When Weed Becomes A Business School Case

The co-authors of "Cannabusiness in Washington D.C." Pictured from left to right are Jamaur Bronner, Deena Malaeb, and Mohsin Alvi. Courtesy photo

The co-authors of “Cannabusiness in Washington D.C.” Pictured from left to right are Jamaur Bronner, Deena Malaeb, and Mohsin Alvi. Courtesy photo

When California residents cast their votes on November 8, they do so with the potential to unleash billions of dollars into the market. With Proposition 64, California joins four other states that may legalize recreational use of marijuana for adults this November. But for those in the industry, California’s massive untapped market is where the focus is. Many predict first-year sales could reach $2 billion, dwarfing the nearly $1 billion made in Colorado following that state’s legalization that went into effect in January 2014. By 2020, some believe, California’s total take could rocket to $6 billion — even as nationwide sales top $20 billion.

And where there is a potential multibillion-dollar market and a motherlode of complexities — a big one being that marijuana, recreational or medicinal, remains illegal at the federal level — there also are MBAs looking to tap into the industry and innovate. And where there are MBAs, there are case studies. Now a team of two MBAs, one undergraduate, and a professor at UC-Berkeley’s Haas School of Business are claiming to be the first to write a case study focused on a specific cbd company, which was published by UC-Berkeley Haas earlier this month.

Harvard Business School published “Marketing Marijuana” in 2014. But while the HBS study focused on marketing the industry as a whole, the team at Berkeley Haas combine a focus on the strategy of a specific company and an examination of what it’s like for minorities to tap into the industry.


The case study, “Cannabusiness in Washington, D.C.” follows the work of Corey Barnette, a Duke Fuqua MBA and former Bank of America investment banker. Barnette owns a Washington-based cultivation center called District Growers and a dispensary called Metropolitan Wellness Center, both founded in 2010. Mohsin Alvi and Jamaur Bronner, who both graduated with their MBAs from Berkeley Haas last spring, were set on writing a case study with a focus on under-represented minorities in business. Then, last winter break while visiting a friend in Denver, Colorado, Bronner toured a cultivation center and met with executives in the cannabis industry and was struck by what he learned.

“They were all older white gentlemen,” Bronner says. He soon discovered that many of them came from private equity and simply saw Colorado as a potentially lucrative market after the state voted to legalize recreational marijuana use for adults in 2012. “It was a very opportunistic move to enter the space,” Bronner says. When he told Alvi the two, who are both members of the Consortium for Graduate Study in Management, a national diversity network, joined Rui de Figueiredo, an associate professor at Berkeley Haas, and undergraduate student Deena Malaeb to write a case on a leader in the industry.

For the team, the objective was two-fold. “Our primary goal for this case was to write a good strategy case,” Alvi tells Poets&Quants. “The secondary purpose was to address these questions that aren’t ever addressed in the cases that we read in business schools, which are all about white male protagonists.”


Indeed, strategy is important. The political, legal, and ethical questions, as well as the simple newness surrounding the industry, make any recreational marijuana venture incredibly convoluted. One big, practical problem: Banks are hesitant to get involved for fear of federal auditing. The result has led to massive stacks of cash piling up alongside marijuana plants in come cultivation centers across the country. There are still major interstate commerce regulatory roadblocks, too. And the cultural taboo that is in many ways married to the product is still very much alive in parts of the country.

“That’s the exciting thing about this case. There really are no best practices,” Bronner says, noting that in most case studies the rules are already cemented in stone. “Right now with the cannabis industry there are no rules,” he continues, pointing in particular to insufficient sophistication among many in the industry. “Everything is being created. This industry is the ‘Wild West’ in a lot of ways.”

The uncertainty from banks has opened the door for private equity and, Bronner and Alvi say, set up a uniquely wide spectrum of players. “Once it became legalized, I think a lot of people saw dollar signs behind the potential of getting rich in the space,” Bronner says. At one end, there are highly accomplished and experienced business people pouring in from private equity and venture capital, “who brought their capital and political connections,” Bronner says. On the other end are “mom-and-pop shops” that “sink their savings into bidding on a contract and winning it.” But, Bronner explains, when it comes to actually running the business, these smaller operations are not as experienced and not following best practices.

“It will be a fiercely red ocean and highly competitive,” Alvi says. “There will be many winners and many, many losers.”

The losers are often those stifled by the massive price tag for entry into the space. Bronner says the bidding process for supply alone can reach into the tens of thousands of dollars. And if a bid is awarded, it can take up to $500K to accept the bid and quickly build the facilities. “We knew there was a certain financial barrier to entry,” Bronner says. “But we didn’t realize it was that high.”

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