Sara Batterby Ventures Into Cannabis
HILLSBORO — Sara Batterby has a cold. The 44-year-old Brit might have caught it during a trip earlier in the week to Colorado, for the Women Grow Leadership Summit 2016, at which she delivered a main-stage speech entitled “The Unexpected Secrets to a Successful Raise — the Feminine Art of Fundraising.” She might have gotten it mucking around on the 50-acre farm in Hillsboro that is her company’s headquarters. Or, suggests Lee Henderson, one of Batterby’s partners in Hifi Farms, she might have picked up germs handling cash from their all-cash enterprise.
Batterby and Henderson are in the weed business. They are not as yet making a lot of money, around $35,000 a month from a 320-canopy-square-foot indoor cannabis grow operation in the Alberta Arts District. The farm, purchased last November with investor funds, means Hifi will now grow marijuana, indoors and out, on up to 50,000 square feet.
It means they will move from their model of selling cannabis flowers to medical dispensaries only to supplying the recreational market with, in Batterby’s words, “these beautiful, beautiful flowers,” as well as exploring prerolled joints and extractions for vape pens.
For Batterby, president and CEO of HiFi, these are the first steps toward taking weed into health, wellness, nutrition, and beyond — “into these massive established mainstream markets, where there are tens of billions of dollars, not hundreds of millions of dollars,” she says. “We’re taking the benefits of this product into markets and into a format that people in Minnesota will understand in two, three, five years.”
Batterby is far from alone in her ambitions. Thousands of people have streamed into Oregon’s recreational cannabis business in the last six months. The Oregon Liquor Control Commission, which regulates marijuana, had by mid-March received 634 applications for licenses in various arms of the industry, including 59 for producers in Washington County, where Hifi is located. This makes for a crowded field, and those who make it will need to figure out their niche; to do more than grow beautiful flowers.
Five-foot-ten and rangy in stylish engineer boots, her bobbed black hair shorn high on the sides, Sara (rhymes with CAR-a) Batterby not only did not know what her niche would be when she relocated not long ago from San Francisco; she also didn’t know anything about cannabis, did not use it and did not foresee a career in it. “I didn’t know what I was going to do when I got to Portland,” she says, tossing a porcupine chew toy to one of the farm’s three dogs, “work in a gardening store or a bakery, maybe.”
You might believe Batterby ingenuous but for the perpetual exclamation points lighting her eyes, an enthusiasm stoked by the incipient promise she believes cannabis holds. It is a world she has entered with speed and determination. Batterby works with local and state government to craft cannabis laws and mentors young pot entrepreneurs, especially women.
She is a board advisor to fledgling cannabis companies, is committed to running Hifi sustainably and organically, and is invested in the idea that the success of legal cannabis, done right, will both eradicate a host of social ills and make lots of people lots of money.
“It’s pretty intense, looking at something that’s such a perfect business opportunity and, at the same time, has all these social components,” she says. “You can actually be a cold, hard capitalist and feel good about yourself in cannabis.”
By now everyone knows the passage of Ballot Measure 91, which legalized the recreational use of marijuana in Oregon, has created a gargantuan wave of cannabis cultivation and distribution. Weed is now available in an ever-expanding range of products and promises, pot for focus and pot for sleep, pot for motivation and pot that produces couch-lock, pot laced into ice cream and pot that will help you lose weight.
It’s science meets art meets farming meets commerce. Lots of commerce: Oregon sold more than $11 million in cannabis in its first week of legal sales last October. ArcView Market Research, a California-based cannabis investment group, estimates that sales in the state could reach $200 million in 2016.
Who will build and who should build the models for the future of cannabis can be debated. There will be grumbles about newcomers like Batterby and their ambitions, crowding into a hot new field some might by rights consider theirs. (Such sentiments will not stop the flood of investment coming from out of state, not with the Legislature passing laws that make it easy for growers to establish residency.)
Are those coming from out of state to make money on Oregon cannabis visionaries or carpetbaggers?
The latter is a weak supposition, if you consider the system around recreational weed before legalization: Those dealing with pot did so in the shadows, not an ideal environment to foster growth and foment change. Businesses offering recreational cannabis now do so in the sunshine. And if weed’s star turn is for the moment making for an oversaturated market — as anyone who spies three new dispensaries each time they drive Northeast Sandy Boulevard can attest — the businesses that flourish will be those that invest time and ideas and money, that see the economic and political possibilities inherent to the plant.
