08.16.2016
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Profiles in Cannabis: Seattle Weed Startups Are on the Rise

Emerald City pot pioneers keep their souls in it from seed to sale.

It’s hard to imagine what might have been had Arthur Denny not taken a right at Portland some 165 years ago to end up founding what’s now Seattle.

William Boeing may never have gotten the chance to joyride around Lake Washington on the wing of a biplane and decide that he would be the one to make a better flying machine. Jeff Bezos might have stayed in Albuquerque and never pursued space commercialization. The Frappuccino may have never come to fruition, and legal weed sales in Washington would certainly not have just hit the $1 billion mark.

Tax revenue for weed—which the ACLU says is supposed to go to the state general fund, health care, youth drug prevention, public health education, research, and administration—just topped $360 million.

The Emerald City is experiencing a renaissance of smart, savvy, hip-without-the-pretense entrepreneurs working in cannabis.

But making it to market as a weed startup in Seattle, let alone seeing any amount of success, is hard-fought. Commercial real-estate growth is up more than any other U.S. City. Median rent for commercial and residential properties is $2,786 per month. 

The Washington State Liquor and Cannabis Board (the state’s governing body for legal cannabis) doesn’t do anyone any favors, either. Locations for retailers, processors, and producers can’t be in a personal residence, on federal land, or less than 1,000 feet from a rec center, child-care center, public park, play area, public transit center, library, or arcade.

After you’ve ponied up the cash for your WSLCB license, State license, City of Seattle license, and Business and Occupation tax, there’s still a 37.5 percent excise tax at retail, keeping margins low and price fluctuations across stores wild, with a 3 to 4 times markup across the board.

God help you if you have to pay for electricity to grow, machinery to shrink wrap, or toilet paper, a beard net, and a $15-an-hour minimum wage for joint roller Java John.

But Seattle thrives at the confluence of shiny, progressive, affluence and innovation next to the gritty, grungy underbelly of the WTO riot days. The Emerald City is experiencing a renaissance of smart, savvy, hip-without-the-pretense entrepreneurs working in cannabis. They came to Seattle, or stayed in Seattle because of a love for the PNW lifestyle: Snowboards, camping, boats, food, music, progressive politics … They also like the effect cannabis has on normal life.

Here are a few of the standouts.

Sitka: The Jon Snows

A connection to place, says Sitka co-founder Shawn Richards, is one of the deepest connections a person can have. “There are a lot of places that are geographically inspiring where people don’t do shit. Seattle is not that place.”

In 2012, Richards and co-founder Nick Saad were graphic designers for Star Wars and Harry Potter DVD trivia games when Initiative 502 passed and Paramount folded their company. Saad, who, with his custom steel road bike(s) and elbow-patched wool blazer(s), couldn’t be more Seattle if he tried, wanted good old-fashioned weed, weed that he could smoke—not a dab rig and some 80 percent THC shatter. He enlisted Richards to help bring the idea to fruition.

“I like to make things to put out into the ether,” Richards tells The KIND. “Otherwise, what’s the use? It’s why I like to build my own house: To put my fingerprints on things; have a legacy. Working is worthwhile.”

Three years and nearly $250,000 raised across six friends-and-family investors later, Washington's first cannabis cigarette was born—packaged under the Sitka brand. The tube, designed specifically for cannabis, with thin, unbleached paper, has a biodegradable and inactive filter. Proprietary blends and curing methods make for a smooth burn and rich flavor. The potency is effective, but not debilitating. 

Two months after the cigarettes hit market, Sitka brought the first (legal) authentic European-style hash to the U.S. “We were under-funded,” Richards says. “To insulate ourselves from competition, we chose to manufacture products that had a lot of barriers not related to money. Being flexible, responsive, adaptable on the fly, and nimble on execution has allowed us to stand out.”

Sitka’s lab on Lake City Way started with Home Depot buckets, power tools, spray paint, and a Mac Pro, and now employs six people to automate eight products for more than 50 stores. They’ve sold $500,000 in their first 13 months on the market.

“You can’t have an end goal in this industry because no one knows what’s going to happen."

They continue to add products wherever they find a niche. Their Two Joints product, which launched this year, retails for $7 and came in at number 10 for volume of any product launched in Washington in the first half of 2016, according to canna-data company Headset.

The name of the game is baby steps. “If you’re going after success, the definition changes every turn you take,” Richards says. “You can’t have an end goal in this industry because no one knows what’s going to happen. Our goal is this month. Next month, it’ll be next month. If you’re not swimming, you’re floating, and if you choose to swim, you can’t focus on the other side of the river.”

botanicaSEATTLE: The Machinists

The Toyota to Sitka’s Tesla, botanicaSEATTLE is the top-selling processor in Washington, with revenue having just passed $4 million and a 25 percent claim on the state’s edibles market. With SPOT, Proper Chocolates, Mr. Moxey’s Mints, and BOND sensual oil, botanicaSEATTLE now has 40 different products in 150 stores.

 “You can make a lot of money in sausage casings, but [weed] is interesting."

After earning his MBA from Dartmouth, Ironman triathlete Tim Moxey founded a wetsuit company, then cut his teeth in Seattle with Nuun and Company electrolyte tablets in 2004. Now available in 20,000 stores in 30 countries, Nuun hydrates everyone from cancer patients undergoing chemotherapy to ultramarathoners undergoing running too far.

After selling his stake in Nuun, Moxey, who says he loves to “dream and improve things,” teamed with co-founder and business school buddy, Chris Abbott, in 2012 to self-fund botanicaSEATTLE.

