Mar 30 2014, 1:00pm CDT | by Forbes
As more states decriminalize cannabis, the beginnings of a new market are starting to take shape. The debate over whether marijuana companies are a sound long term bet has perplexed investors and about 60 publicly-traded companies popped up over the past five years claiming to be hemp stocks, often without submitting to IPO scrutiny, as Forbes’ own Nathan Vardi reported last week.
The scramble to get a piece of the burgeoning cannabis space includes smaller-time bootstrapping ‘ganjapreneurs’ as well. Garyn Angel, founder of the Seattle-based Magical Butter, is one of these, and if the sales trajectory of his marijuana-butter appliance maintains, he could be on course to a big payoff either through distribution or acquisition.
When Forbes caught up with Angel he was in Guangzhou, China working with fabrication plants to ramp up production of his products. It’s essential—the company’s been selling out inventory like crazy, shipping 4,500 units per month of the $175 device by latest count, and is now on backorder. “We’ll do probably 70,000 pieces this year,” claims Angel.
The product – which is essentially a temperature-regulating hotpot with a blender function – allows herbs of all kinds to be mixed into compounds with butter, oils or alcohol. The cannabis connection is often tagged to Magical Butter but technically the device can make a mean salad dressing or shea-based skin cream. All that’s required is for ingredients to be placed in the machine. “It’s micro-processor-controlled,” Angel explained. “It controls the temperature, the time, the blending speed, and the blending duration. If the temperatures aren’t even it knows to spin. It automates everything, there’s no work at all.”
Its connection to the controversial herb stems from the fact that marijuana-infused fats have been used in cooking by those who don’t want to hack up a lung taking bong hits or floss stems and leaves from their teeth after smoking a joint. Angel doesn’t shy away from the association. In fact he embraces it. “We’ve gotten this far this quickly because the cannabis community has come together and helped us nonstop.”
Angel, who’d run his own Florida-based money management firm for 15 years, built his first prototype of Magical Butter back in 2010 from Home Depot parts after a close friend with Crohn’s disease admitted that though medicinal cannabis helped with his ailment, asthma kept him from toking his favorite cure. After several redesigns, Angel felt he had something worth selling. “I started to do some research and – looking at the number of searches for cannibutter and pot-butter and pot brownies – I said, ‘wow, there’re a lot of people cooking with cannabis and there’s no equipment to do it with.’”
After going through the laborious process of establishing a relationship with a Chinese manufacturing plant in Guangzhou, Angel set up production for 1,290 units in 2011. He began officially selling in November of 2012 and burned through his first run in 60 days.
So far Angel has placed his life savings into the company. He’s invested $4 million and last year shut down his finance business to work on Magical Butter full time. He’d tried to juggle the two enterprises but gave in when his son, upon seeing his father leave for work on a Saturday, told him that he should stay home. “I said, ‘son, I gotta go work,’ and then I got in my truck and I was balling, I was a disaster,” Angels says. “Growing up, my dad worked like that and I didn’t like it.”
The next iteration of the Magical Butter appliance is on the way. Called the MB3, it is Bluetooth controlled and designed to make things like pasta sauce and other ingredients. Angel envisions collaborating with physicians on creating dietary health recipes for patients and dieters. The 23-person company is also set to open a food truck in Denver, Colorado which Angel claims will be the first of its kind to serve cannabis-infused foods.
Looking forward, Angel would like to take on investment from private equity, venture capital or even private investors in order to spur growth. He has expansion plans on the horizontal which he would not discuss on the record, but all focus on striking while the marijuana market is hot. “I think I have about 24 months right now to build one of the largest cannabis brands in the world before it gets a lot more difficult and a lot more expensive.”
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Source: Forbes Business
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