Pubdate: Sun, 01 May 2016
Source: Philadelphia Inquirer, The (PA)
Copyright: 2016 Philadelphia Newspapers Inc
Author: Sam Wood


When the 1849 Gold Rush hit, it wasn't the miners who got rich. The 
businessmen who sold blue jeans and pickaxes amassed the real fortunes.

When Gov. Wolf signed a medical marijuana bill into law on April 17, 
Pennsylvania became the 24th state to legalize medical cannabis.

In Old City on Saturday, about 450 entrepreneurs and venture 
capitalists gathered at the Chemical Heritage Foundation for what was 
billed as the "Innovation in the Cannabis Industry" conference.

There were heady predictions - euphoric estimates of how large the 
marijuana industry could grow and the many opportunities for profits 
it might bring. "This eclipses the birth of the internet," said 
panelist Leslie Bocskor, an investment banker. "This is the greatest 
entrepreneurial opportunity we've seen in generations."

Bocskor predicted that by 2020, marijuana and its cousin, industrial 
hemp, would fuel a $45 billion U.S. industry.

"It will be five times the size of all the major sports leagues in 
the U.S.," he said in an interview before the conference. "It will be 
nothing short of massive."

Coupled with Bocskor's forecast was an abiding faith that the federal 
government, which currently considers any marijuana 100 percent 
illegal, will decriminalize cannabis within the next five years.

Other presenters cautioned against irrational exuberance.

"There's a lot of pie-in-the-sky," said panelist and attorney Marc 
Ross, who advises cannabis-related start-ups. "Enthusiasm is good, 
but it's not always realistic."

During the next two years, Pennsylvania will begin to accept license 
applications for 25 growing operations and 150 medical marijuana dispensaries.

Licenses won't come cheap. After paying a nonrefundable application 
fee of $10,000, a would-be pot farmer will have to show $2 million in 
liquid assets, with $500,000 on deposit, to be considered a contender.

On top of that, the cost to build and outfit a growing operation will 
average about $3 million, according to industry analysts.

That did not seem to deter some who attended Saturday's conference. 
Nick Blank and Pedro Sotomayor, who operate a chain of pawn shops 
based in Reading, said they have begun looking at warehouses large 
enough to contain a growing operation.

Sotomayor, a burly man with a shaved head and heavy-rimmed glasses, 
said he expected competition to be stiff because, unlike New Jersey 
and New York, the Pennsylvania law doesn't require operators to be a 
state resident.

Some potential investors took a more hardened view. Jeff Pyros, whose 
Pyros Financial Group in Wilkes-Barre advises and invests in tech 
start-ups, said there's little chance that the politically 
unconnected will win one of the coveted permits to grow or distribute.

"Who's going to get the licenses?" asked Pyros. "Follow the money. It 
won't be the typical Joe."

But others see opportunity on the periphery. Greenhouses will need 
HVAC systems to maintain constant temperatures and humidity, security 
details to patrol cannabis operations, and organic chemists to ensure 
quality and potency, panelists said.

Dozie Mbonu, a former professional international basketball player 
and roundball standout at Lehigh University, is looking for 
investors. Mbonu said his 75-yearold aunt, a former biotech 
researcher, had invented a "fungal inoculant," a soil additive that 
would increase yields of "almost anything that grows."

Megan Krache was drawn to the conference looking for opportunities to 
invest in cannabis-related start-ups.

Krache, the director of commercial real estate lending for Blue 
Bell-based Drexel Brothers L.L.C., said banks and hedge funds won't 
lend to marijuana businesses for fear the federal government could 
seize the assets at anytime.

"They are legitimate business owners and they'll need loans," said 
Krache. "We're not a bank. And this is a good time to get involved."

Lauren Jenison was thinking smaller. The owner of Sweetflag, an 
online business that sells accessories for smoking tobacco, Jennison 
said she attended to get a realistic gauge of the market and listen 
for new ideas.

"It is like a gold rush," she said of the emerging cannabis industry. 
"And I want to be the person selling pickaxes."
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MAP posted-by: Jay Bergstrom