“That the vast majority of producers lack farming experience will soon become painfully obvious,” says Jeremy Plumb, the force behind Newcleus Nurseries, widely acknowledged to produce some of the finest weed in Oregon, and Farma, a medical dispensary opened in 2014. A cannabis grower and activist for 23 years, Plumb has seen the marketplace “increase by tenfold” since last October and laughs at the question of whether there soon will be attrition.
“The short answer to that is: definitely yes,” he says. “The market is flooded right now.” Part of the reason is Oregon is accommodating to outside investment, says Plumb. But “the bigger hidden story is that we’ve had a multigenerational black-market cannabis economy for decades. It’s mature and developed — even though it’s been illegal — and it’s brought in a huge amount of dollars.”
Competition for those dollars will only get keener. “Even with the heavy consumption in this state, we don’t need as many producers as have applied for licenses,” says Plumb. “It’s going to be very challenging at this juncture to be great.”
If Batterby did not bring a working knowledge of cannabis to Oregon, she did bring the ability to ride a juggernaut. After graduating with a degree in politics from University of Durham in Northeast England, she joined Andersen Consulting (now Accenture) in Arizona, where she was employed in finance and technology for a decade and later started a real estate company. She moved to San Francisco in 2003, where she worked as a partner in early-stage angel funds, raising seed-stage money for various startups. She loved the business and the people: “Everyone was superimportant and superamazing.”
With one exception. “The establishment around [the tech industry] means that most of that money goes to young white guys,” she says. Women in venture capital were continually asking Batterby, who has mentored young people her entire career, what she was going to do to plug the gender gap. “I’m like, ‘I’ll just be a woman in venture capitalism,’” she recalls.
Based on data that showed how well women entrepreneurs performed, she and her partners at the time — three men — committed to funding a minimum of 50% female-founded businesses. Then one of the partners became gravely ill and the fund stalled. “I quit my life and quit trying to be important in San Francisco,” Batterby says of her move to Portland in December 2014, two months after recreational marijuana began to be sold legally.
She had been part of tech blowing up, of social media and mobile blowing up, and she thought recreational marijuana had the same dynamic potential. “I was like, ‘This is going to be a huge emerging market,’” she says. “But even more interesting, it’s already an economy in Oregon; it’s just on the down low.”
Down low as in a thriving black market, as in Oregon growers more than poised for recreational sales to become legal. (As most people know, marijuana for medical use has been legal in the state since 1988.)
It helped that Batterby knew Lee Henderson, founder of the Athens, Georgia-based music label Slow Records, from San Francisco, and that he was now a fellow transplant “doing the weed thing” in Portland. “We sort of started out with a mom-and-pop mentality,” Henderson says, of he and Hifi partners Cristian Koch, co-founder and chief audio engineer with Slow Records, and Richard Vinal, a musician who had studied horticulture, and of their Alberta District grow facility.
“We joined forces [with Sara] and quickly realized what the possibilities could be.” Batterby, who joined Hifi as an equal partner in January 2015, says the company raised funds in both debt and equity: “the debt was to purchase the farm and the cash-for-equity was to cover the costs of the build-out and operations until we get to scaled revenue.” Hifi is still in process with the raise and the team is hoping to close out around $3 million. Hifi’s lead investor holds the note for the farm, valued at $1.8 million.
While he and others chose not to have their names mentioned, they are in the mean in their mid- to late-20s, the sons and grandsons of prominent investors and founders of brand-name companies; each put in between $100,000 and $250,000 apiece. “[Cannabis] is attracting some really interesting ‘next generation investors,’” says Batterby. “I imagine they look at what their parents and grandparents accomplished and are looking for an opportunity to make their mark on the next big emerging market.”
Their youth also means they grew up with cannabis being a normal pleasure, not the ideological hurdle it once was. Pot is sexy because it is recognized as the fastest-growing industry in the country. It also gets you high. Millions of people enjoy using weed — including Batterby, who since joining Hifi has found certain strains help her sleep. A chance to be part of a promising new industry that is also fun is integral to Batterby’s pitch.
