By day, Darrin Farrow is president of Pension Builders & Consultants in Rocky River. In his spare time, Farrow helps to manage MAD Farmaceuticals, which supports various aspects of the legal marijuana business.
Marijuana might not yet be legal in the state of Ohio, but a few local entrepreneurs are capitalizing on the budding industry. And given the rate at which states are legalizing the drug — both for recreational and medicinal uses — these local businessmen are setting their sights even higher.
They aren't the stoners with whom you rubbed elbows (or were) in college, but rather a group of guys who already made names for themselves in other businesses and are now looking to capitalize on what some analysts characterize as the fastest-growing industry in the United States. Last year, for example, the legal cannabis industry generated $2.7 billion in sales, according to one estimate from ArcView Group, a cannabis industry research and investment organization headquartered in Oakland, Calif.
Meet Darrin Farrow. His day job as president of Pension Builders & Consultants in Rocky River focuses on managing assets for 401(k) plans, pension plans and the like. But about four years ago, he started investing in business opportunities surrounding the cultivation and production of medical marijuana.
He's one of the founders of MAD Farmaceuticals — yes, "farm" — that supports various aspects of the legal marijuana industry. The company, for one, consults for those looking to launch growing operations. He also boasts software that he says acts much like an air-traffic controller, allowing cultivators to monitor and analyze their operations. Farrow also has stakes in cultivation and production operations in Colorado, Oregon and Nevada. In Oregon, for instance, his facility supplies marijuana to 120 dispensaries throughout the state.
And despite little-to-no marketing, Farrow said his business is in high demand. He regularly receives calls from property owners and investors looking to convert real estate into cultivation facilities. And given that the feds appear to be softening their line on marijuana and support for legalization is strengthening, Farrow said the timing is right to start aggressively marketing his company.
"It's just like post-Prohibition," Farrow said about the rampant growth of the legal marijuana industry. "There are a lot of ancillary opportunities. This is the fastest-growing industry in the world, and by far the fastest in the U.S. There are not many things that have been illegal for so many years and are now becoming mainstream."
It's no surprise that entrepreneurs — even in states where marijuana is illegal — are eyeing ways to capitalize on the industry, according to Scott Shane, an economics professor at Case Western Reserve University. He said states where pot is legal, particularly for recreational purposes as in Colorado, already are seeing increased tourism, and entrepreneurs are itching to get any piece of business they can.
"Any time there's any kind of change in the world, it opens up some kind of opportunity for entrepreneurs," Shane said. "If you change any regulation, you're opening an opportunity. To me, that's what's great about entrepreneurs. They find the pieces and figure out how to put them together."
One of those pieces was right in front of Garett Fortune, a local entrepreneur whose original claim to fame came as the leader of OdorNo, a local firm that makes odor-proof bags for human and animal waste. It turns out there was a need for a similar product to mask the sweet, yet often skunky, aroma of unsmoked cannabis.
Now, under the branding FunkSac, he's making odor-proof and child-proof bags to store marijuana. The company, which manufactures in Solon and Columbus, began to take off last August, and Fortune expects to do $5 million in revenue this year. Being prominently featured in The New York Times didn't hurt business either, he said.
"It's stressful because we're going so hard," Fortune said. "There's long hours and a lot of back and forth out West, but we're having so much fun."
That said, both Fortune and Farrow said their businesses were born out of tragedy. In Fortune's case, his brother was diagnosed with cancer in early 2013, and the disease was so advanced that all he could do was attempt to live the rest of his life in as little pain as possible — something with which marijuana helped. The suicide of Farrow's best friend focused his own interests on deaths due to pharmaceutical drugs — one of the side effects, he said, as opposed to marijuana, is depression.
"When I looked at what was happening with these drugs with my personal experience with my best friend, it made me start looking at things even closer," Farrow said.
They're not paranoid
Despite their dabbling in a less-than-conventional industry, at least by Northeast Ohio's standards, Farrow and Fortune say their involvement in businesses that service the marijuana trade haven't hurt their other endeavors.
"I have two kids, and it's sort of funny how other parents come up to me and give good feedback," Fortune said. "There's no hiding what I do out West. We've embraced it. This is an industry that's going places."
Patrick McManamon would agree. He's managing director of Cannasure, a Westlake-based firm that specializes in insuring marijuana facilities.
Before going all-in with his Cannasure business, McManamon specialized in medical malpractice insurance for the insurance firm that bears his family's name.
"I don't think a lot of people know what we do," McManamon said, "except for maybe friends, family and colleagues. But people should know that this business isn't going away. Too many tax dollars are at stake, and there are too many people employed."
McManamon has quietly operated his enterprise since about 2011, but 2014 was "just an avalanche" in terms of business. From 2013 to 2014, his firm's revenue has grown by 400%. During the same period, Cannasure stomached a 600% growth in customer and premium volume.
"We're sipping on the end of the fire house and trying to hold on to it. We get so many requests every day," he said.