Jamen Shively is gobbling up mind share on his national chain of marijuana dispensaries idea. But seriously, what is he smoking?
Jamen Shively only started smoking herb a-year-and a-half ago, but he's been making up for lost time ever since. Now an aspiring marijuana mogul, as well as a dedicated cannabis connoisseur, the 45-year-old former Microsoft executive even credits the very conception of his latest high-profile start-up venture to the enlightening influence of some top grade ganja. Specifically, a powerful sativa strain he broke out at an exploratory business meeting last November, just days after Washington state voters overwhelmingly approved pot legalisation.
“I pulled out my stash, the dankest of the dank,” he recalls of that fateful occasion. “We fired up, and the concepts we generated were just incredible. Off the charts. Until the idea started to flow into creating a global juggernaut in what's going to be a trillion dollar market. We brainstormed so many different aspects of it, including the supply chain, financing, geopolitics, lobbying, genetics, even greenhouses. And it quickly became clear that we were sitting on an absolute gold mine.”
An evangelical admirer of the business book The 22 Immutable Laws of Marketing, Shively firmly believes it's better to be first to mind, than first to market. So before legalisation even had a chance to take root, he began telling the press he was creating America's seminal national marijuana brand, and that his fledgling new enterprise would soon employ 10,000 people, while “minting more millionaires than Microsoft.”
“It actually becomes a virtuous cycle,” he explains to me over the phone, “the more outrageous claims I make – true claims – the more mindshare I get, and the bigger platform I have to discuss my plans. After all, what weed company is everybody talking about these days? The one run by an ex-Microsoft crackpot whose making all these outrageous claims.”
So let's take a closer look at just three claims Shively's made while promoting the Diego Pellicer brand, which he named after his great-grandfather, a 19th century hemp farmer.
“Diego Pellicer cannabis will retail for $50 per gram.”
This is like Shively saying he wants to create the Starbucks of marijuana (which he actually has said), only his national coffee chain charges about three times as much as the country's most expensive boutique roasters. When I ask if this tremendous mark-up will be attributable to some kind of high-end shopping experience, he says no way.
“Look, dude. This isn't taking a Big Mac and wrapping it in gold foil. We're talking about value based on the inherent quality of the cannabis itself. Because when I get high, I don't want it to be a so-so high. I want an experience that's going to last several hours... We live in a country where even middle class people won't settle for anything less than the best that they can get. And what's considered top quality in the available marijuana market is nothing compared to what we're creating.”
To which, all I can say is: I really look forward to sampling some cannabis that's three times better than the best I've ever had. (And Jamen, I'll in be in Seattle mid-September.)
“Marijuana will be legal, on a federal level, in all 50 states, in two years, tops.”
I first heard Shively make this prediction during an appearance on Huffington Post Live. He even promised the show's incredulous host that if proven wrong, “I will fly you [to Seattle] first class and put you up in my home. And we will get stoned. And you will enjoy it.”
Honestly, I'm struggling for a metaphor to properly explain how unlikely it is that his prediction will come true. How about this: If President Obama held a press conference first thing tomorrow morning, and wore a weed leaf button on his lapel instead of the American flag, while introducing Willie Nelson as the new head of the DEA, I'd still have 50-state pot legalisation by June 2015 as an 18-1 underdog.
(Photo by David Mesford)
“We're not going to appeal to pot smokers. Our price is too high. Which makes our target market the law abiding citizens who will be first time users.”
This particular statement only ventures into the realm of the truly absurd when coupled with the companion claim that Diego Pellicer will be the largest distributor of cannabis nationwide, by securing a 40 percent market share of both recreational and medicinal marijuana sales in every state where it's legal. All by catering to high-end customers who've never smoked pot before in their lives, but have shitloads of cash to spend on it.
Now, I'm no expert on how demographic market research is supposed to work, but it sounds to me like Jamen Shively identified his ideal customer by simply looking in the mirror. Also, I sort of doubt Starbucks built their empire by focusing on first-time coffee drinkers.
