Marijuana Business Magazine February 2020

February 2020 | mjbizdaily.com 87 F or anyone who’s been involved in the cannabis industry for any serious amount of time, Steve DeAngelo needs no introduction. The “father of the legal cannabis industry,” as he’s known in some circles, co-founded three businesses that helped pave the way for the modern U.S. marijuana industry: the medical and recreational retail shop Harborside, the testing laboratory Steep Hill and angel investment firmThe Arcview Group. Marijuana Business Magazine spoke with DeAngelo before his induction into the MJBizDaily Awards Hall of Fame. Tell us about Harborside’s early years and what led you to start Steep Hill and ArcView. The objective was to create a gold standard for cannabis retail and to prove to the world that cannabis could be distributed in a way that brings benefits to communities rather than harm. Before I opened Harborside, I asked every commercial laboratory in the Bay Area to test our cannabis, and they all refused. So we had to start our own laboratory. That allowed Harborside to become the very first dispensary anywhere to sell tested cannabis products, to be able to identify things like a CBD-rich formulation versus a THC-rich formulation. As Harborside began to grow, I began to be approached by other people in the cannabis industry who had heard about our success who wanted my help in finding investors and helping their businesses grow. And that led me to formThe Arcview Group in partnership with Troy Dayton. What have been the biggest hurdles for you over the years? The largest obstacle that I faced over the years is the continuing intransigence of the federal government of the United States to recognize cannabis as a beneficial, therapeutically active product that should be legal. I fought with the federal government in a whole bunch of different ways over the years. The most famous battle happened in 2012. Federal prosecutors knew that it might be their last chance to roll back legal cannabis. And so they launched an attack trying to close down all of the legal industry in California. They succeeded in closing about 600 dispensaries using a tactic called civil forfeiture, threatening to seize the properties that we operated in—until they came to Harborside. We fought them in landlord-tenant court, we fought them in state court, we fought them in federal court—and, to everybody’s surprise, we won. What about the longstanding fight with the IRS? We’ve also been tussling with the Internal Revenue Service, which has been trying to tax not just Harborside but every other dispensary in the country out of existence basically with this kind of insane tax code provision called 280E, which denies normal tax deductions to cannabis businesses. That fight goes on. We’ve won some battles; we’ve lost some battles. Right now, we are in front of the 9 th U.S. Circuit Court of Appeals. We will continue pursuing this case just like every other case of injustice that we encounter until every single avenue is exhausted or we are victorious. What do you see as your biggest contribution to the industry? With Arcview, we provided $280 million to the cannabis industry. We were the first group to really start providing significant capital, and most of the companies whose names you recognize today got their seed capital at Arcview. (This interview has been edited for length and clarity.) – John Schroyer STEVE DEANGELO Chair Emeritus, Harborside Oakland, California Accepting his award, Steve DeAngelo said, “This is a wonderful honor to get; it took an army of thousands to get to this place.”