Cannabis was fascinating because “It’s a market that pushes on the thought experiment of any business or brand model,” employee #1 and resident cannabis expert, Lena Davidson, tells The KIND. “You can make a lot of money in sausage casings, but this is interesting: How do you get really good at something nobody’s had to be good at before—consistent, reliable, at-scale production and fulfillment to a market that is shifting every day?”

The founders decided to go into processing because there’s no limit to the number of products a processor can manufacture. They went into edibles because they wanted to tell a story that could be articulated. (Aside from potency, it’s hard to say what makes your weed strain better than the next grower’s.)

“It has to look good, taste good, and feel good. It has to be a quality experience on the cannabis side, otherwise it’s just food.” 

Their product set, with canna-butter infused baked goods alongside oil-infused mints and premium chocolate, all Clean Green Certified (basically organic, but the feds don’t allow use of that term by cannabis growers), offers a robust way to see cannabis. “It has to look good, taste good, and feel good. It has to be a quality experience on the cannabis side, otherwise it’s just food,” Davidson says.

Over the past year and a half, botanicaSEATTLE has been a manufacturing and distribution company first—with an amazing brand and sales wing next, Davidson says. Institutional manufacturing knowledge was something that emerged as a necessary investment.

BotanicaSEATTLE wants to create brands that “speak to the emerging market but also make an offering that’s compelling outside Seattle,” Davidson says. Basically, put botanicaSEATTLE “in every market as far as it’ll go,” she contends. But, “It’s important to make a lot of smart decisions slowly so that you can be viable day-by-day. A lot of people want to take over the world with cannabis right now, but the green rush is a myth.

“There’s a spoonful of sugar approach to what we’re doing. Let’s make a beautiful brand that surprises people it’s cannabis, then we can talk about cannabis,” she says.

The Goodship: Public Image Ltd.

For The Goodship Company's Jody Hall, brand building around baked goods is about more than making sure the toothpick comes out clean. “Seattle is a really progressive town with values I share, and I feel like I can be a big part of that,” she tells The KIND. “Having a seat at the table to shape culture, reduce stigma, and add classiness, trust and safety—that’s been our focus.”

The opportunity to think differently has presented itself multiple times in Hall’s career. She joined Starbucks a year out of college, when they had 30 stores. Under the leadership of her on-again, off-again boss Howard Schultz, she learned the tenets of building a business around trust and collaboration and based on purpose and values.

She left her decade-long career in marketing to open a cupcake shop, the first outside New York City, in 2003. Cupcake Royale quickly became a Seattle institution, and Hall a local celebrity, poster child for small business, and vocal advocate for the progressive movement.

Nudged by business leaders in Seattle, she applied for her recreational cannabis license. She was initially denied—a months-long legal saga ultimately overturned that ruling—but she had already partnered with ethanol-extracted cannabis oil powerhouse DB3 to produce and distribute The Goodship products. (As of this month, The Goodship will transfer those responsibilities to its own license, partnering with multiple different extractors and trusted growers to buy the oil for their products.)

Delicious, beautiful, high-quality, consistent edibles? The Goodship checks all the boxes, and has the food science and R&D to back up their shelf-stable and sustainable cookies and chocolate with ingredients labels you could find at Whole Foods … minus the weed part, for now.

“New markets have a much higher level of sophistication,” Hall says. “Grey Goose isn’t saying, ‘You get the most drunk.’ It’s not about that. We’re taking a lot of time, care, attention into what the package and brand looks like and how we’re going to market it so we’re not just throwing crap out on the shelf.”

To earn Hall’s stamp of approval, a brand has to do more. It has to have soul. To be fair, dealing in commodities like coffee, baked goods, and cannabis, elevation really is the only way to get a leg up.

“I want to grow a brand that you see their product, what they’re doing in the community, and say, 'We fucking love that company,'” Hall says.

Cupcake Royale donates 50,000 cupcakes annually to non-profits. Hall talks of launching a foundation at The Goodship to contribute 1 percent of employee time, 1 percent of profits, and 1 percent of equity to shine light on the “real pioneers” of the industry who are sitting behind bars. The brand also hosts a monthly series called Higher Education, or a “heady lecture series under heady influence.”

“Our entire strategy is built around the notion that we’re starving for human connection,” Hall says about her platform to draw together, pioneer, and change the world. “We really do look at the world differently and connect in a profoundly different way under the lens of marijuana.”

Indeed, cannabis does elicit a rose glasses sort of worldview and offer a sustainable diversion from everyday life. Is it enough of a radicalizer to be worthy of 700,000 racially biased arrests in the U.S. per year and the same federal classification as heroin? Not according to half the states in the union.

One hundred years ago, prohibition was alive and well in Seattle. A young police lieutenant named Roy Olmstead stringently enforced it for the SPD. Then, much like his modern-day descendants, he thought there might be a better way.

He started importing hooch himself. He shipped it from Canada, unloading it off the coast of British Columbia and sending it via speedboat into Washington. He eventually got caught, jailed, and pardoned by FDR, but he became legendary and successful along the way.

Perhaps it’s something in the water, but progress is just what people fish for in Puget Sound. The movement to normalize cannabis here is no different.

Find and shop these and other Seattle based cannabis products on Proper now.

Disclosures: The writer is married to one of Sitka’s co-founders and has to hear about weed all. day. long. Also, nearly a half-dozen Cupcakes Royale were annihilated while reporting this story, which, shockingly, was not resultant of the subject matter at hand.

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