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Seed money: 'Ganjapreneurs' compete for investors

The marijuana business is either about to explode—or to implode. Oregon, Alaska, and the District of Columbia will vote next month on whether to legalize recreational pot, as Colorado and Washington have done already. Wall Street analysts are starting to cover the small, publicly traded companies ... nine analyst reports were filed in just the first week of October.

At the same time, not everyone is happy. This week, Colorado Gov. John Hickenlooper—who made his money in craft beer—called his state's voters "reckless" for legalizing recreational cannabis. Ten months in, Colorado is discovering challenges with issues like the popularity of edible marijuana products, which can be more potent than consumers realize.

So obviously, it's time for a reality show.

The Marijuana Show
Source: The Marijuana Show

"The Marijuana Show" is a web-based reality competition being filmed in Denver. It's the brainchild of Wendy Robbins, a veteran producer and entrepreneur (she created The Tingler scalp massager) and her partner, Karen Paull, who worked during the original dotcom boom and likens the current legal pot landscape to those early days in Silicon Valley. "There's a start-up energy," Paull said.

Word soon spread that the producers wanted to hear product pitches. "We had 200 people show up. It was, like, 'Whoa!'" Robbins said.

"I was surprised. I thought that people had their stuff together, totally professional," though she admitted. "We turned people down because it was just obvious that the plant had overtaken their brains."

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That initial group of 200 has been whittled down to nine finalists who will go through a series of business challenges to determine if they are worthy of an investment. This is important for an industry for which traditional bank financing is nearly impossible.

One finalist is mom Toni Wolff, a former cosmetologist who broke her neck in an accident 14 years ago. She said medical marijuana has helped her recovery immensely, but she discovered there were no childproof purses in which to carry her medications. She created Wolffpak, small bags with locks. So far she's sold 400. "I need more bags," she said. "I have orders waiting."

Wolff said the bags can be used for anything you want to keep away from kids. She's seeking a $200,000 investment in exchange for 20 percent ownership of the company. "I would like to go national," she said. "I would like to be the exit packaging in King Soopers (a supermarket), or when you have your guns at home or when you go into dispensaries."

Another finalist is BioTrackTHC, a company that has created software to track marijuana from seed to store to help retailers comply with state law. Regulators in Washington have given the company a contract, and several hundred dispensaries have signed on.

"It creates an unbroken audit trail," said CFO and COO Patrick Vo. The company started 10 years ago in Florida, originally tracking pharmaceuticals like Oxycontin, but when medical marijuana dispensary owners began asking for a customized product, BioTrack changed its focus to pot.

"When we first came into the industry, everything was done manually. You tracked your plants by pen and paper, at best by spreadsheets," Vo said. "The industry really needed an end-to-end solution."

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Last year, BioTrackTHC did $1.25 million in sales, Vo said, a number it's already matched in the first half of 2014. Now the company is looking for a $5 million investment to add on new software products. One will track legal pot cash, a necessary step in convincing banks to accept that money. "Our industry has matured to the point where it doesn't make sense to just 'wing it' anymore," Vo said.

Producers of "The Marijuana Show" say investors are willing to put from $25,000 to more than $1 million into winning ideas. Who are the investors? Paull and Robbins don't want to name names yet. "They are moguls who run edible companies to top dispensary owners, to just accredited investors who are individuals who really want to get involved in the cannabis industry," Paull said.

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If the show succeeds in Denver, Robbins and Paull would like to replicate it in other states where pot becomes legal. "There are a number of shows you can do that are cannabis-related," Paull said.

Still, it may not shock viewers to learn that not every ganjapreneur who showed up was serious. When asked which contestant was the most outlandish, both producers thought for a moment before Robbins answered, "This chick with this rainbow hair, and she's like, 'I've got this really good idea. I just want my weed to be colored like my hair.'"

She did not make the final cut.

Toni Wolff did. She still suffers from the effects of her accident. "If this is what all of my journey was about was to make a bag to save other people and protect kids, then I can die and be really proud of myself, and I can forgive and stop asking why did this happen to me."

She then added with a laugh, "And I might be a millionaire! Then I could help everyone else!"