As the world’s largest regulated cannabis market, California is for many the pinnacle of participation in the legalized marijuana industry. For decades, the state has had a rich tradition of cannabis culture, supplying much of the country and beyond with prime bud bred and cultivated by underground growers. But getting into the game isn’t easy. Most of the local governments in the state have banned commercial cannabis, and many of the jurisdictions that welcome the industry have strict caps on the number of licenses issued.
In concert with pervasive social constructs, these barriers to entry have resulted people of color being strikingly underrepresented in one of the fastest-growing industries in the United States. Efforts to address the issue have so far failed to produce solid results. A social equity program in Los Angeles designed to ensure participation in the cannabis industry by members of communities disproportionately impacted by the War on Drugs, for example, is mired in controversy and delay. And previous rounds of cannabis company licensing in the city resulted in only six of the nearly 200 medical marijuana retailers being operated by Black entrepreneurs, according to Virgil Grant of the California Minority Alliance.
Despite all the challenges, Oakland-based cannabis brand GasHouse has made a name for itself in California’s burgeoning legal marijuana market. From its roots as a clandestine grow operation in suburban Atlanta, GasHouse has become one of California’s most coveted brands. The company’s signature strain Pluto has been mentioned on more than one hip-hop track, and fresh drops of the latest harvest have sold out in minutes at high-profile dispensaries.
GasHouse is run by Black entrepreneurs Felix Murry, co-founder and cannabis brand architect, and Kingston, co-founder and master grower. When the pair met in 2014, Kingston had been growing high-end cannabis in suburban homes outside of Atlanta, following his passions for growing herb organically and creating potent new strains of marijuana. For more than a decade, he had been growing hundreds if not thousands of pounds of quality bud per year, gaining the attention and patronage of celebrities and professional athletes. When nightclub and entertainment industry veteran Felix, an Alcorn State University alumnus and graduate of the HBCU’s business school, got his hands on some of Kingston’s herb through a mutual friend, he set up a meeting that would change both of their lives.
Laying The Foundations Of A Brand
Connecting on a fishing trip, Felix and Kingston began to make plans to bring the illicit cultivation operation out of the shadows and into the regulated arena. At the time, both Washington and Colorado had already legalized cannabis for recreational use, and movements to do the same in other states were already afoot. Knowing that the state of Georgia was nowhere near substantial cannabis policy reform, the new partners prepared to set up shop in the next legal jurisdiction.
“I was always on the trail of legalization, just waiting the last 20 years for it to present itself,” Felix tells me in a Zoom interview with the entrepreneurs. “So, I was aware of what was going on.”
While Kingston and Felix waited for legalization to catch up with their plans, they went to work creating and building their brand. After settling on the name GasHouse to honor Kingston’s proprietary strains of weed with pungent aromas reminiscent of diesel fuel and spice, the pair set to create their image. Before long, folks in the greater Atlanta area were sporting hats and shirts with the GasHouse gas mask logo. Armed with a recognizable brand, the entrepreneurs did not have to wait long before the legal climate was suitable for their venture.
In November 2014, Oregon voters passed Measure 91 to legalize non-medical cultivation and use of cannabis. It was the opportunity that Felix and Kingston were waiting for, and they jumped at the chance. On an exploratory trip to the state, they connected with a resident looking to sell 40 acres of his property in rural southern Oregon. But when they arrived at the site, they weren’t sure where they stood with the white-bearded, Caucasian octogenarian.
“We sat down in the kitchen,” Kingston remembers. “His wife, you know, just gave me a stare. But it ended up happening.”
The prospective seller intended to stay on his remaining 100 acres, so he was eager to know what plans were in store for the parcel of land that was for sale. When he and Kingston found common ground over shared values, they struck a deal.
“I told him I’m just trying to do this for my family, and I just told my situation,” Kingston says. “And he sold me his property.”
Later, the man confessed that his prejudices nearly nixed the prospect of reaching an agreement on the sale. But connecting on a human level made the difference and allowed him to look beyond his bias.
“He cried on my shoulder,” Kingston remembers. “He told me he was a bigot all his life and that I changed the way he perceived us.”
GasHouse Goes Legit
With a new base of operations secured, Felix and Kingston went to work bringing GasHouse into the licensed cannabis industry. Oregon had legalized medical marijuana back in 1998, so they set their sights on gaining licensure as medicinal cannabis cultivators under that regulatory regime. And they accomplished their goal by going it alone, without relying on outside professional advice.
“We didn’t use a lawyer. We read the regulations ourselves,” Felix explains. “We realized it was so new that lawyers didn’t even understand the rules and regulations yet. We felt that we could interpret them just as well as they could.”
With medical marijuana cultivation license in hand, Kingston went to work creating his new operation, this time under the sun in greenhouses. Although the environment was different, he relied on his experience and commitment to grow clean cannabis without pesticides or synthetic fertilizers to guide his operation. Before long, he was again producing top-shelf bud, this time for Oregon’s medical marijuana patients. After a year, the fledgling enterprise was licensed to cultivate for the state’s newly legal adult-use market in 2015.
“We got our recreational cannabis license, and that’s when GasHouse Farms was really born,” says Felix.
