Podcast Episode: Illicit Roots: How to Grow Into the Legal Market

Chris Walsh

Welcome to Seed to CEO, the podcast about making your way in the cannabis business. I’m Chris Walsh, the CEO of MJBiz. In this episode, I talk to Chris Ball, the founder of Ball Family Farms in Los Angeles.

Back in 2018, Chris made the move from the illicit underground cannabis market into the regulated legal framework. His story starts with him selling marijuana illegally at a young age, then earning a degree from UC Berkeley, making pitstops in the NFL and the Canadian Football League, and then finding himself in a federal courtroom and eventually prison for selling marijuana before turning over a new leaf and winning a cultivation license through the city’s social equity program.

I’m sure you’re asking: How do you go from selling cannabis on the streets to operating a successful aboveboard cultivation business that’s expanding? Keep listening to find out.

Before we dive in, here’s a quick word from our partner Headset.

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Chris Walsh

Hi, and welcome back to Seed to CEO, the podcast about making your way in the cannabis business.

I’d like to warmly welcome Chris Ball, the CEO of Ball Family Farms, which is a 100% family-owned, black-owned cultivation business in Los Angeles that received a license through the city’s social equity program.

So we have not one but two Chrises today. What a treat for all of you. How’s it going, Chris?

Chris Ball

Great, Chris. Thanks for having me, buddy.

Chris Walsh

No problem. Now I understand the best place you found to call into for this podcast today is your car.

Chris Ball

Yeah, that’s correct. Apparently. I’ve been doing a lot of these, and I have found that the most non-echoey place and where I sound the best is inside of my car with the windows rolled up. So that is where I am podcasting from today.

Chris Walsh

And I can attest to that, because when we were just going through a sound check you were in a different location and this sounds a lot better. So thank you.

And to start, can you just give us a 30,000-foot overview of Ball Family Farms?

Chris Ball

Sure. So Ball Family Farms is a vertically integrated family-owned business out of Los Angeles, California, like you said earlier. We have a 100,000-square-foot warehouse. Currently we are occupying about 20,000 square feet of that 100,000, and we are expanding into the second 20,000 as of January 1 this this year.

So as of right now we have about 300 lights going, all indoor hydroponic. And then we will be expanding for another 150 lights downstairs and including our type six manufacturing. We will do solventless extraction, distribution, things of that nature. So that’s where we are.

Chris Walsh

So you’re growing and expanding after founding the company in 2018. You have quite the story when it comes to your journey in cannabis. And the chapter of this story that I really want to focus on is how you successfully moved out of the underground market and into the legal one in California, and what your plans are going forward – really look at what steps you took, what challenges you encountered, what mistakes you made and how you were able to really create a solid growing and licensed cultivation business in California’s legal market.

Now, not many people want to talk about their experience in the illegal market for obvious reasons. But there are many people out there who are in the position you were in a couple years ago. And they’re trying to figure out how they can get above board and participate in the legal cannabis industry. And they need some guidance.

So Chris, I think your experience and your willingness to speak openly about this will help a lot of others chart their course going forward. I don’t want to spend too much time on the backstory, so we have enough time to dive into the real business lessons that you can impart to our listeners. But I would like you to give us a quick overview of your experience in the illicit market, which I understand started when you were a teenager and eventually landed you in prison but also got you where you are today.

Chris Ball

Sure. So I was introduced to cannabis when I was about 10 years old. And I recognized it from the funny-smelling cigarettes that my dad used to smoke after dinner. And again at family barbecues. Auntie was smoking it, grandma smoking it, cousins were smoking it, so it just kind of became a part of the family culture for me.

Fast forward to I turned 16, and my cousin Earl was the neighborhood weed man. Cousin Earl always had fresh shoes, white T-shirts, jewelry … and I admired him because of that. So I asked cousin Earl if he could hook me up with an ounce of weed and teach me how to sell it. He did, and I failed. I think I was more focused on girls and sports at that time.

I graduated from high school, and my parents told me, “We can’t afford to send you to college.” So I moved out, moved in with a friend, and I enrolled in a junior college called Mt. SAC (Mt. San Antonio College) in Walnut, California. I called cousin Earl back, only this time it was two years later, I was a little bit more mature – and there was a lot more on the line. I sold weed out of my backpack all through junior college to pay my tuition, put gas in my little car, put shoes on my feet and food in my stomach.

