A Social Equity Success Story in Oakland
How Jesse Grundy grew his company Peakz into one of the largest social equity marijuana company in the country.
On this week's Green Entrepreneur Podcast, Green Entrepreneur Editor In Chief Jonathan Small talks to Jessie Grundy, CEO of The Peakz, which is one of the most successful social equity cannabis brands in the country.
Operating out of Oakland, California, Grundy transitioned from the dangerous world of the illicit market to the legal market, offering a brand that appeals to an urban audience. This is the story of how he built the brand from scratch and how social equity programs can make a difference in the industry.
Here's the transcript:
Jon: Welcome, everybody, to the Green Entrepreneur podcast. I'm editor-in-chief of Green Entrepreneur, greenentrepreneur.com, and I've got a very special guest with me today.
Jessie: Yes, yes.
Jon: Jessie Grundy joins me. He is the CEO of The Peakz, which is the biggest social equity brand in the country.
Jon: Jessie operates out of Oakland, California, and he's going to tell the story of his brand and how he grew it and how he qualified for the Equity Program in Oakland, which is very lauded but also very controversial. Jessie, welcome to the show.
Jessie: Definitely, definitely. How you doin', Jon? Yeah, I'm Jessie.
Jon: Tell me a little bit about the Social Equity Program and how it works in the Bay Area.
Jessie: The Social Equity Program in Oakland, California, you have to either have a cannabis conviction or you have to have lived in places that they earmarked as the areas of Oakland that have been most affected by the war on drugs. If you've lived in those areas for 10 out of 20 years, then you will qualify, or if you have a cannabis conviction.
Also, you can't make over a certain amount of money in the year that you apply. I believe a one-person family home would be like you can't make over $60,000 or something like that.
If you meet those requirements, then you will become equity eligible. After that, you will have to either find somebody which is called an incubator that will give you a place rent-free for 3 years. Those are people who are getting licensing in Oakland but they are not natives or they don't meet the requirements for social equity, so they'll provide you a space for 3 years rent-free. Or you can rent your own place, and then you will have to apply for the state. From there you'll get your state license.
Jon: How did you qualify for the Social Equity Program?
Jessie: I lived in the affected areas for 10 out of 20 years and I didn't make any money. I was on the street, so I didn't have any money on the books or paying taxes or anything. I was just doing everything black market.
Jon: So you were doing the black market cannabis thing?
Jessie: Yeah, I was doing black market cannabis, just reselling stuff. I was really heavily into it. But I've been always into the black market, even when I was in high school. I've always had my hand in cannabis and other things. But yeah, I was in the black market beforehand.
Jon: What caused you to decide to go into the legal market?
Jessie: Just shady business. You hear stories of things going wrong – deaths, robberies, stuff like that. I have a daughter who just turned 7. At the time I believe she was 3 or 4. So I was over here really like, "I've got to do something different." And I was always into trying to do things legal. The black market stuff, I would always put the money into legal inventions and entrepreneurship. They just never caught on how I wanted them to.
But I always wanted to do something legal, because I know that's really where the money is. I didn't want to just be working with what was in my pocket. In the streets, you really work with what's in your pocket, and I knew that from being around it for so long. It's kind of a cycle. You get money, you buy some nice things to prove to people you've got money, then you go broke, and then you do it again. I was just tired of that cycle.
Jon: So you applied for the Social Equity Program. Was it pretty easy to get in, to qualify?
Jessie: In the beginning I believe it was way easier than it is now because it wasn't as many people, and they were trying to get everybody in, as many people in as possible, because Oakland has a law which states that for every general application, there has to be one equity application. So none of the general people could do anything unless they had equity partners. It was a way easier process when I got in it in 2018 than probably now in 2020.
But it wasn't real hard, but Miss Nancy Marcus, who is the head of cannabis everything, really, in Oakland, I would bug her. I would come to their office. If I didn't know what I was doing, I would just come up there. So I think that's how I established a good relationship with the city. Just showing them that I'm serious about what I'm doing and trying to get out there.
Jon: Did you also find an incubator? Because you mentioned that part of it is finding an incubator.
Jessie: Yeah. I had two incubators at first. One owned a dispensary in Oakland, or they won it, and I don't believe they opened it yet, but I think they're in the process of opening two dispensaries. And then my real incubator – he don't like to be named, but he's the greatest incubator you could ever have.
Jon: How so?
Jessie: He supplied space for 3 years. Even after 3 years, he's still going to give me that space so I can rent it out and everything. We have a really close relationship. Just showing me how to do my taxes, giving me advice when I didn't really have anybody in the legal market. We just call him Mr. B. He comes from a really strict religious background, so he don't like being out there like that. But I couldn't ask for a better incubator. The things that he did for me, that's like a father figure to me. So yeah, I definitely really appreciate him. I wouldn't be able to do this without that. That was the olive branch type of family relationship.
