Buffett’s Berkshire Helps Cannabis Growers

Warren Buffet owes part of his fortune to selling ice cream, soft drinks and candy. Now, a company in Buffet’s Berkshire Hathaway Inc. is turning to marijuana.

That subsidiary is known as Cubic Designs, Inc., a unit of Berkshire’s MiTek business that specializes in making platforms that maximize floor space in warehouses. In recent months, Cubic Designs, Inc. sent around 1,000 fliers to marijuana dispensaries with offers to help them expand the number of plants they cultivate. The fliers say that Cubic Designs can help these prospective customers double their growing space and improve their profits.

Cubic Designs first came up with the idea of selling their products to marijuana dispensaries when they were approached by a few growers about its mezzanine systems. Growers became interested in these additional platforms when a demand for more growing space allowed landlords in Colorado to raise prices on warehouses. After Cubic Designs sold a few mezzanines, the management made the decision to market their products to other growers.

 

A Growing Acceptance of Marijuana

Not too long ago, this kind of effort was unfeasible for a major corporation. Marijuana was illegal and had the reputation of an illegal “gateway drug” that would ruin lives and inspire users to try more dangerous substances. While there is still a stigma surrounding marijuana in some circles, it has become much more acceptable in the United States. Colorado and Washington have legalized the drug for recreational use, and Alaska and Oregon will be joining them in 2015. On top of that, marijuana is legal for medical use in 23 states.

The one major obstacle for Cubic Designs and other companies who are attempting to profit from the increased acceptance of marijuana is that it remains illegal according to federal law. Even in states that have legalized marijuana in some form, growers still work largely in secret. Cubic Designs distributed its fliers in Colorado, Washington State and California with the hopes that they would eventually circulate elsewhere to other potential customers. The path could be a slow one, but it is one that Cubic Designs and Berkshire Hathaway hope will pay off in the future.

 

Profiting from Legal Marijuana

The 84-year-old Warren Buffet is currently the third richest person in the world. He attained this position by acquiring value-based companies like Dairy Queen and See’s Candies. He has also taken leading stakes in other companies such as Coca-Cola Co. He is known in the business world for giving the many units of Berkshire Hathaway autonomy to run their businesses as they see fit. Now that marijuana has proven to be profitable in the relatively few places where it is legal, it may be only a matter of time before one of those units benefits from a once-maligned substance.

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