Got my football scholarship two years later to the University of California, Berkeley and retired (selling weed) again. Then I was the first kid in my family to graduate (college). I got some time, went into the NFL for a year, got released. They sent me over to Europe. And then I got signed to a three-year deal over in Canada in the CFL. And this is where I was bit with the cultivation bug.

A guy on my team had a grow. It was the first time I saw cannabis go from seed to harvest. I had never seen that before. I’d never seen the evolution of the plant, I had only seen the finished product. And that evolution and process just completely fascinated me. I was hooked.

So during the offseason in Canada, it was widely popular for us to traffic weed down to the United States. Statute of limitations so I can openly talk about this now, it’s been over 10 years.

We’d jump the border over at Bellingham and drive down 16 hours and get to Los Angeles. Now in Canada, I was buying weed for about $800 a pound and getting it down to Los Angeles and selling it for about $3,500 a pound. So I became very, very popular really, really fast and made a lot of money. I made more money trafficking the product and creating a name for myself in the illicit market in Los Angeles then I was making actually playing pro football.

Chris Walsh

Wow.

Chris Ball

After two years of doing that, I decided, all right, you know what I’m kind of done. I’ve kind of touched my dream with football. I’m making way more money over here. I’m just going to focus over here and make my millions of dollars over here.

And in fact, that was so popular that I attracted the attention of the federal government, the Feds. So in 2010, I was federally indicted, and I was charged with the conspiracy to distribute 2,000 pounds of marijuana across the United States.

I was looking at a 10-year mandatory minimum on my case; I signed a three-year deal. I just kind of pled out. I just decided, you know what, I don’t want any part of this.

I’d only spent about a month in prison before they let me out on pretrial release after I had signed my deal. I had a really good attorney, and my attorney asked the judge, “Hey, can Chris report for sentencing after the case is over?” Because there were still guys on the case that were fighting. So the judge said yes. Well turns out that the No. 1 and No. 2 in the case fought the case for about four years.

Now remember, I had only signed for three years. So when I went back for sentencing, I had kept a job that entire time. I worked for Abercrombie and Fitch – you know as a 32-year-old Berkeley grad folding T-shirts. Really embarrassing working with, you know, 18-19-year-olds in the mall. And then I got headhunted by Nike. So Nike brought me in and I ran the NFL department for them for two years out of Las Vegas at Caesars Palace.

Chris Walsh

So you went from Abercrombie and Fitch to Nike?

Chris Ball

Yeah. So that was a blessing. Because what had happened was because of my pro football career, I had Nike contacts. One of my contacts discovered that I was working at Abercrombie and gave me a call and was like, “Hey, we need to get you out of there. How would you like to come run the NFL department for us in Las Vegas?”

Chris Walsh

That’s a big jump.

Chris Ball

It was a huge jump. Right? So for me, I thought great. My life is about to turn around.

Once I went back, the judge could see that I had been working the past four years. I had been paying my taxes. I’m a rehabilitated citizen. So the judge gave me time served. No more prison time for Chris Ball.

I left that courtroom – and do not ask me why, because I still can’t figure it out to this day – but I left that courtroom, went back to Las Vegas, quit working for Nike, came back to Los Angeles and bought a 14-light grow. Back in the illicit market.

There was something about this industry and the business that just kept calling me back. You know, I wasn’t happy in corporate America.

Chris Walsh

So you had you cut your teeth in the cannabis cultivation side and in the industry over all these years in the underground market. And then you got in trouble for it, and you have this ticket out – and an attractive job and a path forward as well. But something drew you back in and you went back into the underground market, moved to California and took on these risks again?

Chris Ball

Yep. My family was upset. My mother was upset. My brother, Charles Ball, who’s now the CFO of Ball Family Farms, was extremely upset because he’s the one that had to put up property to get me out of prison in the first place.

And in my brain, I said, “You know what? If I can just go back and learn how to grow take all that information I learned from Canada and apply it to my own grow, well, I can create a real business for myself.” And at that time, there were Prop D compliant shops. You know, these were the pre-ICOs (Interim Control Ordinance). And because I had been hustling so much in Los Angeles for so long, I knew all the owners of the shops because they were all my boys.

Chris Walsh

When was this?

Chris Ball

This was in 2012.

Chris Walsh

So the legal marijuana industry was cropping up around the time you went back to the underground. What led you to on the path towards saying, “Hey, I’m going to switch and look at going into the legal market?”

Chris Ball

So how that happened was after growing and burning up plants for two years and not having very much success, it finally clicked. I was finally able to get through my first harvest and harvest something of quality.