Jon: Once you got into the Equity Program and you found your incubator, how did you decide how to position your product so it would stand out from all those in the black market that now you're going to be competing against?
Jessie: It was a tough time. At first I really didn't know. I was kind of trying to hide my artistic ability – because I make all the packaging, all the labeling, all that stuff. At first I was really just like logo, white or black background, just tell them what it is, the strand. I didn't really want to put my hip-hop, my streetwear background into it at first.
Then I was starting to see people were like, "man" – they wasn't trying to hurt my feelings, but they was like, "Man, you could do better on the packaging. You need stuff on the packaging." So I start looking at other people's stuff. I'm like, okay, everybody else is doing their own little thing, so maybe I could add my culture into it. Because there's really not any young African American people in this space as a brand. Most of the people that are like me are, for one, way older than me.
Jon: Right. I think of like Cookies, Burner.
Jessie: Cookies, yeah, Burner. That's somebody who I definitely look up to and model and stuff. But really, I kind of model myself after Supreme and Bait because I only distribute myself like they do. I'm really logo-based. I never change my logo, but it's always different colors and stuff. I learned that from them. Being exclusive, not letting just anybody – and another thing, I make sure my product is at a price point where everybody can get it, but it's still considered top shelf. It's not too low, it's not too high.
So I feel like I'm right at a sweet spot. I learned all them things from studying streetwear brands who have a long cult-like following. We're starting to get that buzz, and Cookies has that cult-like following.
Jon: Tell me a little bit about that. You mentioned Supreme. What did you emulate in those companies that you've applied to Peakz?
Jessie: I would say really just looking at them and seeing how you won't see Supreme being sold in another store unless it's resale, and it's going to be two, three times the value. You don't see Bait in other stories unless it's somebody reselling it. With cannabis, you can't really do that, but you can keep it to yourself, like distribution.
Most big brands are distributed by a huge distribution. The distribution will buy the product upfront and then they'll be the ones who sell it to the stores. Usually a lot of these dispensaries just buy from those big distros. Instead of me doing that, I wanted to make everything personal, so I do my own distribution. At first it was really hard, but now it's paying off because I have all the relationships with the buyers myself. So that's my own type of way of keeping my stuff exclusive, and to me how those other brands do it.
Also, if you've ever noticed about Supreme, they always use their same logo on everything. You see that, it's always stuck in your mind. The same way with Bait. They use the Baby Milo and they use their camouflage in a lot of different items. You always see these certain things every time you look at these certain brands.
So what I do is I always make sure my logo is front and center on the packaging, and then the packaging is always different. I done made stuff specifically in the city. I done made stuff lava lamps. I done made stuff on beaches. I do everything. I do all the photo designs and everything.
Jon: So you came up with the design yourself. You didn't hire an agency or anything like that?
Jessie: No, because I used to have my own streetwear brand and I made everything myself. I'm really a control freak. [laughs] It's hard for me – the best thing about doing this type of stuff is I get to do my own thing. I get to put my own artistic touch, and people get to take home a souvenir, basically, from me. So yeah, it's very important to me that I make my own stuff and it's coming from my mind.
I think like my own self, and I always have. Growing up, I always knew I was really different from kids, because I'm hood. I've always been hood. I've always had hood brands. But I was the kid, when they was listening to Hot Boys music, I was talking about the last episode of Dragon Ball Z. They're like, "Bruh, what? I don't watch that." So I've always been really into aesthetics, graphics, art. Doing things like this excite me.
Jon: Tell me about your logo and the thinking behind it a little bit. I'm looking at it right now. It says Green Peakz; it's got peaks of a mountain. Definitely, the "Peakz" is in a graffiti kind of type, 3D. You've got some smoke coming off of it. Tell me a little bit about the thinking when you designed it, how you thought about it.
Jessie: When I thought about it, really it was like I'd seen the Utah Jazz. At first when we were going by Green Peakz, I had the name and I was like, all right, I'm going to slip this Utah Jazz – so I kept it really simple, and then I started using emojis a lot in my campaigns on social media. The volcano emoji was way cooler than just a mountain emoji, so I'm like, I keep using this volcano emoji to symbolize we the mountain, but we on fire. So I'm like, all right, I want to switch it up.
I added the lava to it just for a little swag. Originally it was Green Peakz, and then I was like, I want to be more mainstream. Because I notice everybody's one word, like Cookies – who else? Viola, [unclear 00:13:34].
Jessie: Yeah, Sherbinski's. So I was like, all right, we're going to take out the "Green." So then we became The Peakz Company, but most people just call us Peakz. So then I took that off, and then I wanted to add the smoke just to signify we're a cannabis brand. I just wanted to have different characteristics. So after a while, it looked nothing like the original logo that it was inspired by. Now it's its own little thing. It has its own hip-hop flavor, and I'm always doing something different with it. I'm always changing it up so people can feel like they're collecting stuff.
