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Friday, Feb 3, 2023
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Valley Pot Delivery Delivers Cash

When Speed Weed brings its product to a customer, it follows the same business model as many companies specializing in home delivery. In fact, its founder scoured the manuals of Papa John’s International Inc., Domino’s Pizza Inc. and FedEx Corp. for inspiration and advice. But, of course, instead of delivering pizza, shoes or books, Speed Weed delivers pot – as you might expect from its name. And somehow, despite a city crackdown that has closed hundreds of medical marijuana businesses in the past two years, the Woodland Hills company is still in business. That’s even a surprise to Speed Weed itself, which maintains that it’s trying to professionalize pot delivery and won’t do itself or the industry any good if it remains underground. “When you get an order from us, it’s just like getting Chinese food or pizza delivered,” said Chief Executive A.J. Gentile, who started the company in 2011 with his wife Jennifer and his brother Gene. “We are not troublemakers. We would love the city to view us as an ally and a resource on how to regulate this industry.” The company deals exclusively through delivery with no walk-in stores and operates as a co-op with clientele that it claims range from Hollywood stars to everyday patients. It operates its growing facilities in the West Valley and has plans to open more east of Los Angeles this summer. In recent years, marijuana delivery services have popped up across the country, with companies in the Bay Area, Nevada, and Colorado. But they also have been subject to crackdowns. Similar services have recently been shut down, including Super Budz in Las Vegas for alleged criminal activity, and smartphone app Nestdrop, which was forced to leave Los Angeles in December after a judge determined the operation violated Proposition D. The measure was passed by voters in 2013 and places tight restrictions on pot shops. City Attorney Mike Feuer, who held a press conference earlier this month trumpeting the closure of 503 medical marijuana businesses, went after Nestdrop claiming Prop D prohibited any delivery of pot to customers. Still, Speed Weed agreed to speak to the Business Journal because it believes delivery services are a reasonable system to supply patients their legally prescribed pot without storefronts in the neighborhood. As evidence that it has filled a demand in the market, Gentile said Speed Weed had revenue of $2.5 million last year and has grown by at least 10 percent for the past 18 months. Growing business Gentile founded the business several years ago after moving to Los Angeles from the East Coast, where he operated a software business with his brother. He said he wanted a change of pace and found it when he visited a pot dispensary. “It was like Whole Foods and I couldn’t believe it,” he recalled of his first experience. “Weed to me growing up was little dime bags that looked like burnt oregano.” In 2011, Gentile and his wife installed a growing operation in their Valley apartment, but found that software expertise didn’t matter in agriculture. He described it as “a nightmare.” And though the crop could not be smoked, it was very potent and could be used to produce pot candy. The business took off from there. “Back then edibles were really just a brownie wrapped in Saran wrap with an Avery label stuck on it with handwriting,” said Jennifer Gentile, who serves as chief marketing officer. “It was very homemade looking.” The couple then started to look for ways to expand the company. One day they came across an online video on how to start a delivery service. So they turned their candy business into a pot delivery service. “We discovered fairly quickly that this business doesn’t really scale, it was what we were calling the ice-cream truck model,” Jennifer Gentile said. In response, Gentile downloaded the operation manuals from Papa John’s Domino’s and FedEx. He spread the pages across his living room floor, and based on the delivery industry’s practices, developed platforms for ordering, dispatching and managing drivers. The website reflects Gentile’s software background, and is crisply presented in a white-and-green color scheme. To sign up for the service, patients must provide contact information for the prescribing doctor, as well as digital scans of their identification and the doctor’s recommendation for pot. Once approved, the customers can order smokeable marijuana variants such as Cabbage Patch and Thin Mint, as well as edibles such as chocolate bars and capsules. Prices range from about $20 for a gram to $60 for an eighth of an ounce, depending on the strain. Delivery times average about 45 minutes, Gentile said, and the website highlights a fleet of Smart cars. But in fact drivers use their own unmarked vehicles and the site does indicate the cars are not the actual delivery vehicles. Still, the overall presentation is one of efficiency and professionalism. In April 2012, about six months after they had entered the business, their business had hit its stride, Gentile said. Today, Speed Weed covers all of L.A. County and has a warehouse along with several annexes spread throughout the city. They employ 50 drivers and operate from 10 a.m. to 2 a.m. every day. Gentile said the pot operation generates zero profit and even if it did, as a cooperative any surpluses would be distributed to the members. His profits come from ancillary businesses such as software and cultivation consulting. “Overall, margins are much slimmer than an industry outsider would suspect,” he said. Pot professionals Speed Weed is one business under the Gentiles’ umbrella company called Space Brain. Another subsidiary sells the delivery service software to restaurants and pizza shops. Gentile said he has invested about $200,000 in all his companies, but most of that has gone into non-marijuana ventures, particularly software development. Speed Weed said it operates within the law – even as it disputes the regulations under Proposition D – and pushes for an openness to build trust with the community, city officials and law enforcement. “We are very careful about driver safety and making sure that we are inconspicuous about how our deliveries are done. Patients still want their privacy,” said Jennifer Gentile. Taylor West of the National Cannabis Industry Association in Denver said that marijuana businesses like Speed Weed are starting to see the benefits of professionalizing an industry that essentially started as drug dealing. “When you move from that to a regulated market, you realize that there is an advantage to being organized and disciplined and professional,” West said. But no matter the professionalism, services like Speed Weed always face the possibility of closure as long as Proposition D is in effect. Under the city’s law, all medical marijuana delivery businesses are technically illegal in Los Angeles, acknowledged Eric Shevin, a Sherman Oaks attorney representing Speed Weed. “According to the city all delivery is banned,” he said. But he argued that the law was framed as a zoning regulation with the intent to keep the shops away from schools and relegated to specific areas. And he said Speed Weed differs from Nestdrop in that it is a co-op, whereas the app allowed buyers to receive deliveries from multiple, existing pot shops. No matter what the legality, Shevin said the city’s crackdown on dispensaries has spurred more delivery services like Speed Weed, though it’s unclear exactly how many exist. “There is a sensitivity among people that are trying to operate medical marijuana collectives that they’re sitting ducks if they are operating storefronts,” he explained. Rob Wilcox, a spokesman for the L.A. City Attorney’s office, would not specifically comment on Speed Weed or any ongoing investigation. But he did say that the office considers all medical marijuana delivery services illegal. Amid worries of a possible shutdown, the company is looking to expand geographically into San Diego, the Bay Area, Palm Springs and San Bernardino. In the near future, they hope to move into Nevada and Oregon with the approval of local government and law enforcement. “We’re building a business to last,” Jen Gentile said. “We wanted to make sure that everything we did as we built this business was done properly.”

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