09 Jul HerbFront Grows: Business Model Evolves
The marijuana industry has arisen through evolution, that is, it has taken shape through a series of ad hoc adaptations allowing for survival in often difficult circumstances—as, presumably, has the underlying botany. One part of that industrial version of natural selection is the introduction of algorithmic mapping for the identification of locations where marijuana can be cultivated or retailed without violating any of the restrictions that applicable zoning and other land use regulations may place upon such activities.
Such mapping was the key to the launch of HerbFront, Inc., which combines a real estate platform with a realtor network.
Marijuana Investor News’ earlier story on HerbFront discussed the plans and prospects of the firm as launched by Nathan Glaisner, Matt Chapdelaine, Alan O’Connell and Dennis O’Connell.
At that time, HerbFront was an Illinois-only operation, though Glaisner acknowledged plans to expand it to two other states in particular, one on the east and one on the west coast.
Those plans have subsequently matured. On June 17, 2015, HerbFront announced an expansion into a west coast state: Oregon. Then on June 25, it made known the identity of that east coast state: Maryland.
The politics of each of these states has brought its own twists and turns.
Potential producers and consumers of medical marijuana in Maryland have had to endure what some consider an inordinate delay since the enactment of the legalization bill in 2013. The program went into effect on June 1, 2014. But applications and instructions for growers, processors and dispensaries are not yet in evidence. The Medical Cannabis Commission hopes to have them ready this September. The general expectation now is that actual medical marijuana production in state could begin by the end of this year.
Glaisner didn’t want to discuss the politics of the long delay. His company’s blog indicates that the real estate exchange platform for the legal cannabis industry in Maryland is already fully operational. Philosophically, Glaisner told MJINews that every state legislature that legalizes has to work through its own system, but that each state that is doing this work now has the benefit of the states that have passed this way before. They are collectively working their way up a learning curve.
Oregon provides another example of the continuing struggles. A bill now before the legislature there proposes a 5-mile buffer zone between hemp and marijuana farms. Alan O’Connell explained to MJINews that this is due to concern about cross-pollination. The wind could carry seeds from one farm to another, hybridizing the two distinct strains and producing the cannabis world’s equivalent of sauerkraut ice cream.
Legislators are considering some narrowing of that buffer zone, though. O’Connell said this is “probably because the initial zone was overkill—a bit too restrictive.” At any rate, legislative uncertainty may help enhance the market for algorithms that keep track of zigs and zags in the pertinent laws and regulations.
Change in Model
HerbFront isn’t merely expanding its own geographical scope, it is changing the underlying business model. “We’ve been successful with our brokerage model. But we’ve realized we’re not really getting to the end user,” Glaisner said. HerbFront wasn’t getting its maps to landlords, dispensaries, etc. So the company has gone to a subscription model, “which makes our maps available to everyone” for $750 a month.
HerbFront is mostly active in medical marijuana states, but there is nothing about its algorithm or business model that makes either inapplicable to adult recreational marijuana states. “We are set up in Denver,” Glaisner said, “and Seattle is one of the next cities we’ll be mapping.”
Back in February the founders of HerbFront saw their business as free of competitors. That has changed, but only a little bit. “Our competition mainly comes from local zoning-savvy real estate agents who have earned a reputation for finding good cannabis properties,” Glaisner said. “There are a few small websites which are just listing platforms for properties out west. They have no mapping services, broker network, nor capital arm.”
Looking ahead, between two and five years, Glaisner foresees a time when HerbFront is applying the same technology to “different verticals,” that is, other business fields with zoning and land use compliance issues. That will be a considerable further adaptation of this life form.