“I went to Portland to check out Sara’s new venture. I was blown away!” says Bob Garland, founding member of Angel Investment Group in Phoenix, where he met Batterby 15 years ago. It was seeing Hifi in action at their Alberta facility that led Garland to write a check. “I witnessed a team of enthusiastic millennial scientists happily going about their duties,” he says. “I like happy people with mad passion in growing their business.”
The evening is glittering and intimate and suffused with a sense of being at the right place at the right time, cameras capturing relaxed and beautifully dressed partygoers, pin joints of “Medihaze 4% THC 12% CBD” and “Island Sweet Skunk” next to bottles of cabernet sauvignon; the joints disappear first. Batterby, sitting on the knee of boyfriend Jonathan Myers, owner of GreenHaus Analytical Labs, a cannabis testing facility — he and Batterby met at an Oregon Cannabis Association event— blows a kiss to a guest across a living room that is, in the words of one attendee, “bigger than all the houses I’ve ever lived in.”
Back at her farm, Batterby is sitting by a picture window in a large hilltop home. “The entire industry is a start-up,” she says. “You basically do the business so your cost basis is the lowest it can be. Fortunately, the best way to do that is to be incredibly sustainable.”
To this end, Hifi is following a well-trod Oregon path: committing to using less power, less water, to making their own nutrients on the farm; to take these sorts of measures to bring down expenses and compete effectively in the long term. Further shrinking of the cost basis and eco-footprint: Batterby and Myers currently live at the farm, as do Hifi partners Koch, Hifi’s master grower, and Vinal, grow operations manager. Henderson works in sales, community outreach and events. Other Hifi employees include Henderson’s brother Carey, who runs the Alberta grow room, and Peter Holmes, an Iraq war vet who serves both as grower on the farm and mechanic.
“I work with three guys — no different than when I was in tech — and I thought, I’ve got to network with women,” says Batterby.
Soon after joining Hifi, she contacted Women Grow, a national organization that connects and educates women leaders in the cannabis industry. Finding there was no Portland chapter, she founded one with Leah Maurer, a longtime cannabis activist. The launch last May was the largest in the organization’s history with 250 politicians, growers, dispensary owners, edible makers, patient activists and others ready to navigate the new world of legal pot. “Women see this as an opportunity,” says Maurer. “Bringing the cannabis industry above ground and into a legalized and regulated market gives women the chance to shine in a space where they aren’t afraid to do so.”
Batterby estimates that 40% of cannabis businesses in Oregon are women owned. Marijuana Business Daily cites women as holding 36% of executive positions in the cannabis industry nationwide, and Hifi’s Lee Henderson says 7 out of the 10 people he deals with in cannabis and its related fields are women. “And there are no corridors of power, and no closed doors where it’s already established,” says Batterby. “No one calls me ‘sweetie.’”
Those entering the cannabis industry in 2016 might be wise to be a little afraid. Cannabis is still illegal on the federal level, and those working in the cannabis industry cannot legally run money through any but state institutions. This can mean a lot of cash on hand. As a precaution, grow sites tend to be inconspicuous. (There is no sign announcing Hifi Farms, a former equestrian boarding facility and hay farm.)
Cannabis cultivation is further a complex process, with plants requiring specific light, temperature and nourishment, and enormous amounts of water. As with any hot business, people’s excitement can outstrip their expertise, and cannabis may see more burnout than blaze.
“One of the first things I ask clients is: ‘What’s your risk tolerance?’” says Genny Kiley, a founder of Emerge Law Group, a full-service, cannabis-centric firm in Portland. Kiley, who helped craft Measure 91, says there’s a reason the majority of her clients swing between euphoria and caution. “Oregon is taking a really staggered approach to legalization,” she says. “There are counties, like Deschutes, that have banned cannabis, leaving the county essentially ‘dry.’” The laws could soon change that — or not. Kiley says she’s had “really experienced businesspeople come in ready to go, and six months later they come back saying they can’t plan” because of evolving regulations.
