Lala Herzog trims marijuana leaves at Medicine Man marijuana dispensary, which its owners say has ambitions of becoming a national brand. (Hyoung Chang, Denver Post file)

Family’s business ambitions: Become Costco of marijuana (series)

In a warehouse district of northeast Denver, right next to a post office, the Williams family is building the Costco of weed.

Nine relatives from three generations work behind the bulletproof glass at Medicine Man, which opened in 2010, grew into one of the state’s largest medical marijuana dispensaries and has aspirations of becoming a national brand if pot legalization continues its march.

There was never any doubt that Medicine Man would open as a recreational pot shop after Colorado voters approved Amendment 64 in 2012, making it legal for anyone 21 and over to possess and use marijuana.

EDITOR’S NOTE: This is the first in an occasional series of articles on Year One of recreational pot sales in Colorado told through the lens of one business, Medicine Man in northeast Denver.

Part I: Family’s business ambitions: Become Costco of marijuana

Part II: Family’s bonds showing strains as business evolves

Part III: Bags of cash, bank subterfuge part of pot shop’s “desperate” strategy

Part IV: Family behind ever-expanding Medicine Man weighs sellout

The brothers who started the business — Andy and Pete Williams — are risk-takers and dreamers who put everything on the line betting on a product that remains illegal in the eyes of the federal government.

Their older sister, always the protector, has kept them in check. Or tried.

The Williams siblings describe recurring nightmares about being busted, strained marriages and the judgment of neighbors, but also the rush of being a part of something groundbreaking.

“The decisions are every day,” said Sally Vander Veer, the sister. “Everything is moving all the time. Every day, there are five different fires that need to be put out immediately. Maybe 500 fires.”

This is an industry like no other, populated by stoners, white-collar entrepreneurs, genius growers and hustlers out to make a buck, all on the cusp of incredible fortune or one raid or election from ruin.

A day at the office at Medicine Man means armed guards, stacks of cash, rewards programs for employees and sales clerks versed in 70 strains of marijuana and peach soda that can get you high.

Over the next year and beyond, the Williamses’ faith in themselves and an unproven new industry will be tested. This spring will bring a $2.6 million expansion of Medicine Man that will double growing capacity and feature a retail shop done up all in white like an Apple store.

There are discussions about possible expansion in Colorado, a franchise in Las Vegas and development of a top-secret (for now) system for growing marijuana its architect calls “the future.”

But first, Medicine Man would need to pull off successfully opening on Jan. 1, or “Green Wednesday,” the long-anticipated first day of legal recreational pot sales not only in Colorado but the world. It was a moment the Williamses had been building toward for months.

Keeping employees happy

There are no losers at the Medicine Man employee Christmas party raffle. Everyone from trimmers and budtenders, or counter clerks, to the cleanup crew are guaranteed goodies ranging from Target gift cards to an iPad mini.

“More weed,” says one employee after picking up his prize, a dispensary gift certificate. “I don’t have enough.”

Like any good business owners, the Williamses want to keep their employees happy. That means paid time off and year-end bonuses too.

Before the party ends, Andy Williams briefs his crew on plans for Jan. 1. Eleven budtenders, instead of the customary three. Pamphlets describing marijuana dos and don’ts to customers.

“The eyes of the world,” Williams says, “are going to be upon us.”

Williams, the 45-year-old president and chief executive, is confident of one thing: Medicine Man will not run out of pot on opening day. The dispensary took the unorthodox step of trying to sell less of its own starting in September to stockpile for recreational sales.

Not only did Medicine Man cut out discounts to medical patients, it steered customers to marijuana-infused products such as chocolate chews and soda — products made with other people’s weed that also can provide a longer high and cost less compared with smoking it.

“That is the message — edibles is what you want,” said Pete Vasquez, who started as a $10-an-hour trimmer and worked his way up to general manager. “When the time comes, the flowers sell themselves.”

That Medicine Man was first in line to apply for a recreational store license might seem strange, given that at the beginning, Andy and Pete Williams just wanted to grow.

After the Obama administration signaled in 2009 it would take a hands-off approach to medical marijuana businesses, the restless entrepreneur Andy approached his mad-scientist brother with a proposition: I’ll be the brains and you be the green thumb.

Andy had built a career as an industrial engineer but also did his own things on the side, not always successfully. A mall kiosk that sold patriotic knickknacks “did not earn a red cent,” and a construction company he poured his savings into folded after 11 months.

Other ventures flourished, including a company that managed seized properties that were to be renovated and resold.

Andy approached Pete about getting into the pot business because his younger brother was a caregiver for medical marijuana patients and earning more than $100,000 a year growing out of his basement and selling to dispensaries.

Though his pot-growing experience had been limited to tossing a few seeds in the backyard, Pete sunk about $15,000 into building a grow room and spent hours at grow shops absorbing advice about nurturing his “tomatoes” — code for pot during riskier times.

“This was one of these great opportunities, like a gold rush,” Pete said. “We were just kind of pioneers, willing to take that risk.”

The risks were small for Pete. His wife had recently left him. His children were grown. A high school dropout who delivered pizzas and drove limos, Pete Williams eventually earned a GED, got into construction and ran his own successful tile-flooring business before getting into growing pot.

Circumstances were different for Andy, who was working at the time as a project portfolio manager for the aviation firm Jeppesen. He was married with a 5-year-old daughter (a son would come later).

“I’d dream multiple times a week of landing in prison and never seeing my family again,” Andy Williams said.

Read the rest of the story about the family behind Medicine Man

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