Foxes Protest Raid On Henhouse

The most influential promoters of California's messed-up cannabis "legalization" scheme (they are often IDed as "thought leader" or "visionary" when speaking at conferences) are now its most vocal critics. None are expressing any self-criticism. The smartest about-face was made by Steve DeAngelo, co-founder of Oakland's Harborside Health Center and ArcView, a company that connects investors and cannabis-related enterprises.

In 2016, when DeAngelo was promoting the Adult Use of Marijuana Act, I covered what was supposed to be a debate in Nevada City between him and Hezekiah Allen, lobbyist for a group of small growers. DeAngelo requested a format change so that there would be no give-and-take, just two speeches. Hezekiah foresaw disaster looming if AUMA passed. DeAngelo, who has a soothing voice, referred to the people in the audience as "legacy growers." It was the first time I'd heard the phrase and it seemed double-edged—praise that defined them as has-beens. Achieving "our ultimate goal of bringing the plant to everyone in the world," said the Harborside honcho, would necessarily involve "big business."

After AUMA took effect in 2018, DeAngelo's lobbyist provided an accolade that subsequently appeared on all his emails. The quote ran beneath DeAngelo's name where some people put a job title.

"The father of the legal cannabis industry." —Willie L. Brown, Jr.

Steve's paternity claim might well be valid, I thought. He certainly fucked the movement as much as anybody.

But now DeAngelo feels the need for an image change and is disowning his problem child. On January 18 he tweeted:

Excerpts from an interview with Harborside's former purchasing manager and clone manager that didn't run in O'Shaughnessy's:

O'S: I never understood ArcView.

Purchasing Manager: I don’t either. What I saw was people who were willing to throw down a lot of money to get into an industry that they felt was kind of fashionable.

Clone Manager: If you go to Wall Street and you say "For 15 grand I’ll get you ins with the biggest and baddest people in California," well to those guys 15 grand is nothing. You get a hundred of them to come to your conference, in one day you’ve got 1.5 million for basically letting people mingle.

PM: There’s nothing but white men.

O'S: I noticed. They had a conference at the boat club over by the estuary and hired Dr. R to issue approvals so that the would-be investors could go to Harborside and buy weed. Dr. R knew I lived nearby and said "you gotta check this out." I thought I’d walked into a country club in Kansas City. One guy was even wearing Bermuda shorts!

CM: When I showed up at Harborside I was led to believe they were going to pay the best growers the best money for the best product and we’re going to be, not only the biggest, but we’re going to be at a boutique level. And then over the years – I almost feel like it was sudden, like one day somebody said about the providers "They can't get by without us." And all of a sudden it wasn’t them making Harborside great, it was Harborside that was making them great. That became their attitude towards the providers.

O'S: 'Providers' meaning growers and edible makers?

CM: And hash makers and clone makers and growers — all of them. One day Steve and Andrew (his younger brother and top aide) would hear that on the black market somebody was selling a pound of weed for $2,500 and we’re paying $3,500. What they weren’t taking into account was that the person paying 25 hundred was buying 100 or 500 pounds, they weren’t picking through it and they didn’t have the quality standards or the mold testing.

O'S: The middleman has the power.

The purchasing manager had worked at Nordstrom's before getting hired at Harborside in 2008. She hated it. If a customer returned an item, she said, the sales woman got docked! The atmosphere at Harborside was a great improvement.

O'S: It did seem like a great job — the best growers in northern California coming to you with weed.

PM: It was awesome. I loved the job. I thought I loved Steve. What made me really love the job was working for Andrew. I thought: he's eccentric but he gets the job done. And we’re working hard for him because we admire him. And then, he had to stop wearing his overalls. He had to start being professional, you know, go from maintaining their inventory at a balanced level to running the whole show. And now he's wearing suits, no longer allowed to wear a snow cap, which made him look adorable. I liked that somebody could be a freak and still get the job done. I admired him. And then it slowly changed. I think the shift came when they went to Colorado and saw a for-profit structure.

