What Happens When Your Dream Weed Business Goes Up In Smoke?

SAN DIEGO — Along with the cheers of stoners and patients in each successive state that legalizes weed, America’s Green Revolution, like the rise of the digital age, has created a new generation of mega-wealthy entrepreneurs.

In 2018, sales of cannabis in the U.S. reached nearly $10 billion. Sales of CBD — reported to have therapeutic effects across a range of illnesses and ailments — reached a half-billion last year. The recent federal legalization of hemp is expected to push sales to nearly $2 billion in 2022. With federal banking regulations lagging behind legalization statutes, tales abound of armored cars full of cash convoying across state lines to more cooperative banks.

But it turns out there’s a flip side. An investment in the weed business is like any other.

Sometimes you lose everything.

Two years ago, Dr. Don Davidson — Dr. D. to friends and colleagues — was living in a mansion on a hilltop near Malibu, overlooking the Pacific Ocean. He had spent the previous several years working 14 hour days to build, with the help of home pot-delivery service Eaze.com, the largest marijuana-related telemedicine platform in the world.

Along the way he banked hundreds of thousands of dollars and created an email list of over 150,000 patients. In anticipation of the legalization of recreational use in California, he invested tens of thousands of his earnings to create his first line of marijuana products. There were billboards, branding parties around the pool and hot tub, a vintage Mustang in the driveway, a chief on staff, and a revolving cast of model-quality girlfriends. He was one of the weed industry’s rising superstars.

Today, the 34-year old graduate of the Virginia Commonwealth University School of Medicine lives in his van.

Mind you, it’s a pretty cool van, tricked out for off-road travel — matte-black with big tires and solar panels and a trailer/chuck wagon with a full cooking setup. He calls it the War Pig. It even has a microwave and a generator.

A couple years ago, when he first bought the War Pig and spent a small fortune having it customized, it seemed an outrageous overspend, kind of like the container full of white custom leather sofas and other furniture he ordered from China to fill the mansion’s various lounges and sitting rooms. Things were going so well. Go big or go home, right?

Only now, the man toy is his shelter. Everyday, Dr. D has to find a shower and toilet.

Dr. D says he lost more than $1 million when his business arrangement and investment with a larger company went south. His parents say they lost their investment, too. Tens of thousands spent on travel and product development, and more in possible sales receipts, were also lost when, he says, the company either failed to manufacture his products or failed to pay him for any products sold.

It all began in 2016. After spending more than a year to make connections with manufacturers, distributors and growers to develop a line of products — hash oil vapes and vape cartridges, marijuana flower, pre-rolled cigarettes, extracts, and edibles — Dr. D. managed to accomplish what so many owners of startups hope for ... he made a deal with a large entity he believed would take his company to the next level. A company he believed would make him a very wealthy man and a leading medical figure, sort of a Dr. Oz of Weed. Dr. D was so enthusiastic about the large company, he says, that he and his parents both invested large sums of family money with the company as well.

At the time, all around California, weed deals were being made, and money was being raised by the millions. Seemingly everywhere I went, I heard talk of consortiums and investment groups. I hear about a group of NBA players, a group of NFL players. Snoop Dogg and the Bob Marley clan and even Whoopie Goldberg were fronting companies. Hell, one of the nation’s leading proponents of legal weed was a conservative Republican congressman from Orange County. Weed — or at least the idea of making money from weed — was bigger than race, politics or ideology.

During this period, the investment terms people were getting were astronomical. One deal I personally vetted asked for a $250k investment. In three months time, according to the terms, the $250k would be repaid, along with an additional $400k in interest. Additional payments would be made over a two-year period.

It seemed too good to be true — and so I was advised by an attorney familiar with the business. Turns out few people were seeing weed for what it was — a commodity. In the deal I looked at, the company was anticipating selling the harvest from a 20,000-square-foot grow for something like $9.5 million. Using hydroponics, new plants can be harvested every three months. But what happens when everybody rushes to planting and the price drops?

Earlier this year, his patience exhausted and his bank account substantially depleted, Dr. D. made the decision to seek legal recourse. According to Dr. D, no product was ever produced. No revenues were received. No investments were repaid. A lot of the time, he says, the officers of the company — who once yukked it up with Dr. D. at a party at his Malibu mansion — even returned his emails.

In order to save money, Dr. D. made the decision to live in his van and spend the remaining cash on a last-ditch attempt to bail himself out.

“I’m a cautionary tale, for sure,” Dr. D. says.

It is Saturday, late morning. The six-foot-three-inch former Division 1 tennis player is parallel-parked along the storied blacktop of US 1, not far from Malibu. He’s got an oceanfront view of the Pacific ocean from one of the two reclining seats installed in the rear of the War Pig, the outside of which has been wrapped in colorful artwork to publicize his CBD brand—unfortunately, the brand advertised will never be available; he’ll have to get the artwork changed when his budget allows.