Most, however, seem more afraid not to get into the cannabis field; afraid they’ll miss the moment. Kiley knows of what she speaks: she left her former firm, Schwabe, Williamson & Wyatt, in part because they were overcautious about taking cannabis cases. They take them now; so does another big Portland firm, Davis Wright Tremaine. “I can’t even speculate where [the cannabis industry] will be in one year, in five years,” Kiley says. It’s more than a new market, she opines. “It’s a whole new frontier. When was the last time an industry could change the social and economic paradigm?”
Batterby agrees. “I have this theory, that after 10 years of legal cannabis in Oregon, we will actually do more for social policy — health, education, teenage pregnancy, addiction, all these social problems — than a bunch of guys who have been sitting in a room for 60 years not solving,” she says. Batterby sits on the OLCC Business Rules Advisory Committee, helping to develop rules that establish and support the cannabis industry.
She meets with Rep. Ann Lininger (D-Lake Oswego) to help craft legislation. Earl Blumenauer attends Women Grow events and invites Batterby to cannabis roundtables. I’ve been in Oregon a year; I was in California for 10 years,” she says. “Here, I know my Congressman.”
“We didn’t,” adds Henderson, “know Nancy Pelosi.”
Batterby has also started a group she calls Leader Camp, wherein she advises five young cannabis entrepreneurs. Her efforts have not gone unnnoticed by those in the industry. “Hifi is very big presence in the community,” says Newcleus Nurseries’ Jeremy Plumb. “They have a crack team — and they have Sara, who came into this with a diverse set of skills, from tech and VC.” In terms of producing craft cannabis, Batterby has put “Hifi on a parallel track” with Newcleus Nurseries, Plumb adds. Both use advanced lighting from Fluence Bioengineering; both are committed to liquid organic nutrients.
The resulting strains coming out of Hifi are of very high quality and, Plumb predicts, will get even better once the farm starts producing. “You have people with talent but no business skills, or business skills and no talent, getting into the business,” he says. “Hifi has both. That’s very rare right now.”
Visiting with Batterby away from the farm is like hanging out with the ambassador for pot. After meeting with a potential investor at a Portland coffee shop, she texts with Rep. Lininger, who reports the latest legislative session has brought more good news for those investing in cannabis in the state.
Then it’s off to a dispensary, at a reporter’s request, where those Batterby does not already know, she befriends in an instant, mentioning she is with Hifi, glad-handing business cards, inviting women to the next Women Grow event, and laughing with the bud-tenders behind gleaming glass cases holding strain after strain of weed. Batterby sees Hifi Farms’ Lemon Alien Dawg among those offered, mentions there will be more and varied strains coming from Hifi and, after cooing over the edibles, listens to a phone message from one of the Leader campers.
“The advisory work that I do, and my mentorship of other entrepreneurs, my version of service work, is a big part of my pitch,” she says. “I think there is something essentially feminine about this approach to investment. I never had kids, and I think my desire to invest in other people’s future, and support growth and success, is where I express that part of me that might otherwise have been expressed through having children.”
(No kids, maybe, though during the course of writing this article, Myers did buy Batterby an engagement ring.)
“The opportunity to do things differently in the cannabis industry is very real,” she continues. “I believe that if I am successful in building a company based on strong values, transparency, equality, sustainability and love — not to get too corny — that could be quite impactful, and maybe serve as a model to other companies looking to succeed.”
If, as the saying goes, change-making happens when people fall in love with a different version of the future, it is safe to say Batterby is in love, ready to expound about the rosiness on the horizon. To be sure: There’s a great deal of marketing in her pitch, but there’s also a great deal of effort.
One of the Leader campers, for example, expresses gratitude for her mentor’s “energy and willingness to make time in her overly packed schedule.”
If the Oregon cannabis world in 2016 is dynamic, attracting a steady stream of insiders and outsiders eager to cash in, then Batterby is one of the dynamos: a natural connector who is playing to win. She’s going to have to hustle, what with people curating monthly cannabis boxes sent to your door; building cannabis museums; making edibles and oils and cosmetics and clothing and soaps and snacks and energy drinks; writing cannabis cookbooks; teaching bees to make honey from cannabis; creating cannabis expos and fairs and tourism; using cannabis to party and cannabis to ease pain, maybe even save lives.
Then again, it would make sense that Batterby considered this munificence at the outset, that her prescience about the marketplace told her that no matter what the cannabis product, it all starts with the beautiful flowers.