On a whim, GasHouse submitted entries to the Dabathon, a high-profile cannabis competition. Kingston says he wasn’t expecting to win any awards and was surprised to learn that public cannabis competitions even existed. In their very first contest, however, they came home victorious twice over.
“Our first show, we won first place off something I grew.” Kingston says proudly, quickly followed by “Two first places!” as a friendly correction from Felix. “It just blew my mind,” Kingston adds.
“Nobody knew who we were,” remembers Felix. “We were probably the only African American company that was at the event.”
With success came increased brand awareness, and in 2018 GasHouse moved its headquarters south to California. The state’s voters had legalized recreational marijuana two years earlier, and the onset of legal adult-use sales marked the creation of the largest regulated cannabis market in the world. GasHouse was ready to get in the mix.
“We recognized California had 40 million people, and Oregon had four or five million people,” says Felix. “And so, we was just like, ‘Hey, it’s a whole country’s economy in one state. So, let’s attack this state, and let’s go at this state really hard.’ And that’s what we did.”
Like the first time, Felix and Kingston decided to forego the services of expensive consultants in the quest for a license in California. In many ways, it was “much the same process,” Felix says.
“We understood the system. We weren’t scared of it because we had been through it. To me, it was just an application,” he explains, adding, “I’m fairly well versed in contracts and stuff like that, so it wasn’t a big deal to get it done.”
Once established in the Golden State, the accolades continued to roll in for GasHouse. Encouraged by their early success, Kingston and Felix entered other competitions, taking first-place finishes at both the 2018 High Times Norcal Cannabis Cup and the 2019 Chalice Cup. Demand for GasHouse cannabis flower and concentrates continues to grow, and the company’s products command top-shelf prices at the exclusive list of dispensaries that carry them, including the Cookies chain from co-founder and hip-hop artist Berner.
The brand’s reach now extends beyond California, as well. Because the federal prohibition on cannabis precludes products from crossing state lines, the company has agreements with cultivators in four states to produce cannabis featuring Kingston’s GasHouse genetics to their local markets. Similar plans are in the works for the brand’s return to Oregon.
Sharing The Entrepreneurial Spirit
Because of the success of their brand, which Felix and Kingston conservatively value at approximately $60 million with the recent addition of hemp CBD products to the GasHouse portfolio, the partners find themselves in the position to give back to their community. They believe it is important to help young entrepreneurs working to make their own impact on California’s regulated cannabis economy.
“We mentor a lot of guys from the neighborhood in Oakland, and we still do, you know. I may charge someone $10,000 for an hour of my time,” Felix says. “I give these guys endless hours of my time and information. I want to see them win. I’m going to do everything I can in my power to see them win and to empower them to be the best that they can be. I’m all about that.”
By sharing their knowledge and experience, Felix and Kingston have helped several businesses owned by people of color gain the credentials to enter California’s regulated cannabis market.
“These guys have delivery licenses, distribution licenses,” Felix explains. “They have their own licenses at this point, and we’re still working together. We still talk; we’re still sharing information. They’re standing on their own.”
But gaining those licenses is becoming more and more complicated, “now is a different time when we started our company,” Felix notes, adding, “not that it can’t be done, but it’s a lot harder now.” With intense competition from deep-pocketed corporations that have entered regulated cannabis on a national scale, putting together a winning combination of resources necessary for a viable brand takes a lot more than it used to.
“Now, it takes an enormous amount of capital. When me and Kingston first started, yeah, it took a little capital, but nothing compared to now,” says Felix. “Because now you got the big boys in there. Now you got hedge funds in there. Now you got them paying lobbyists to make things difficult, to keep people out.”
The Pitfalls Of Social Equity Programs
To help level the playing field, many jurisdictions are implementing social equity programs designed to help people from communities adversely impacted by the War on Drugs gain a foothold in the regulated cannabis market. But Kingston and Felix are wary of such initiatives. The social equity program in Los Angeles is being rolled out in fits and starts, and no licenses have yet been issued to applicants, many of whom have been paying rent on empty storefronts for years as they wait. Others lost everything they had invested when they could run out the clock no longer.
In addition to the red tape of social equity programs, Kingston says they do not address the needs of the entrepreneurs they are designed to support once they’ve been licensed. Precious few members of underserved communities of color have had the opportunity to develop the skills needed to run a successful cannabis business. And raising the necessary start-up capital is another serious challenge. The result is often an even greater influx of corporate cannabis into the market, Kingston asserts.
“So, you can give a guy a license; he doesn’t have the money, he doesn’t have the business skills,” he says. “What ends up happening, what’s happening in California, corporate is going to get these social equity guys and fund them.”
Once a social equity licensee accepts outside investment, they risk losing control of their business if they aren’t careful.
“They go get a social equity person, and they basically use them,” Kingston warns.
Felix agrees, saying the motives behind social equity initiatives may need to be revamped to provide additional services to the budding entrepreneurs they were designed to support. And he believes business owners of color with a proven track record in the regulated cannabis industry should have a hand in reinventing the programs.
“Social equity is a good program. It just needs to be ran correctly,” Felix says. “They may need to scrap what they have now. They need to bring people to the table such as myself and others to craft guidelines that will work, and stop setting people up for failure.”