Dr. D. has just returned from a refreshing surf session in the modest, two- to three-foot swells. His ever-morphing, often elaborate hipster hairstyle has been reduced to a short crop for easy care. With his laptop fully juiced, and four bars on his hotspot, he’s open for business.

At the moment he’s working on art and labels for three new brands of CBD products. CBD does not require expensive licensing, and can be distributed through the mail and across state lines, so he’s decided to focus his comeback in that arena — you can even buy CBD products on Amazon. Tincture is a purified liquid form of CBD extract used with a dropper and placed under the tongue. Other products he’s doing include face creams (one for night and one for day), a body cream, vapes, and dog biscuits.

“Name me one successful businessperson who hasn’t lost at least one fortune in their career,” he preaches, as much to himself as to me. He’s been down. Now he’s climbing back up. It’s about more than just business. He’s lost time. He’s lost face. He’s lost his parents' money as well as his own. “It’s true what they say — What doesn’t kill you makes you stronger. It also makes you smarter. My only real mistake was being naïve and expecting people to be good human beings and to do what they say they’re going to do.”

I first met Dr. D. in 2016. Back then, only medical marijuana was legal in California; you needed a recommendation from a certified doctor to buy from a dispensary. As it happened, my recommendation was about to expire. It was my son (of course?) who suggested I go online and get a referral from Eaze, a local delivery service. To my surprise (and great delight), within a few minutes and a few clicks, I was sitting face to face with the super-fun, high-energy dude who called himself Dr. D.

Davidson’s manic fervor, deep knowledge of cannabis science, washboard abs, and cornflower blue eyes combine to create a sort of SoCal version of a mad visionary — Dr. Frankenstein meets The Beach Boys. In ten minutes or so I had my new license, and after a few more minutes, I’d made arrangements to spend some time with Dr. D. in his loft in Downtown Los Angeles for the purposes of writing a story. Over a 12-hour period I watched him “see” about 70 patients on line — at $40 a pop. "The Pot Doctor Will See You Now" can be found in my book of essays, The Lonely Hedonist .

Since then, I’ve followed Dr. D. on his trajectory as he moved to Malibu, staffed and built a cannabis brand called Dr. D. Cannabis (complete with advertisement-wrapped Smartcars, billboards and salespeople). Like most founders of startups, he was thrilled when a big company wanted to partner up and take him to the next level. (Full disclosure: I own a content brand. Our artists have designed logos for Dr. D.)

For the next two years, Dr. D. went about the business of creating “my own conglomerate empire of weed.” He went to Amsterdam a number of times to buy seeds and research strains. He attended conferences and sales gatherings all over the world. Spent time in labs researching techniques. Met dozens of purveyors of everything from cold cream-style jars to vape batteries to cigarette rolling machines. Built a website containing wealth of cannabis and CBD information and selling some products. But nothing ever happened, no actual products came to market — at least none that he was informed about or paid for.

“Whenever I asked the officers of the company what was going on, I would get no answer. I would get stalled. Sometimes the head guy would just go off on me. I guess i didn’t want to believe that something weird was going down. This was my dream. I lived this stuff 24/7. And nothing was happening.

“Finally I got the message. I went to see a lawyer.”

And so it was that Dr. D. moved into the War Pig. Judging by some of our talks, in darker moments, this has not always been easy time. For long periods he has dropped from the radar. Judging by some of his photos, he’s had some pretty lit private parties in the War Pig, too.

As recently as a few months ago, Dr. D. was parking his van behind a manufacturing facility in suburban San Diego, where he was living while supervising production of an interim line of products — with his money running out, he was pushing all of his chips into the middle. To save on costs, the factory owner allowed Dr. D. to work with the technicians and to do many of the jobs himself, like mixing and cooking CBD dog biscuits in large industrial ovens, or to affixing labels to tinctures and skin products. “It’s like a chem lab on steroids,” the former pre-med student said.

Once he created an inventory, Dr. D filled his van and headed out to trade shows to sell his products, spread the gospel of medical cannabis and hemp, and make enough money to continue forward.

Lately it seems that the cloud is lifting. Dr. D’s perseverance is beginning to pay off. There are new partners, one of them a female M.D. whose family has a large farm in the Midwest that will soon be growing CBD-rich hemp. The process is coming easier this time around; he’s been here before, building a brand from the ground up. He knows the ins and outs. He’s made a load of contacts. His parents are even speaking to him again.

Coming soon will be a new line of human and pet products, brand name Dr. D. CBD. Some are already available on his website, DrDCBD.com. A sister brand, targeted to women, is called Sunset Hemp. Another company, Everyone’s M.D., combines multiple products and services: telemedicine, hemp farming and extraction, product development, and production.

“I really thought, at this point in my life I’d be in a much different place,” Dr. D says. “We’re gonna make it work this time. Failure is not an option.”

Through the phone, I can hear the waves crashing outside his window. It occurs to me that maybe paradise is not so great when there’s nowhere else to go.