The Cannabis Debate: The Merrill Lynch Venture Capitalist Turned Marijuana Millionaire

Entrepreneur: Rick Batenburg, co-owner of Bonsai Cultivation in one of his Colorado growhouses Photo: Westley Hargrave

It was Saturday night when I landed in “Mile-High City” as Denver is known, though these days not just for its elevation, and caught an Uber to a party of cannabis A-listers. Colorado’s recently appointed “pot tsar”, Ean Seeb, had arranged to meet me at the bar and so, gin cocktail in hand, my tour of the cannabis power elite began.

Seeb introduced me to Ricardo Baca, the Denver Post’s first marijuana editor, dubbed “the rock star of cannabis” for his “thought leader” role in normalising the conversation around cannabis.

Baca passed me to Skyler McKinley, who served as deputy director of the Governor’s marijuana office at just 26. “We built it from scratch,” Skyler said. “Nobody had any idea it would become a billion-dollar industry.”

As the evening unfolded, I scanned the venue for potheads blazing up, but the guests seemed more into networking than getting high. Where was the dope-filled, smoke-filled room?

Everyone seemed incredibly young, educated, ambitious — and sober. Then someone said, “Have you met Rick? You have to meet Rick.”

And there he was, Rick Batenburg, eyes blazing with evangelical zeal. “Three years ago I left my job as a venture capitalist at Merrill Lynch to start my own marijuana empire and now I am worth $30 million,” he said.

He offered me a toke on his strawberry-flavoured cannabis vape. “It’s not legal to smoke buds at public venues because of the Colorado Clean Indoor Air Act but you can vape away without anyone knowing what’s in it,” he said.

I inhaled. “That’s 93 per cent pure THC,” he told me, referring to the intoxicating constituent, tetrahydrocannabinol, that makes you high.

Is that safe? I asked, knowing that even 15 per cent would be regarded as high-potency skunk in the UK.

“Actually, this is the healthiest way because you need less to get high and you are not putting carcinogens in your body,” he said.

He took another toke. “I have a 50,000 square-foot cultivation facility in the middle of Denver with four grow rooms, each the size of a football field. Want to see it?”

Later that week I would find myself in the passenger seat of Batenburg’s turbo-charged Porsche as we sped at 110 miles per hour to his grow house.

As he gunned the engine, yelling into his phone to do a deal with a farmer in Mexico — “so you wanna turn 200,000 acres of broccoli into 200,000 acres of cannabis” — I would come to understand the special place Colorado occupies in the global cannabis market. It is not just a pioneer state (along with Washington), but the benchmark by which other countries and US states can set their compass.

I had travelled to Colorado, the first legal marketplace for cannabis in the western world, to discover the impact legalising marijuana in 2012 had had and to see what the UK might learn.

I would criss-cross Denver, the capital city, visiting dispensaries, grow houses and the State Capitol, where I would attempt to break cannabis-infused chocolate with the Governor of Colorado, Jared Polis.

Economically, cannabis has been a boon for Colorado, flowering into a $1.5 billion (£1.2 billion)-a-year industry that has generated a total of $6 billion (£4.8 billion) since retail outlets opened in 2014. The state reaped cannabis taxes of $314 million (£250 million) last year, some of which was spent on improving deprived schools, and 40,000 jobs have been created, turning Denver into one of the fastest-growing cities in America.

Colorado took a free-market approach to issuing cannabis licences and its decision to limit applicants almost exclusively to individual residents of the state, rather than let public companies invest, has favoured small start-up entrepreneurs such as Batenburg.

The result is that cannabis retail outlets, referred to as dispensaries and signified by a green cross, are a highly visible feature of the city. Indeed, with more than 3,100 licences issued, Colorado has more marijuana dispensaries than Starbucks and McDonald’s combined. This is most evident on Broadway boulevard, a stretch of town so inundated with “mom and pop” dispensaries that it is known as “the Green Mile”.

But it was at Simply Pure, a dispensary downtown, that I experienced legally buying weed for the first time. I showed my ID at the door (all dispensaries are strict about checking customers are over 21) and entered a boutique-like pharmacy.

Budtenders (staff) offered me an array of enticingly packaged products: cannabis flower to smoke, concentrates to vape, topicals to rub on your skin and edibles such as chocolates and gummies to eat.

I asked for flower and was shown dozens of exotically named strains, such as Gorilla Glue and Jabberwocky, each with a unique terpene (odour) and with clearly labelled THC and CBD content. Products are organised under three types: “sativa” to make you “energised”, “indica” which makes you “chilled”, and “hybrid”.

No consumption is permitted on site but just a whiff of bud from the glass jars — with THC ranging from 12 to 30 per cent — sent me reeling.

