Back in 2013, Bloomberg published a feature on Medbox, a marijuana “vending machine” set to take the cannabis world by storm. The Chief Executive Officer, Bruce Bedrick, was quoted as saying,
“We are in the right place at the right time. We are planning to literally dominate the industry.”
The article went on to discuss Medbox’s product juxtaposed against its stock: in short, the product was good, the stock was a bit on the moody side. It was this portion of the article that proved particularly prophetic.
The idea behind Medbox was simple: it was like one of those DVD dispensers that sits outside McDonald’s. Only it was black. Only it was refrigerated. Only it was armored. Only it was filled with Mary Jane instead of “There’s Something About Mary.“
It wasn’t a true vending machine: there was no self-service where a person could walk up, slip in a dollar, and hope their pot didn’t get stuck hanging in purgatory after the appropriate buttons were pressed. Instead, Medbox sat behind sales counters at medical dispensaries. Technology identified the patients by fingerprints and doled out edibles or plastic vials of bud. Technology also tracked everything, assuring that patients didn’t purchase more than legally allowed, that clerks didn’t help themselves, and that states were paid the right amount of taxes.
The idea seemed solid: $50,000 machines and a million-dollar idea spearheaded by young entrepreneurs who understood the value in the cannabis industry. It seemed great, until it wasn’t.
The Fall of Medbox
Things looked rosy for Medbox until this pesky organization called the Securities and Exchange Commission got involved. Per Fortune, “Instead of selling their $50,000 vending machines that were supposed to dispense marijuana on the basis of biometric identification, Medbox executives and consultants created phony press releases with false revenue figures.” According to the SEC, 90 percent of the revenue reported in the first quarter of 2014 was made up.
But how did they do this? How did a company that once aspired to be the “Wal-Mart of Weed” end up selling little more than hot air? The SEC states that they created a shell company called “New Age Investment Consulting” in order to perpetuate their deceit. This agency was used to carry out illegal stock sales; they then used the proceeds from those illegal sales to boost Medbox’s revenue. But they had fun too.
The Inventor of Medbox
Vincent Mehdizadeh, the inventor of Medbox and Bedrick’s business partner, allegedly used $640,000 to purchase a home in the Pacific Palisades. The SEC further stated,
“Investors were misled into believing that Medbox was a leader in the burgeoning marijuana industry when the company was just round-tripping money from illegal stock sales to boost revenue.”
The Medbox stock was about as unstable as its founders during this time; between August 2012 and December 2014, it fluctuated from an all-time low of $2.50 a share to an all-time high of $250 a share.
Mehdizadeh settled with the SEC and agreed to pay over 12 million in disgorgement and penalties. As of March 2017, litigation against Bedrick remains up in the air.
A New Beginning
Medbox eventually changed its name to Notis Global in hopes of securing a new beginning, a beginning that would allow them to say, “No, I wasn’t the company being investigated by the SEC. That was the other guy.” Notis bills itself as “a pioneer in the worldwide legal hemp and CBD Oil industry. Specializing in cultivation, extraction, and product development, we bring an unparalleled set of skills and executive experience to the burgeoning hemp industry.”
But no website is complete without a statement from the new CEO addressing past SEC allegations. This statement addresses the agreement finalized between Notis Global and the Securities and Exchange Commission, an agreement where Notis agrees to abide by current and future regulations. This agreement also relieves Notis of any fine or penalties and severs them from all ties to the former executives at Medbox.
Yet the things with new beginnings is that they don’t always go as planned. According to Inside Financial, the share structure of Medbox is one so awful Notis Global remains a gamble. But that doesn’t keep them from thinking positive.
In January of 2016, Medbox purchased a 7,500 square-foot retail property in San Diego in hopes of turning that property into a medical marijuana facility. It was a nod – albeit a sad one – to their original plans:
In 2013, they circulated a press release describing their plans to open 30 dispensaries in Southern California.
Still, hope remains for Notis: the cannabis industry continues to boom and it doesn’t look like it’s going to go away. Even with threats from our recent administration, cannabis continues its upswing.
In December 2016, Forbes released its predictions for 2017, some that may be further reaching than others. These predictions included the following:
LA will become the marijuana capital, taking the crown from Denver: It’s certainly possible based on population: the population of Los Angeles is around 4 million (in the city alone). Denver’s population – despite what the traffic will tell you – is a measly 700,000. More people means more people smoking pot.
We will see greater demand for synthetic CBD: Now that Jeff Sessions and the DEA have found fault with plant derived CBD, the demand for synthetic CBD is likely to increase. It lacks the legal limitations of other products, but it does have a downside. Some patients claim that the fake stuff isn’t as good as the real stuff.
A sport’s league will approve marijuana for medicinal purposes: This might happen, but probably not any time soon. Sports leagues still maintain stiff penalties for anyone who tests positive for pot. But if they were ever to bend, perhaps they’d rename some of their teams. A few ideas for the commissioners out there clearly reading this article: The Oakland Raiders of the Refrigerator. The Chicago Bowls. The Boston Where Are My Sox.