Sunday, April 6, 2008

Weekend Marketing Memo: Meet Richard Lee, A 'Budding' Entrepreneur in What Some Are Calling 'The Other Natural Products Industry'

Like the now-famous marketing tag line says: "Pork: It's The Other White Meat (besides chicken)." And, Just like pork, "The Other White Meat," there's what many are calling "The Other Natural Products Industry": the legal, regulated medical cannabis business. Well, at least in California it's a legal, regulated and legit industry.

Just like in the "real" natural products industry--know for its organic, sustainable, healthy and premium quality products, the medical marijuana industry in California has a product hierarchy: cannabis plants grown organically sell for much more than those grown using pesticides and synthetic herbicides and fertilizer.

Additionally, a premium or quality product criteria exists--the more "premium" the cultivated weed is, the more it sells for. There are even brand names for the product, which consumers who regularly purchase the medical marijuana are familiar with. [We've also heard that many folks who don't procure the pot on a legit basis are very familiar with the brand and quality hierarchy as well.]

Enter Richard Lee of Oakland, California.

Mr. Lee is a "budding" entrepreneur in California's "growing" medical cannabis industry. Lee, 45, is the founder and president of the only known University in the U.S.--and according to the school's president just the second one in the world besides 30 year-old Cannabis College in Amsterdam, which was the entrepreneur's "big idea" inspiration for his Oaksterdam University in Oakland--which has a curriculum devoted exclusively to the cultivation, processing, marketing and distribution of marijuana.

Lee's Oaksterdam (a combination of Oakland and Amsterdam if you aren't paying attention) is located in the heart of Oakland, between the city's downtown and iconic Lake Merritt. The campus, more of a storefront really, is in an area that's become prime real estate during the last 10 years during which the city has been undergoing a massive urban renewal movement. For example, the New Whole Foods' European market-style superstore is only a few minutes drive from Oaksterdam U. And one of the two new Trader Joe's specialty grocery stores which opened in Oakland during the same week late last year is just a roach clip's toss away from the campus of "higher" cannabis education.

Mr. Lee, who nearly 20 years ago suffered a spinal-cord injury which put him in a wheelchair and says he smokes cannabis both medically and "as an adult,", started Oaksterdam University after returning home to Oakland from a 2006 trip to Amsterdam in the Netherlands.

His motivation for starting and nurturing Oaksterdam U, which Mr. Lee recently told the San Francisco Chronicle has spawned nearly a dozen cannabis-related businesses thus far since its founding, was because when he returned home to Oakland after seeing how marijuana was treated as a legal but regulated substance in Amsterdam, he felt a similar thing would be good for California, which had recently passed a law legalizing medical cannabis for people who could obtain a prescription for the weed from an approved physician.

Lee says he realized there aren't "enough good people in California who want to work in the legal cannabis industry in a professional way, who want to pay taxes and obey regulations and help improve their community."

As a result, Oakland Oaksterdam University was born.

Lee says the school of "higher" cannabis education is not just an educational institution devoted to studies of the weed, but also a political and applied or entrepreneurial one as well. It's mission--in addition to offering courses which range from the $150 " basic course" module which includes an overview of the political and legal issues surrounding the trade, along with an introductory course in horticulture and "bud tending," which is the art of picking and choosing the cannabis plants' buds, to advanced courses like "Retail (cannabis) Management" "Starting a Business" and "Packaging and Distribution"--is to legitimize the industry and eventually make cannabis legal in the U.S.

Oaksterdam U held its first classes in November, 2007. Mr. Lee says the school had 22 students for those first classes. Beginning in February of this year however he says enrollment started to skyrocket. According to the school's founder and president, the February and March classes were sold out--standing room only--and this month (April) is fully-booked. We're tempted to say business is "growing like a weed."

Things also seem to be "buzzing" along with Oaksterdam U's private sector business offspring. Directly across the street from the school of "higher" cannabis education is the Oaksterdam gift shop, which among other things sells Oaksterdam University T-shirts, jackets and other apparel, all emblazoned with the Oaksterdam University crest. The gift shop also sells an assortment of other cannabis-related items--all legal. Mr. Lee says the shop is currently bringing in a "few thousands dollars in gross sales each month."

Mr. Lee says he owns the gift shop as well as the university but plans to turn them all over to a non-profit foundation--or create one--soon.

He also tells us, based on his research, that the numerous medical cannabis clubs located in Oakland, which are the only types of retail outlets that can legally sell medical marijuana in California, are generating income for the city. He says the various clubs pay about $5 million a year to the city of Oakland and to the state of California in taxes and fees. Further, Mr. Lee estimates the numerous cannabis club retail outlets, which are regulated by both the city and state, have a combined payroll in the city of Oakland of nearly $5 million.

