Time travel back to November 6, 2012. Initiative 502, which legalized marijuana for the masses, had just passed with 56 percent of the state vote and a convincing 64 percent of the King County vote. Fans of the measure were probably busy doing celebratory bong hits, but Seattle entrepreneur Marcus Charles was dreaming up his next big idea.
Charles is a far cry from your stereotypical pothead, but he has an eye for business opportunities. He opened his first bar at the age of 23 and is the MBA-toting mastermind who brought us live-music venue Neumos and the three-day hipster squee session that is the Capitol Hill Block Party. Charles’s current portfolio features establishments like the Crocodile, Local 360, and, most recently, Bell and Whete. After I-502’s passage he started working on Juju Joints, a cannabis e-cigarette. “With that kind of demand,” he says, referring to the initiative’s overwhelming margins, “I had to get involved.”
The problem with regular joints is that they’re messy and require a lot of stuff: paper, weed, lighters. Juju Joints, on the other hand, simplify the art of taking a toke. Each e-joint—which looks like a matte-black cigarette—comes preloaded with 250 milligrams of cannabis oil, enough for about 150 puffs. It requires no lighter, releases a nearly odorless vapor, and can be recycled like a battery. Current models are single use, but the company plans to release a 500-milligram version and a rechargeable one-gram vaporizer by the end of summer 2015.
Charles teamed up with former tobacco marketing executive Rick Stevens in December 2012, and they spent more than a year developing their cannabis-oil extraction method and went through seven e-joint prototypes before finally going to market in April 2014. To date, the company has sold 75,000 units, with projections to move an additional 500,000 in 2015.
While Charles’s fledgling venture is already working with a healthy cash flow, it’s the business model that’s perhaps the most ingenious part of it all. The company has been able to dodge the state’s Liquor Control Board, which is in charge of pot regulation, by acting like a third-party franchisor: Juju Joints sells empty vaporizers, branding, and intellectual property for its extraction method to marijuana growers. Those licensees then take the filled e-joints to retail, leaving Juju Joints out of the I-502 red tape.
As of mid-January consumers could find the e-joints in 75 medical marijuana stores and 46 recreational pot shops across the state, but the price varies depending on the seller. It’s just a $25 donation (a tax workaround) at medical shops but can cost anywhere from $65 to $100 at a recreational store. Part of that higher price is due to the state’s 25 percent marijuana excise tax. Charles says he’s watching other states like Oregon as they approve and implement cheaper tax structures and hopes Washington will adjust its policy to stay competitive.
But even if that doesn’t happen, Charles is already ahead of the game. He’s currently talking to licensees in Nevada and California. “We like Washington,” he says, “but our play is a national play.” Spoken like a true entrepreneur.
This article appeared in the March 2015 issue of Seattle Met magazine.