I bought some product to sample later: a 1-gram “Chocolope” pre-roll sativa joint for $10 (“reduced for Happy Hour”), a pack of 100mg Strawberry Pucks gummies for $20 and a 10mg Mint THC infused chocolate bar for $6. Because cannabis is still federally illegal, banks and credit card companies avoid servicing the industry, so all purchases are cash-only.

The proprietor, Wanda James, the first African-American to own a dispensary in the US, said she and her husband used to own a chain of restaurants but switched to cannabis in 2015 because of her brother’s experience.

“He was imprisoned at 17 for possessing four ounces of cannabis and lost ten years of his life for a few hundred dollars worth of weed,” she said. “I told my husband, it’s pay-back time. Let’s be a part of the new wave that’s rewriting history.”

James, 55, smokes four joints a day, starting with one for breakfast. So is she addicted? “I say this not to boast, but if I am what a 16-year-old pot smoker turns out like, how bad is that?” she said. “I am the first person in my family to go to university, I worked for two Fortune-100 companies, I get up every day at 4.30am to do yoga and I take no medication. Marijuana has had no negative effect on my intellect or ability to create million-dollar businesses.”

But addiction is a real public health concern and the Colorado Department of Public Safety monitors it closely.

Its 2018 report shows adult use rose almost 2 per cent to 15.5 per cent in the five years to 2017, but that under-age use has remained reassuringly stable at 19.4 per cent.

Hospital emergency room admissions involving cannabis spiked by 23 per cent, mainly due to people overdoing edible cannabis and suffering severe vomiting, and driving under the influence citations rose by 6 per cent.

Most worrying is that the strength of cannabis flower has doubled from 15 per cent THC to around 30 per cent, with breeders developing ever more potent strains. In the case of vaped cannabis concentrate, THC potency soars to more than 90 per cent.

I interviewed six Denver medical experts to ask whether legalisation had been a good idea. All expressed concern about THC potency but surprisingly only two were against legalisation.

Ivor Douglas, 52, professor of medicine at the University of Colorado, said: “I remain against for one reason: the addiction rate for cannabis is 8 per cent historically, but the addiction rate to higher THC cannabis is unknown. We might find out too late we have made a terrible mistake.”

But Ivor Garlick, 70, a physician who attended inmates in jail and runs a private practice in addiction medicine, said he felt reassured there had been no spike in teenage use.

“I voted to legalise from a criminal justice perspective because I saw people in jail, mostly African-Americans and Latinos, who did time for selling even small amounts of marijuana. The effect it had on them and their families was devastating. Marijuana is potentially harmful if abused but it doesn’t kill you. Of the 100 patients I see every month, 96 are addicted to opioids. That’s America’s real addiction problem.”

Over the week, I saw how cannabis has become integral to Denver’s identity. A straw poll of ten Uber drivers I used revealed that seven were pro-legalisation. It wasn’t hard to see why. Jobs are plentiful, house prices up, tourism up, the economy is booming.

I visited Rick Batenburg’s Bonsai Cultivation, a growhouse with high-pressure double-ended grow lights and Dosatron reverse-osmosis watering systems to maximise output.

The scale is impressive: 6,000 plants amounting to $1.5 million (£1.2 million) of wholesale crop and yielding six crops a year. He led me through the process, from nursery to grow rooms, each the size of an aircraft hangar and stuffed with 6ft plants.

Later as we zoomed across town to his extraction plant which produces 95 per cent THC vape concentrate, he addressed my concerns about rising THC levels. “The free market is an unstoppable force unless it is regulated,” he admitted. “In the Nineties, the highest THC flower was 14 per cent but today we’re regularly hitting over 30 per cent.”

Are breeders competing to break the THC barrier? “Absolutely,” he said. “It’s like a 100m sprinter who wants to go faster and faster. We get awards for it. In our case, we’ve won the High Times Cannabis Cup three times.”

Two hours later, I climbed the steps of the State Capitol for an audience with Governor Jared Polis, 44, a man worth $313 million and an arch exponent of legalisation. I began by offering Polis a piece of my cannabis-infused chocolate. He declined.

Did he enjoy edibles? “I’ve never had [any],” he said.

I asked what he thought of people overdosing on edibles, the rise in people turning up at ER with uncontrolled vomiting, the worry that children might mistake it for normal chocolate and accusations by critics that Colorado has put profits ahead of public health.

“Other countries will learn from our experience,” he said. “We’ve become better at making the packaging of edibles child-safe, but parents need to keep them out of reach as they would prescription drugs.”

Did he have any regrets?

“We didn’t think enough about compensating people for the way enforcement of cannabis laws has disproportionately impacted communities of colour, but otherwise, no. We’ve created billions of dollars of revenue and thousands of good jobs and helped focus our law enforcement activities on criminals who endanger lives rather than ordinary people who buy marijuana.”

He looked at my uneaten chocolate and smiled.

“That’s over a billion dollars a year that’s not going into the arms of organised crime. I would call that a success.”