Richard Lee was a major force behind getting Measure Z passed in the East Bay Area city of about 400,000 residents. The measure, which calls on the city of Oakland to tax and regulate cannabis for all adult residents of the city, not just those with medical permission, and makes the private sale and cultivation of cannabis the lowest priority for law enforcement and prosecution, passed with a whopping 65% of the vote in a 2004 city election. Six other California cities have passed similar city ordinances since Oakland's law passed four years ago.

Oakland's police force and DA's office seems to be all for the measure. The city, which has one of the highest per-capita violent and serious crime rates in the U.S., currently has a police force that's understaffed by at least 100 officers, according to the police chef and now even the city's Major Ron Dellums who has been slow to act on the problem since getting elected over a year ago. Further, the DA's office has such a backlog of serious and violent cases to deal with that the last thing it wants to do is spend its time prosecuting cannabis smokers, and even sellers for that matter.

Asked what his motivation is besides the fact he's used medical cannabis for years because of the pain from his spinal-cord injury as well as the fact he had his Oaksterdam U epiphany while visiting the original college of "higher" cannabis education, Cannabis College in Amsterdam, Mr. Lee tells a story about being carjacked in Houston, Texas in 1991.

In a wheelchair at the time because of his spinal cord injury, Richard Lee says he was carjacked and left flat on his back by the thugs who did it, his wheelchair turned on its side and tossed off in a distance. It took the police 45 minutes to arrive as he lay flat on his back on the street, according to Mr. Lee. After they arrived, nobody called an ambulance he says. Lee said he asked the police officers if they could give him a ride home. The police officers told him they couldn't, that they weren't a taxing service, and had to get on to their next call, according to Mr. Lee's version of the story.

He said that incident made him mad and made him an advocate of sorts for better police protection for citizens. Further, he says he in part blames the laws making cannabis use illegal and thus forcing police to deal with pot users rather than having the time to protect citizens from violent crimes. It's a problem with the law, not the police, he says.

So, through his Oaksterdam University cannabis college of "higher" learning, his political action to make cannabis legal, and the entrepreneurial offshoots of Oaksterdam U such as the giftshop, Richard Lee has set his sights on eventually getting state governments--and ultimately the U.S. federal government--to see the light and legalize the natural-growing weed.

It looks like Richard Lee, the founder and president of the only known University in the U.S. to have a curriculum devoted exclusively to cannabis studies--or as he likes to say, "Quality Training for the Cannabis Industry"--is at the helm of a major growth industry in Oakland.

The first two or three classes of Oksterdam University have already graduated. Students receive a diploma if they complete all their classes with a passing grade and pass a final test. The diploma's don't look much different than those given to graduates of the two, nearby prestigiuous Universitys--U.C. Berkeley and Stanford. Well...except for the cannabis leaf on the Oaksterdam U diplomas, that is.

The future of Oaksterdam U: We speculate; tongue planted firmly in cheek

In fact, with things booming and "buzzing" so much at the Oakland-based college of "higher" cannabis knowledge, we're wondering what the future holds for the school.

Perhaps, like its sister Bay Area Universities Stanford and U.C. Berkeley Oaksterdam U might want to start its own football and basketball teams? There are plenty of ideas for team names, that's for sure. Perhaps the "Oaksterdam Tokers" for the football team? If nothing else, the name would sure confuse competing teams.

And, what about a name for the school's basketball team? Perhaps the "Oaksterdam Buzz?" It's got a nice ring to it, and a number of professional basketball teams use similar sounding single- syllable names after all. There's "The Kings" (Sacramento) and "The Jazz" (Utah) just to name two. We also think the "Oaksterdam Buzz" basketball team could give a whole new meaning to the popular "high five" hand slap which is so popular in the sport of basketball.

Of course, a University football and basketball team must also have a pep band and cheerleading squad For example, U.C. Berkeley's "Cal Marching Band" and Stanford's "Cardinal Marching Band" are nearly as popular as each respective school's football and basketball teams are.

However, as all good marketers know, a University sports team pep band and its cheerleading squad needs to fit the format of the school. And since Oksterdam is a specialized University, unlike nearby Stanford and U.C. Berkeley which are "multi-University's, its pep band and cheeleading squad needs to fit the school format and specialized curriculum like a hemp-based fabric glove.

As such, we suggest rather than having a traditional marching band like nearly all Universities and colleges do, Oksterdam U should go with a six-person rock band, one that plays retro 1960's songs from such bands as the Grateful Dead, Jefferson Airplane, and The Cream, all of which were Bay Area-based rock bands by the way.

We're thinking three electric guitar players--a lead guitarist, a bass player and a rhythm guitarist--along with a drummer, keyboard player, and a combination lead singer/tambourine player would be the winning formula for Oaksterdam U and its sports teams. Additionally, tie-tied T-shirts, faded blue jeans, long hair on the guys and even longer hair for the woman, would be the uniform dejur for the cannabis college of "higher" knowledge's 1960's-style rock group school team pep band.

