This post originally appeared on Entrepreneur.com - #StartingABusiness
Startup costs: $165,000
Equipment needed: Order tracking software, warehouse space, shelving, various lab equipment, shipping supplies
Burt Linnetz says he never planned to break into the cannabis business. He just sort of fell into it. The longtime entrepreneur had been humming along with his first business, Pacific Combustion Engineering, a Torrance, Calif.-based laboratory equipment supplier that he has owned for 15 years, when he started receiving interesting calls from prospective clients. They were nothing like the big-name, traditional clients he routinely services, such as NASA, Tesla, SpaceX and several colleges and universities. They were cannabis entrepreneurs specifically in the market for marijuana extraction processing equipment.
“The lab equipment manufacturers I work with were giving the middle finger to cannabis industry processors for the last two or three years,” he tells Entrepreneur. “They denied them under the guise of ‘marijuana is not legal at the federal level, so we’re not doing business with you.’”
To meet the demand, Linnetz self-funded and created a second company, also based out of Torrance, and called it Blaze Lab Solutions. Launched in January, the startup now supplies dozens of cannapreneurs throughout the U.S. with the various types of lab equipment needed to produce a variety of cannabis extracts, including hash, shatter, wax, oil and other derivatives.
Linnetz describes Blaze as a “one-stop shop” for all kinds of basic benchtop equipment, including glassware, hotplates, rotary evaporators, kilns, vacuum ovens and pumps, water baths and beyond. “We’re not talking nuclear lab stuff here, like I would supply to a teaching lab at a university or anything,” he says. “It’s all standard benchtop items people in cannabis extraction honestly can’t acquire elsewhere. So far, I’m the only one willing to deal with them.” (We did a quick search and found several other companies that do supply cannabis extractors with lab equipment.)
As far as the startup costs, Linnetz considers his $150,000 out-of-pocket initial investment reasonable. “I already had everything I needed, including a vast network of supplier contacts in the traditional laboratory equipment manufacturing industry,” he says. “I just needed to change customers.”
He incurred additional fees, though he did not disclose them, to hire a lawyer specializing in cannabis law. “He kept ramming it into my head not to ever touch or supply or distribute the product, but only to simply supply supplies to those who do,” he says. “It’s just smart business.”
Linnetz also sank $15,000 into a high-tech security system to protect a fast-growing stock of laboratory equipment in his 3,000-square-foot warehouse.
Where others in the lab equipment space saw trouble, Linnetz saw opportunity. “I’m a businessman, and I saw an opportunity for profit that other major manufacturers and suppliers were ignoring,” he says. His decision to make the leap has more than paid off, Linnetz claims, citing revenues of “more than a million dollars” during Blaze’s first 10 months.
As of today, Blaze remains a three-person operation, with Linnetz at the helm as CEO. However, if business keeps, forgive the pun, blazing along, he aims to hire additional employees. New orders continue to pour in as word of mouth spreads that Blaze is willing to work with people in the marijuana business, and as mainstream acceptance of the drug increases overall. “Just a few months ago, we were whispering the word ‘marijuana’ behind closed doors,” he says. “I was quiet about my new business. Now, it’s an open conversation and getting more open every day.”
If California’s Proposition 64, a ballot measure that would legalize recreational marijuana, passes this November, Linnetz expects his business to take off even more. “It will send the message that this isn’t just a couple of stoner guys growing a few pot plants,” he says. “It’s exploding into a multi-billion-dollar legit business now and it’ll only get bigger.”