The Mexican Connection
Most recently, in search of mind share, Shively held a joint press conference with former Mexican president Vicente Fox, who eloquently expressed his hope that marijuana legalisation in the United States will help diminish the prohibition-fuelled violence of the international drug cartels. Though Fox has no direct stake in Diego Pellicer or any other aspect of the cannabis industry, his high profile appearance before the press only fuelled speculation that the brand might eventually look to import its product from south of the border.
“The whole topic of trade with Mexico got so far overblown it's kind of funny,” Shively says now that the smoke's cleared. “My whole point from the beginning was simply that we've got this big, hemispheric problem that may require a big, hemispheric solution. So we need to keep an open mind about things we might otherwise have a knee jerk reaction against.”
An interesting and even worthwhile thought experiment, no doubt. But perhaps one best kept to a smoky back room until the Feds finally call off their War on Weed.
“He's waving a red flag at a bull,” UCLA Professor of Public Policy Mark A. R. Kleiman responds when I ask if Shively's plans might be seen as provocative by the US Department of Justice. Colloquially known as Washington's “pot czar,” Kleiman advises the state's Liquor Control Board on how to best implement the will of the people when it comes to recreational marijuana cultivation and sales, including by creating a system that adequately addresses the federal government's frequently voiced interest in preventing the rise of large-scale, multi-state marijuana enterprises.
“So going on TV to announce the creation of your large-scale, multi-state marijuana enterprise is certainly not helpful to the cause,” he says. “Nor is it consistent with any sane business strategy. The people entering this industry will be in a very equivocal position, and I suggest they keep their heads down. Not hold a press conference with Vicente Fox.”
After stressing that he's speaking with me not as an official of the state of Washington, but strictly in his role as an academic, a blogger, and an “all around nice guy who's single and looking,” the so-called pot czar wraps our call up by saying some less than nice things about the Diego Pellicer business model .
“The only thing I can imagine is that the goal is not to sell cannabis, but to sell stock,” Kleiman speculates. “I don't have any evidence, but that would make perfect sense. But even if this is a stock promotion, somebody's either crazy or stupid. Because this guy sounds like he'd sell you the Brooklyn Bridge, while taking the Verrazano as a trade-in.”
No Risk, High Reward
Perhaps the central selling point Shively's been using to attract potential investors is that his brand offers a “risk mitigated” way to get in on the ground floor of the sure to be lucrative marijuana production and distribution market without running afoul of the authorities.
“We've taken jail out of the equation,” he says. When I ask how that's possible, given federal law, Shively describes spending a tonne of money in legal fees to come up with a proprietary “deal structure” that allows him to acquire medical marijuana dispensaries and recreational pot stores across the country without creating any criminal liability.
“When it's sufficiently legal to own them outright, we will. Until then, there's a whole different way we're going to operate.”
Diego Pellicer's first such acquisition was a Seattle medical marijuana access point called the North West Patient's Resource Center that maintains a stellar reputation within the industry and among lawmakers in Washington State. CEO John Davis has been a dedicated drug law reform advocate for decades. In 2008, he shared NORML's Cannabis Activist of the Year award for his role in helping to organise Seattle Hempfest, and he currently serves as Executive Director of the Coalition for Cannabis Standards and Ethics.
When I ask about his relationship with Jamen Shively, he says they're “married,” in the business sense, just three months after meeting for the first time.
“We each had what the other needed,” Davis explains. “I know the law, policy, procedures, the political landscape, and how to properly bring to market this particular product. While Jamen can access the financing I need to build infrastructure.”
Meanwhile, Shively says he's already looking to acquire additional retail outlets in Colorado and California, as soon as he completes an ongoing $10 million round of fundraising. The head of Diego Pellicer expects absolutely no problem reaching that initial eight-figure goal, though the current state of his coffers remains confidential, right alongside the risk mitigating details of his proprietary deal structure.
Ultimately, he's looking to raise $100 million to fully fund the company. Or perhaps to buy 2,000,000 grams of whatever he's been smoking.