So now we've got like patients, fans, whatever you want to call them, that they just collect the jars. Soon we're going to be doing a reward system where you can show me – if you post three different products a month, you'll get a hat. If you post five different, you'll get a pillow. So we're trying to do different things in the cannabis space that nobody else is doing, to have brand loyalty.
Jon: Were you successful right away, or did it take a little while for it to catch on?
Jessie: Oh, it definitely took a while. I think my first month, ECO Cannabis, who I have a really close relationship to, they were the first people to buy my strand. I probably didn't sell another thing for a month. I had to lower the prices super low. I was really distraught over that. My mom was trying to keep me in good spirits. She was telling me, "You came a long way. You can't give up now just because it's not going like you wanted at first."
So I'd say it took about 3 months to get in maybe five stories. After that, it was just slowly, slowly going. Then I changed cultivators, and once that happened it really went crazy. That's when things started really going crazy and I started really getting a lot of love.
Jon: Tell me what it was about changing cultivators that changed it for you.
Jessie: I think changing cultivators – Falcon Brands, who do my cultivating, I have a very close mentorship type relationship with them. I really appreciate what they do for me. I wouldn't be able to be at this level I am without Falcon. Once I switched to them – basically, he's like my big brother. His name is [unclear 00:16:13]. He introduced me to Jay. After that, we had a great relationship, and they really have designer type strands.
That was what I really, really needed. I needed more strands that people would think I would have. Strands that they dang near see in the streets, you know what I'm saying? It's a certain type of look, smell, feel to the designer strands that people really look for with me. I was kind of hit or miss with some of the other ones. I mean, they have some good stuff. We did some great stuff together. But once I moved to Falcon, everything was always hit, hit, hit, hit.
Jon: These were the strands that your customers were really looking for?
Jessie: Yeah, these were strands they was really, really looking for.
Jon: Were they strands that they were getting on the black market, but these were just legit?
Jessie: I mean, some of these used to be – some of the genetic stuff they come from was probably back in the day popular black market strands. But these strands are more new to consumers. Most of my strands are new to the market that [unclear 00:17:36]. Those type of strands were never [unclear 00:17:39], like he knows what I want. So once I moved to Falcon, it was all great. I got the packaging, and then once I get supplies to the buyer, it's a wrap.
Jon: I'm trying to understand the secret to your success. Piecing this together, one is that you didn't use a big distributor. You do it yourself. You're very hands-on with the design and the logo, and you really came up with an aesthetic that you thought would appeal to your audience that was inspired by Supreme and Utah Jazz and different companies.
Is there a scarcity? Do you control the amount of your product that's out in the market so that people want it more?
Jessie: Yes, definitely. I definitely don't try to do more than needed. I try to stick to a certain quantity. I try to not do over like 100 units a month. I try to stay around there. Because really, I only want to be in 100 stores. I want to keep it at 100 stores and keep it at that level, because I don't have employees.
It's not like I need to be the biggest brand ever. I just want to be that niche brand that people are loyal to. I feel like there's more to that than being the biggest brand out there. I know my niche. I want this to be one of those like Louis XIII type brands. People know the quality and it goes down for generations, like "Peakz has got that, Peaks is always going to have quality, it's always going to be family-owned" and stuff like that. I want it to be that type of brand.
Jon: You probably still have friends that are in the black market, working in the black market. What do they make of you and your new, aboveboard venture?
Jessie: They pretty much love it. I think I'm inspiring the hood if anything, because I get people all the time telling me, "I can't believe you're doing this. How do you do this? I'm trying to go legal. Help me. What can I do to be like you?" These are people really in the streets and probably would never even think about this if they didn't see me doing it.
I helped one of my cousins, Torren Cooke. He has an equity brand called Cannaquake, and they're in five or six dispensaries now in their first 2-3 months operating. I think I got my license for distribution in June of 2018, and by December he was like, "Man, I'm seeing you doing this, I'm trying to get in too." And this was before I was even operating. Just things like that, and now people see him and they're inspired by him. It's just a chain reaction.
And I've got a lot of people who all the time are asking me about the Equity Program and how to do it.
Jon: So you become a mentor to other people in the community. You mentioned that the black market – I'm always curious about the black market. What is your take on the black market? A lot of people in the legal market don't like the black market because they don't have to play by the same regulations, they're able to keep the prices down.
Jessie: Yeah, definitely.
Jon: I'm sorry, Jessie, you cut off for a minute there. What'd you say?
Jessie: Yeah, I couldn't hear.
Jon: Now you're back.
