Ari and Heidi Zorn of Egremont plan to open a CBD and cannabis store in the building that houses the Egremont Spirit Shoppe. Photo: Terry Cowgill

Egremont couple crowdfunding future cannabis store, as more outlets reopen after shutdown

In the cannabis industry, trying to raise capital through traditional borrowing is difficult, in part because most commercial banks avoid lending money for marijuana businesses.

Egremont — Most successful businesses originate in the minds of entrepreneurs with a dream. Either they see a market for the product or they imagine, as the Kevin Costner character did in Field of Dreams, “If you build it, they will come.”

In the case of Ari and Heidi Zorn, it was a little of both. They wanted to open a cannabis store in their hometown but lacked access to the estimated $1 million in capital it takes to complete that sort of undertaking. So they started dreaming.

“I thought to myself, if we could get 100 people to invest $1,000 apiece, we would have $100,000, and who better than our local community to be part of this?” Heidi asked rhetorically.

The answer to the Zorns’ vision was crowdsourcing — in their case a platform called Fundanna, a Chicago-based crowdfunding portal that connects cannabis start-ups with investors, some small and some not-so-small.

The Zorns were already well-known in the area, having lived in the Berkshire region for 25 years and in Egremont since 1999. Heidi is a popular chiropractor with clients throughout the Berkshires and beyond. She has taught anatomy and fitness on the college level, and is a board member of the Egremont Land Trust and the Eagle Fund.

‘Devine’ will occupy the basement space below the Egremont Spirit Shoppe. Photo: Terry Cowgill

Ari was for many years the chef-owner of the former Dos Amigos Mexican restaurant in Great Barrington and currently owns and operates Zorn Core Fitness in South Egremont. Known in town as the “Turtle Man,” Ari founded the Facebook page Friends of Smiley’s Pond, in which he updates friends about efforts to keep the pond’s environment healthy and its many animals free of danger. He has also been active in the NAACP.

In the cannabis industry, trying to raise capital through traditional borrowing is difficult, in part because most commercial banks avoid lending money for marijuana businesses. Though recreational sales are legal in 11 states and the District of Columbia, marijuana remains a Schedule 1 narcotic on the federal level, lumped in with heroin, LSD, ecstasy and hallucinogenic mushrooms.

As a result, most banks avoid lending money to marijuana businesses because the FDIC considers it a violation of federal law. Consequently, most of the entrepreneurs who got in on the ground floor when Massachusetts legalized adult-use cannabis four years ago already had access to capital.

So the Zorns formed a limited liability corporation, New Green, which will be doing business as Devine. They are setting out to sell CBD, which offers nonintoxicating health benefits and is derived from cannabis plant, while they go through the process of obtaining a license from the state Cannabis Control Commission to sell recreational marijuana.

The sale of CBD requires no special license, but the sale of marijuana requires thousands of dollars in paperwork and a final license that can take months or more for the CCC to approve.

But the CCC told the Zorns on April 30 that New Green’s application for a license to sell cannabis is now complete. Typically the commission takes action on complete applications within 90 days, so the Zorns should know by August whether or not they will receive a provisional license to sell cannabis. The Zorns will still start out selling CBD in a few months after the renovation of the space is completed, but they expect the cannabis sales will start sooner than they thought, perhaps even by the end of the year.

They have found a cozy space to rent in the basement of the building that houses the Egremont Spirit Shoppe. The owner of the building, Jeffrey N. Cohen, is currently renovating the cellar to make it suitable for retail. Cohen is perhaps best known locally as the developer of the planned Eagle Mill housing and retail development in Lee.

“It will have a back-to-nature feeling,” Heidi explained. “We will also use multimedia projection, with moving imagery in certain places … there will be earth tones.”

Theory Wellness has set up a physically distanced tent for customers to pay for pre-orders. Photo: Terry Cowgill

Before turning to Fundanna to raise start-up capital, the Zorns looked at the CCC’s Social Equity Program, the goal of which is to “ensure that people from communities that have been disproportionately harmed by marijuana law enforcement are included in the new legal marijuana industry.”

Theory Wellness, the first licensed recreational dispensary in Berkshire County, joined the Social Equity Program to provide start-up capital, loans and inventory to new cannabis businesses that qualify for the program. Click here to read an Edge story on Theory’s involvement in the program.

“We don’t qualify for social equity,” Heidi said. “You have to live in an area that has been disproportionately impacted. Pittsfield and North Adams are the only places in Berkshire County.”

“It’s a total irony to me because this is about racial discrimination across the board,” added Ari, an African American who, as a child, was adopted and raised by a Jewish couple.

Employees at Canna Provisions in Lee on the store’s opening day in July 2019. Photo: Terry Cowgill

It’s not clear whether now is a good time to be opening a cannabis business. Recreational operations were shut down statewide in mid-March by Gov. Charlie Baker in response to the COVID-19 pandemic. They were only recently allowed to reopen with curbside pick-up for online pre-orders only. That’s precisely what Canna Provisions in Lee is offering.

In addition, sources tell The Edge that as much as half the recreational business at Berkshire County’s pot shops is comprised of customers from out of state, primarily New York and Connecticut, both which will likely legalize in the next few years.

Rebelle, seen here under construction in April, will occupy the space that housed the former Wild Birds Country Store on South Main Street (U.S. Route 7) across from Guido’s Fresh Marketplace in Great Barrington. Photo: Terry Cowgill

Two South County stores, Rebelle in Great Barrington and the Pass in Sheffield, plan to open this summer, according to their websites and social media feeds. The Pass received its final license in March. Rebelle received its provisional license in November. Calyx Berkshire on Main Street in Great Barrington received its provisional license in January. At least three other outlets in South County are in various stages of the licensing regimen.

During a recent visit to Theory, marketing director Thomas Winstanley told The Edge that the store is starting to return to normal. Theory’s medical cannabis program remained open during the shutdown, but it was only allowed to open recreational starting on Memorial Day, May 25.

Pre-order curbside pick-up began on that day. Theory serviced four cars at a time with runners using mobile payment systems. Customers had to stay inside their vehicles at all times.

“This model was challenging so we pivoted after about 72 hours and went to the tent. This allowed customers to park, get into a socially distanced queue, and be rung out outside,” Winstanley explained. “From there, they walk around to the front of the building where we hand the order to them from the retail window. Given recent changes, we are continuing this model until further notice.”

Customers at Theory Wellness in Great Barrington keep their distance. Photo: Terry Cowgill

Winstanley said Theory saw a very high demand on the day of the reopening, “but it has since been a bit sluggish compared to last year.” Theory’s famously long lines were nowhere to be found on Friday, though there were perhaps 20 customers, all physically distanced, either under the tent or in their vehicles.

It is unclear whether cannabis consumers are still concerned about their health, and apprehensive about visiting a store that has historically attracted large crowds, or whether during the shutdown they had found cannabis sources on the black market and were sticking with them rather than making the trip to Great Barrington.

“All said, this has been the biggest challenge we’ve faced as a company by far,” Winstanley said.

Meanwhile, the Zorns dream on. They’ve raised more than $10,000 from 20 investors and the total rises each day. The minimum investment is $100. Click here to buy shares or to see the progress on the Zorn’s Fundanna page.

The cultivation, sale and use of recreational cannabis-related products was legalized in Massachusetts through a 2016 ballot initiative. The measure passed by almost 7.5 percentage points statewide and by roughly 30 points in Great Barrington and Egremont. Implementation of the new law was left to the hastily created state Cannabis Control Commission. Preceding that law, medical marijuana was legalized in Massachusetts in 2012 through the same process.