CM: They hired a consultant who was big into Toyota’s model of a supply chain. The American companies have a warehouse full of bumpers, a warehouse full of engines, a warehouse full of wheels, a warehouse full of frames, a warehouse full of axles, whereas Toyota, as they sold them, it pinged back on a computer to the supplier hey we need one more axle, hey we need one more bumper, we need one more this. And it keeps your inventory low. Now, he was very enamored with this idea, but I tried to remind him, pot is a living thing. A lot of it is harvested at one time a year. His idea was 'we’ll just make them hold the 100 pounds all year. And then we’ll take it as needed at this low rate.' So they make people drive from Eureka once a week with 1 pound to leave on consignment.

PM: When I started we were paying $4,200 for the very best, then 38, then 36 and steadily down. And every year it's my job to tell people how much less they're going to get. And these people are my friends!

O'S: When you say the very best, was that mostly indoor?

PM: All indoor. Outdoor was probably like 22, 23, 25 for the really good stuff. And then, every year we’d drop it 200, 300.

CM: And then the contracts with growers came in around 2011.

O'S Explain the contracts.

CM: The contract was basically 'We’ll take everything you have but you got to give us this really good rate.' In reality, though, we didn’t take everything. The fine print said you had to meet these super high standards. And they’re like, 'Well for such a low price you’re going to have to take these little buds.' And we're like, 'No we don’t have to. It says it right here in the contract, we don’t have to.' It was very uncomfortable.

PM: So Rick (Pfrommer, the PM's boss) and I were like, we need to pay them more. We need to pay them more. We fought tooth and nail to pay $22 hundred when Andrew was like 'I don’t see why we have to, two thousand will work, it’s been working.' What ended up happening was the quality level went down. People started saying that I didn’t know how to – it got addressed in a review — "You don't know how to ascertain quality. Our quality levels have dipped because of your inability to buy appropriately." I was told I needed to be on the side of Harborside and that I was too much on the side of the growers.

After that I started really leveling with the growers I respected. "I want to take your product over this mediocre bullshit I had to take for two thousand a pound. What do you want? Well, how about 25 hundred? Would that work for you?" "How much would you take at 25 hundred?" "Well, we could take almost everything." "How long would it take for you to pay me?" So I was navigating the growers and navigating Steve. I tried to to make sure that everybody was taken care of, that their needs were met. And at that point I started getting more and more people to sign contracts. I took the consultant's model, but instead of forcing everybody to the lowest price, I did what was fair, what was right for everybody.

O'S: Is it going to change now that Tim has taken over the buying?

PM: Tim will push the price down. I wanted to keep my job. I wanted to do well. I reduced their cost of goods.

CM: She achieved what they asked for.

PM: They gave me a goal but then they stretched it. I was supposed to lower the cost of goods from 55 percent of the shelf price to 40 percent. And they wanted the people from ArcView to have priority putting their products into our retail store… The sad thing is, it was so great for a while.

O'S: Did you get a severance package?

PM: They said I would have to pay for it and then their finance people would pay me back. But at that point, I said I’ll go to the State. I’ve paid so much money in taxes to, I’ll apply for MediCal. I didn’t want any more hand-outs from Harborside, because they were all like, "Here take the money and go the fuck away. Oh, and sign this piece of paper that says you’re not going to say anything bad about us in the social media."

CM: They just hired on a new CFO and he’s fired some of the top-paid people.

O'S: Are they trying to sell the business? Sometimes you cut your payroll to make the deal look better.

PM: That's the only reason I can think of why they fired Rick.

O'S: What were you getting paid?

PM: At the end — this is gross — $65,000 a year.

CM: Which is not a lot for someone who’s buying three-quarters of the product coming into your building — $1 million worth of weed a year.

O'S: It’s about what a mid-level manager gets at Big 5 Sporting Goods.

PM: I was happy. My son had his insurance and that’s all I cared about. He has diabetes. And we could eat, we had clothes, I was happy. Plus, I was meeting all these wonderful people that I had a lot of respect for. I don’t want to be stuck thinking about Steve and his flunkies, waking up in the middle of the night, thinking like "Fuck them."