Jessie: Okay. Yeah, my feelings on the black market – I mean, they've got to make a living for themselves, but I think it's just because they don't look at it from a long-term look. Everybody's just thinking about getting quick money and this and that, but they're not thinking in the long-term. I'll be getting propositions for big-time funding, millions of dollars. Black market, you can't do that. It's just everything that's in your pocket.
I'll be just trying to tell people, you can't look at everything just from a money standpoint. Everybody's just so cash consumed, and it's really about growing something that's going to live long and continue to make you money. The black market is the black market, but I think eventually it's going to downsize, especially like how Weedmaps cracked down on it and stuff like that. So I don't think it's going to be around like how it's around forever. It's going to wind down eventually.
Jon: Are you able to share how you're doing? Do you ever share your financials publicly?
Jessie: Oh yeah. Basically I have two different sides of my company. I have brand, which is The Peakz Company, and we've already done over $500,000 in sales, and we started in April. Then we have the other end, which is the distribution side, which is you're buying other brands and you're selling them back to dispensaries. We did far over half a million dollars. So I would say a rough estimate is like $1.2 million generated in revenue.
Jon: How's your margin? Are your expenses high as well, or not really?
Jessie: I don't have a big overhead as most people because I'm a one man show. So yeah, I do have some pretty nice margins. It's not half, it's not 50%, but I do have some nice margins probably compared to most people in the industry.
Jon: This is a very inspiring story. What's next for you, do you think?
Jessie: People have been asking me about licensing, like maybe licensing my name to a dispensary, maybe licensing to different states, like different cultivations, providing them genetics that we're using out here so they could use the Peakz brand in other states. Because we're getting so popular. Every day, people are learning about us. Celebrities, athletes, everybody's reaching out to me. It's a pretty humbling experience. I didn't think I would get all this success so soon, but I'm just trying to handle it the best I can.
Jon: That's great. If people want to find out more about your company, where should they go?
Jessie: Instagram.com/thepeakzco, @thepeaksco. That's our Instagram. We're really popular on there. We've got like 80,000 followers. So everybody could follow us there.
Jon: That's great advice.
Jessie: Definitely. We're in 40 different dispensaries. Our retail location is on the highlights on our page. Every place from San Francisco, Oakland, San Jose, Los Angeles, Hollywood, Oxnard, Sacramento, Modesto. I believe out of the top 15 counties, we're in like 11 of them. I believe the only really big county I'm not in is San Diego, and that's just because that's very far and I don't feel like driving 8 hours to pick up some money. [laughs]
Jon: I hear you.
Jessie: Definitely. So I'm just trying to be one of the minority owned brands. And I own it 100%, so I like keeping that. I'm very big on owning it all by myself.
Jon: Yeah. Congratulations on your success, Jessie. It's really awesome.
Jessie: Thank you so much.
Jon: Thanks for talking to me, man. That was great.
Jessie: Oh, thank you so much. That was fun. I've never done a podcast before. [laughs]
Jon: I'll let you know when I air it, all right? Do you think we should – do you have any stories of before you got in the business? Because you were mentioning it was kind of dangerous.
Jessie: Yeah, yeah. If you want to talk about that, we could talk about some of that too.
Jon: For those of us who might not have ever worked in the black market in the city of Oakland, did you ever feel in danger? Were there dangerous situations? What was that life like?
Jessie: There's two different points. When I was first doing black market in high school, it was definitely – I don't want to say it's scary, because me and my friends kind of was like the iron fist in high school, so people kind of left us alone. They knew we wasn't playing.
So we was selling up at Skyline High School up in Oakland Hills. Really, once you got on that hill, you couldn't come down. If you wanted to smoke at lunch or smoke after school or before practice or before you go to class or something, you would come find us, and I would have this big old baby blue puff coat. Everybody would just look for the baby blue puff coat.
Just little things like that, learning little things like that helped me in the legal market. And I was already naming strands. This is really when medical marijuana was just being introduced, medical cannabis. So I was really ahead of the game when it came to stuff like that.
So that wasn't really scary, but once I started getting older and I was in the black market, that's when it gets a little scary because you're dealing with hundreds of thousands of dollars, and sometimes you're dealing with strangers, and all you're going off of is somebody's word that this person is cool. It's a different type of feeling.
So I definitely was scared for my life and stuff like that, because I've known people who done died from things going wrong in a deal and stuff. All that type of stuff is in the back of your mind. I done heard plenty of people I'm close to get robbed and stuff.
Jon: You were never arrested, right?
Jessie: I have been arrested for smoking in neighborhoods, but the police would always just let us go, luckily. But I definitely done got arrested a couple times and placed in the back of a police car and got talked to about smoking weed. But it never really hindered me from smoking.
Jon: I hear you. I think that's great. I'll just put that up more towards the beginning of the interview. Thanks, Jessie.
Jessie: Okay, no problem.
Jon: All right, man. I really appreciate your time.
Jessie: You too. Thank you so much.