Central California

Entrepreneurs see Santa Cruz as fertile ground for cannabis startups

SANTA CRUZ — Entrepreneurs hoping to make it big in California’s new cannabis marketplace are planting roots in Santa Cruz County, looking to bring new meaning to the term “high tech.”

Area initiatives include an online pot marketplace, a smart-growing solution that harnesses big data and an app that allows cannabis companies to manage their delivery and transportation – to name a few.

And investors are taking note.

Santa Cruz Foundry, founded by Andy Van Valer and Kurt Grutzmacher, is billed as the Central Coast’s first cannabis-centered accelerator that would provide budding businesses with co-working space, mentorship and other support. The seasoned investors say the green industry is ready to catch fire, and that Santa Cruz – with its proximity to Silicon Valley and its unique cultural history around the plant – could catch more than its share of the heat.

“Santa Cruz is the place for cannabis,” Van Valer said. “It’s the energetic center, at least in our nation, for cannabis.”

Santa Cruz Foundry is working with dozens of entrepreneurs out of its 2,000-square-foot River Street office, according to Grutzmacher, and is about to expand to a second location.

Ezra Dibble, left, Tim Sauchuk, Elizebeth Shapiro and Socrates Rosenfeld sit in the conference room of online pot-marketplace I Heart Jane’s Soquel office. (Marcello Hutchinson-Trujillo — Santa Cruz Sentinel)

Based in Soquel, I Heart Jane is aspiring to become the “Amazon of cannabis” with a twist that puts local businesses front and center. Users search the site for the strains, products or effects they’re after, and they are able to sort through what’s in stock at local dispensaries and buy online for pickup or – where legal – delivery.

In a little over a year, I Heart Jane has grown to a network of 350 dispensaries across 14 states, according to founder and CEO Socrates Rosenfeld. Rosenfeld, a former U.S. Army Ranger and MIT alum, said he moved to Santa Cruz to found the company because of its “rich and vast tradition” with the plant.

Local farm-tech company Cityblooms is also branching out from its farm-to-table solutions to seed-to-shelf, according to founder and CEO Nick Halmos. The company offers a modular farming system that monitors temperature, moisture and other factors to keep plants healthy and generate a trove of useful data.

Both companies were among the presenters Wednesday at CannaTech, an event hosted by Santa Cruz New Tech Meetup at the Dream Inn. Additional presenters included cryto-currency solutions provider BitAlpha, intellectual property outfit IP Provider, and topical-ointment maker Randy’s Club.

Co-host Danielle Davenport, CEO of the Global Foundry Group, said the industry is in an a moment that is full of both opportunity and risk.

“It’s tantamount to the deregulation of the utilities and the dot-com boom,” she said.

Nationwide, the legal marijuana market is projected to pass $11 billion in sales by the end of 2018 and top $23 billion by 2022, according to analysis by Arcview Market Research and BDS Analytics. But Davenport cautioned that, as with the dot-com boom, as many as 90 percent of the new businesses should be expected to fail.

While most CannaTech presenters looked ahead, Christopher Carr looked behind. The host of The Cannabis Connection on KSCO Radio spoke about cannabis’ close connection to Santa Cruz County, where Carr said much of world’s most-prized stock was bred and where noted activists such as Valerie Corral, director of the Wo/men’s Alliance for Medical Marijuana, squared off with local and federal authorities for decades.

“As we get excited about money, commerce and business, we can’t forget the patients, we can’t forget the people whose shoulders we stand on in this industry,” Carr said.