to legal, but they’re well worth the effort.

Do you expect that the business will be different for recreational cannabis than it is for medical marijuana? That the two will be treated differently by the government and require different professional skills?

In the beginning the industries will be similar, as you see in Colorado. The main difference is that if you have a medical card, cannabis is a lot cheaper to buy in a dispensary than if you’re buying it for recreational purposes. Eventually these two industries will split to some degree. Both will be incredibly lucrative, since people want product of varying types and quality. The medical grade cannabis will need to pass higher standards than the product for recreational use. But both will be vibrant and projected to be a combined hundred plus billion-dollar industry.

Which states are the best now for setting up a cannabis business?

The good news is things are happening really fast. Colorado, Washington state, Nevada, Oregon are moving. But a lot of states are starting to open up in different ways, and wherever you live there’s an opportunity. Each state has laws related to who can set up a business, but not who can service it or work with those businesses.  There are a few things happening that could be monumental, including the rescheduling of cannabis from a Schedule 1 drug. The Schedule 1 status makes no sense, since that definition means it has no medical benefit — which at this point is already been proven not to be true.

Once the rescheduling happens, it will be a huge boom for the industry. Then you’ll see many states start to have legal medical cannabis industries, and a bunch following up with the recreational status.  States are also coming up with ways to accelerate their own opportunity. For example, Nevada, which is real now for medical, is voting in 2016 for recreational, and there’s another bill that will allow visitors in Las Vegas before 2016 to get a short-term prescription.

Which states are most likely to be legal in the near term?

I’m confident that by the end of Obama’s term, or the beginning of Hillary’s first term, the federal government will come out and say that they are leaving it up to the states — whatever they want to do, they can do. This is going to be a huge moment for the industry, and every single state will have some type of cannabis industry happening. The interesting thing about this for entrepreneurs is that every state will want their cannabis business to come from within the state, are they’re there going to want the product to stay there, and they’ll want the jobs and the taxes. So every state is going to have lots of opportunity.

Click here to learn more about Zappy’s upcoming live, interactive video course, “Cannabis 2.0: Making it in the Emerging Marijuana Industry.”

Image by Brett Levin, courtesy of Creative Commons licensing.

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