India’s Stoners Have Become Shrewd Entrepreneurs In A Booming Shadow Industry

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Photo Credit: David Bebbe

Kunaal Kapoor and Nikunj Ahuja, 20-year-old management graduates from Mumbai, were smoking marijuana in their hostel room when they had a brainwave. And it would have been just another stoner conversation if eight years later they weren’t running an e-commerce business selling smoking paraphernalia.

It started in 2014 after they invested Rs10,000 ($148) each to start printing colourfully designed roach tips—thin pieces of cardboard that are rolled-up and placed at the edge of a joint in place of the filter—at a press in Mumbai.

“The roach tips we used back in college were just plain white. We wanted to bring some fun to it, and that’s how it all began,” said Kapoor, sitting in his new office in Worli, Mumbai. Today, Kapoor and Ahuja’s online portal—SlimJim.in—sells over 50 different types of smoking paraphernalia products.

After all, even as the intoxicant itself remains a forbidden fruit, a smoker’s kit is a growing rage, encompassing everything from grinders to rolling machines and even seeds. And they weren’t the only ones to spot a business opportunity, which industry insiders estimate to be worth between Rs450 crore and Rs500 crore annually.

The use of cannabis for recreational purposes is illegal in India under the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985. But there is a massive recreational demand for marijuana. In fact, Delhi and Mumbai are among the 10 cities in the world that consume the most marijuana every year, according to a 2018 survey by Seedo, an Israel-based firm that sells devices to grow weed at home.

The products

After hawking their roach tips within a small group of friends for a few months, Kapoor and Ahuja decided to explore other options. In April 2014, having checked the legal fine print, they registered SlimJim as a Limited Liability Partnership (LLP).

Even though the sale and consumption of cannabis is strictly prohibited in the country, the NDPS Act doesn’t cover smoking accessories, according to Sarthak Maggon, a New Delhi-based lawyer. “Such accessories can also be used to smoke tobacco. So it can’t be directly related to using marijuana,” he explained.

A few months after SlimJim was registered, Kapoor and Ahuja invested Rs1 lakh each to launch a website and set up a rolling paper processing unit. “We imported the paper from China, and then we would cut and package it in Mumbai,” Kapoor said.

Eventually, the pair introduced a new brand of rolling paper in the Indian market, then dominated by expensive foreign names like OCB and RAW. They claim SlimJim managed to make a space for itself by selling good quality paper at a 50% less price than OCB or RAW.

That was in 2015. Now, SlimJim’s offerings include imported tobacco and rolling papers, handcrafted Italian clay pipes, glass bongs, ashtrays, hookahs, and herb grinders. They even sell hybrid marijuana seeds imported from the US, though they maintain that these are sold only as memorabilia, and not for cultivation. And there are also devices that can be potentially used to grow weed at home.

“The seeds are excluded in NDPS act, so possession and sale is not an issue,” said Maggon, “And as far as hydroponic devices go, they can also be used to grow vegetables, and hence are not directly related with sale or possession of marijuana.”

And Kapoor and Ahuja aren’t alone.

In 2015, Sourabh Narsaria, along with Ajay Shah and Charan GP, set up Outontrip.com, an online store that serves the same user base as SlimJim. The three—based in New Delhi and the US—started the venture after they couldn’t find decent rolling papers while on vacation.

“We are basically a smoking accessory company. We have an exclusive distribution of one of the top smoking accessories distribution companies from Europe, HBI, which owns famous brands such as Wiz Khalifa, RAW, and all the products are imported from Germany,” said Narsaria, a computer science engineer from Mumbai University.

Fail and succeed

Around the same time that SlimJim hit the market, 37-year-old Shaleen Mathur finished a long stint working as a consultant with KPMG in Qatar. He wanted to return to India to start his own business and had earmarked the smoking paraphernalia market as a potential investment opportunity.

“I was working with the 2022 Qatar (football) World Cup committee. After we won the bid, I got a special bonus and that was the birth point of Smokiiz,” he recalled. However, unlike the pair behind Slimjim, Mathur wasn’t focused on creating an online marketplace. He wanted to get into manufacturing, and started making pre-rolled cones—rolled papers with roaches already attached—in 2015.

It turned out to be a rough start and Mathur lost his entire initial investment of Rs20 lakh a year after launching Smokiiz.

“I rented a place in Sant Nagar to host my small unit for manufacturing and packaging. I also did a lot of events in Manali, Kasol, Rishikesh, and other places in an effort to market my products,” Mathur said. “I lost count on how much I was spending and soon I realised I was broke.”

Mathur took a break, pulled some money together and got back in the game a month later. But this time, he took a different approach. Instead of doing his own marketing, Mathur decided to push his products through the same channels as other tobacco products. “I started going to Chandni Chowk every day to meet dealer, stockers, runners. People who had pre-existing marketing channels,” he explained.

It worked.

Mathur’s firm now includes a rolling paper brand with around 100 employees in its processing unit at Tughlakabad, New Delhi. In February, at the Uttar Pradesh Investment Summit, Mathur also signed a memorandum of association with the government for hemp manufacturing in the state. Hemp is a variety of the cannabis rich in fibre but with minimal Tetrahydrocannabinol (THC), the psychoactive constituent that gives weed users a high.

The profits

Both Mathur’s Smokiiz and Kapoor and Ahuja’s SlimJim claim to have nearly doubled their business every year since 2015. Meanwhile, Outontrip’s sales have grown by between 70% and 80% every year, said Narsaria.

While they always knew there was a market for their products, Kapoor and Ahuja didn’t quite expect business to grow at such a clip. “We recovered the money we had invested in first two months after starting the website,” said Ahuja, whose firm now handles around 1,700 orders a day. “The demand is coming from everywhere. But I’ll say it (the demand) is more from the tier-II cities.”

For Narsaria, largely into distribution, the biggest consumer base is Mumbai, though there’s a lot of demand from Kerala, West Bengal, the north-eastern states, and Gujarat.

The global marijuana market, worth around $7.7 billion today, may touch $31 billion by 2021 with many nations set to legalise its recreational use, says a report by Brightfield Group, a cannabis market research firm. India’s market may be much, much smaller, but it appears there’s plenty of money still to be made.

After his initial struggle, Mathur is also overwhelmed by the demand. “If I’m making one box, I have orders for 10 boxes lined up,” Mathur said. “It’s just about how much money you can put in the market.”

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