In terms of the cheerleading squad, it too like the pep band has to fit the school's culture and curriculum. Think integrated marketing.

We're thinking rather than having the conventional college cheerleading squad paradigm--which is generally lots of woman and a couple men on a squad, the woman dressed in short plaid skirts, knee-high socks and sweaters with the school letter on the front, and the male cheerleaders dressed in funny looking pants and a similar sweater--Oaksterdam U should turn that traditional model on its head. After all, it is a "head-changing" institution of higher learning.

Therefore, we're thinking an all-male cheerleading team--with a major twist of course. Instead of the six-man Oaksterdam U cheerleading squad being merely an all-male version of the traditional majority female, minority male cheerleading team which is the norm at nearly every college and university in America, we would give that conventional concept a hip and cool 1960's twist for the Oakland college of "higher" cannabis knowledge. Our scheme also is integrated well into the rock group-style pep band concept.

As they say in marketing, here's the pitch: Oaksterdam University's cheerleading squad would not only be all male, each member would be required to sport a full beard and at a minimum shoulder-length hair. The uniform: blue jeans, T-shirt and brown tweed sport jacket. Smoking pipes (for tobacco only) can be optional for home games, but mandatory for away games so as to create the proper integrated school marketing message.

Additionally, instead of doing the traditional, peppy cheers common among all university cheerleading squads in America, the cannabis college's cheerleading team would instead resight poems and verse written and made famous by such famous 1960's beatniks and poets as Allen (A Coney Island of the Mind) Ginsburg, Jack (On the Road) Kerouak and local San Franciscan Lawrence (City Lights) Ferlinghetti.

In fact, we think if asked properly, Mr Ferlinghetti who owns the famous City Lights Bookstore just across the Bay Bridge from Oakland in San Francisco's North Beach neighborhood and is the only remaining one of the three still alive, might even agree to be an advisor to the beat era-oriented Oaksterdam U "cheerleading" squad.

We can hear it now:
(Football): "Go Tokes...Get-Um Tokes...Smoke 'Um Up Then Exhale 'Um-Out Tokes....Show Those Boys You Mean it Tokes; Its Time to Stop 'Um 'Cold Turkey' Tokes...Go Oaksterdam Tokes!"

(Basketball): "We Are the Buzz...The Oaksterdam Buzz...Try as you might; run as fast as you can...But you'll never catch...A Buzz...Like Our Guys Can!"

The Serious (and big dollar) side of the cannabis industry

All kidding aside, here are some facts on cannabis or marijuana production in the U.S. from a study conducted in 2006 by Jon Gettman, Ph. D:

>Marijuana is the largest cash crop in the United States. Using conservative estimates, Dr. Gettman estimates the dollar value of cannabis production in the U.S. at 35.8 billion. That's just the United States mind you, which isn't even the largest producer of marijuana in the world. That's more than America's total corn crop ($23,299,601) and vegetable crops ($11,080,733) combined in 2006.

>The top ten cannabis producing states in the U.S. are (in order): California, Tennessee, Kentucky, Hawaii, Washington State, North Carolina, Florida, Alabama, West Virginia and Oregon.

>Despite tens of millions of dollars in government spending to irradicate domestic marijuana production in the United States over the last 25 years, cannabis production has increased from 1,000 metric tons (2.2 million pounds) in 1981, to 22 million punds in 2006, according to U.S. federal government estimates.

>Marijuana is the top cash crop in 12 U.S. states; in the top three cash crops in 30 states; and in the top five of cash crops in 39 states. In California, the number one cannabis-producing state, marijuana production is larger than cotton, grapes, vegetables and hay combined in terms of total dollar amount.

You can read Dr. Jon Gettman's research paper, "Marijuana Production in the United States (2006)" here. It's the second entry from the top at the link.

Based on your reading the four bullet points listed above on cannabis production in the U.S. (let alone getting into the dollar totals of global production), you can probably see clearly why we called cannabis production and the industry "The other natural products industry."

This seems like lots of potential tax revenue going untapped perhaps. Maybe if cannabis was legalized, regulated and taxed like booze and cigarettes, the revenue could help pay for the war in Iraq. Help pay down the nation's massive debt even? Or, maybe even used to fund social programs. Perhaps?

On the other hand, do we want to legalize another "drug" and place a sin tax on it like we do cigarettes and alcohol? Both are legal in the U.S. despite the fact that as many or more scientists and researchers than not say both of the two "drugs"--nicotine and alcohol--contained in the respective products are likely worse for human beings' health and wellness than marijuana is. But so what, does that mean we merely add another substance to the list so we can generate tax revenue from it? Maybe? Or, Maybe not?

What do you think? Feel free to comment in the comments box below.

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