It is one thing to turn a quick dollar, but to build a business with staying power is a completely different achievement. When you peel back the layers of a good business and you look past the product and branding, you want to find an enterprise founded on integrity and quality service. One company that is dedicated to such ideals is Speed Weed, a marijuana delivery service in California.
Founded by AJ Gentile, CEO, and Gene Gentile, his brother and head of Business Development, Speed Weed delivers quality medical marijuana to patients in the Los Angeles area at little to no extra cost for the consumer. Prospective customers are required to sign an agreement and join its membership-based collective. Deliveries are free, but there is a minimum purchase amount.
If you are wondering how Speed Weed makes a profit, the answer is the company doesn’t. By law, medical marijuana businesses in California have to be not-for-profit. In order to operate within the law, Speed Weed rewards the members of its collective.
“Any surplus is returned back to the members of the collective,” AJ said. “We do this by offering $30 of free product with every order. We also do not require donations from disabled veterans, the elderly or the terminally ill.”
The way Speed Weed makes money is through various consulting services. AJ and his management team have extensive experience in technology, branding, marketing, logistics and technology. In an industry that is expanding as rapidly as the marijuana industry, that kind of knowledge is worth its weight in Acapulco Gold.
Like other successful companies, Speed Weed’s origins can be found in hard life lessons and the failure that often comes with it.
“In the beginning, Gene convinced me to invest in a small grow,” AJ said. “We sunk all of our savings into it which turned into a disaster. Everything that could go wrong happened.” Although their product was potent; it lacked the flavor, aroma, and aesthetic appeal that many medical marijuana patients, and dispensaries, have come to expect.
Undeterred, the brothers decided to turn lemons into lemonade by making edibles. After months of rigorous trial and error testing, AJ and Gene finally had a quality extract which they used to make medicated gummy bears. As their business grew patients began to reach out to them directly so they decided to launch their own medical marijuana collective and delivery service in 2011. Thus, Speed Weed was born.
In Speed Weed’s short history, the company has already been able to position itself as one of the largest marijuana delivery services in the country. Speed Weed’s delivery area covers all 6,000 square miles of L.A. County and the company’s member enrollment has swelled to a staggering 21,000 patients. For a little perspective, that is more than the total number of medical marijuana patients in the state of New Mexico.
Speed Weed currently services L.A. County and the northern half of Orange County, but the company has plans to expand. Speed Weed will soon open offices in San Diego and San Francisco. By the end of the year, the company plans on opening up in Sacramento, Fresno and Palm Springs. Speed Weed is also eyeing the possibility of opening up in Nevada and Oregon.
AJ noted that one of the key components of Speed Weed’s business model that helped grow the company was its emphasis on logistics. In the beginning, Speed Weed adopted the “ice cream truck” method of delivery that many other delivery services embrace. Under this model, a driver would drive around town with a large amount of product and money, which is neither safe nor legal under Los Angeles’ Proposition D.
Determined to find a better way, AJ studied other delivery companies. “I downloaded and studied the operations manuals of companies like Dominos Pizza, Papa John’s and Federal Express—the leaders in logistics,” AJ said. “I pulled apart those manuals and rewrote a business model … because of my 30 year background in building software systems that focus on business workflow and efficiency; we were able to scale very quickly.”
Another component of Speed Weed’s success is how it invests in its people, from customers to employees. “Speed Weed is not a marijuana delivery service,” AJ said. “Speed Weed is a clique, a secret club, a culture, a community. We don’t focus on market share, margins, or milestones. We focus on people. When you take this good-karma, non-greedy approach to running your business, financial success is a natural result.”
And Speed Weed has found success because even though the company is currently seeking funding, it is by no means strapped for cash. In 2013, an independent analyst estimated that Speed Weed was worth approximately $10 million. Using that same methodology, AJ currently estimates that his company is valued at approximately $17-$20 million.
Perhaps the biggest difficulty facing Speed Weed is the ever changing laws and regulations surrounding the medical marijuana industry. To combat any hidden liabilities, the company keeps a deep bench of lawyers.
“We retain three different law firms,” AJ said. “Speed Weed goes above and beyond what is required by law to operate. We look at the more strictly regulated states and implement as many of their good policies as we can. When CA is ready to regulate, we will have little difficulty adjusting.”
One of the laws that presents a unique challenge to the company is Proposition D. Enforcement of the law has led to hundreds of dispensaries to shut down; and although Speed Weed is fully compliant with the law it still raises cause for concern.
“While we, and our legal team, disagree that we are bound by Prop D—which is a zoning law—I agree that any city should be allow to limit or even ban storefront dispensaries,” AJ said. “However, when the government uses a zoning law—or any law—to regulate what citizens do in the privacy of their home, I grow concerned. ”
It is for this very reason that Speed Weed has worked tirelessly with local leaders and law enforcement to stay within the confines of California’s medical marijuana law.
Speed Weed is the perfect example of what happens if you are not afraid to fail. AJ and Gene Gentile dove headlong into the marijuana industry. While they may have had some challenges along the way, they have managed to put together an impressive team to run an even more impressive business.
It will be interesting to see how this company evolves when recreational marijuana comes to California and the rest of the nation. Marijuana delivery is definitely a part of this industry’s future, and Speed Weed is blazing a trail worth tracking.