So from 2014 up to 2018, that’s what I did, I grew. I was a caregiver for a bunch of different pre-ICOs and Prop D-compliant shops. I would take my product over there, and they would buy it. And that’s how I was making my money, keeping the lights on and able to provide somewhat of a lifestyle for myself.

And then in 2018, a partner of mine made me aware of the social equity program. “Chris, they’re giving this license out for guys like you who have felonies.” And this is right after Prop 64 had passed when they made marijuana recreationally legal in California. I said there’s no way they’re going to give a guy with a felony a license, right? This is for all rich people, you know, squeaky clean people. He said, “No, bro, you probably need to go check it out.”

So I went down to City Hall in Los Angeles and sat in on a meeting and sure enough, I found out it was real. So I said, “Okay, if this is a real deal, I have nothing to lose, I might as well apply.”

Chris Walsh

So the social equity program is really what opened the door for you?

Chris Ball

100%. Social equity – when I was granted that license, Ball Family Farms was officially born.

Chris Walsh

What were some of the first steps you took? You went to this meeting and you said, “Okay, I have nothing to lose. I’m going to try this.” What did you do after that?

Chris Ball

So right after that, I found a group called the CMA, the California Minority Alliance. I actually found them while I was down at City Hall, because they were the ones pioneering the movement of social equity. They’re the ones who had put it up and got it passed. So I met those three guys, told them my name, kind of told them my story and asked them to mentor me to help me get this license.

They kind of consulted me for a little while, and but they were consulting a whole lot of other people at that time, so I kept kind of falling by the wayside. So I just decided, you know, what, if I’m going to really do this, I’m going to dive in headfirst, and I’m going to find someone who can help me navigate this myself. And that’s when I found my COO, and partner in my company now, Ebony Andersen.

Chris Walsh

How did that relationship develop? And what was the support you got in those early days that cleared that path forward for you?

Chris Ball

Yeah, so me and my brother, so we are trying to take our black-market warehouse and make it a legal place. We want to do this the correct way, we don’t want to do this in the illicit market anymore. We want to try to clean this up so that we can stop looking over our shoulder.

So we went down to building and planning, which we had never been there before, and sat in building and planning for about four hours chasing our tail around, not knowing what the hell we were talking about or who to speak to. We went down there to pull some electrical permits, so that we could pull some electricity back to the building. And we just we had no clue, right?

So after four hours and being frustrated as hell, I called my general contractor who was building my illegal grows for me at that time. And I said, hey, man, I need some help. Can you help me pull an electrical permit? He said, “Well, what are you trying to do, Chris?”

I explained to him what I was trying to do. And he said, “I’m going to put you in touch with a woman named Ebony. She’s a city planner, by trade, she understands what you’re trying to do. She’s African American, so you guys will probably hit it off. So just ask her for her advice, and she’ll point you in the right direction.”

So I called Ebony and explained to Ebony in raw form and very transparently who I was and what I was trying to do and asked for her help. And she decided at that moment that, “Hey, I’ve never heard someone tell me what you just told me. I’m really proud that you want to do this the right way. So I’m going to help you.”

Chris Walsh

That’s fantastic. So you took the right steps. And you were open and honest, as you’re being with us today. And that made all the difference. So you were basically saying I want to take what I’m already doing in the illicit market and make it legal.

Chris Ball

Yeah, I knew cannabis. And I knew I knew the street. And I knew I was a part of that culture. And L.A. being the No. 1 market for cannabis in the world, if you ask me, I knew if I could get my name on legal jar and get into that industry, I knew that I would have success because I’m from it. I was born into it. I’ve given up everything, I’ve sacrificed for it. I’ve sat in prison for it. I’ve done those things.

I have those stripes, as they will call them in the streets. So I said if I can just figure out how to get this legal, I know exactly what to do and exactly who to take it to, and that’s what I did.

Chris Walsh

Well, how does earning those stripes in the street, how does that translate into the legal market? Isn’t it completely different people involved in a different climate and environment?

Chris Ball

It is and that’s the problem with the market today. The market is not built from guys who have their stripes in the street. The cannabis industry is not a new business. It’s been around for 50 years. It’s just now becoming mainstream. It’s just now becoming legal and on the forefront, but there are guys who have been pioneering this industry since I was born – since way before I was born.

So if more guys like myself, who actually know good product, who actually know how to market it, who know how to sell it, who know what budtenders to hire, who know the education behind the cannabis, and what it does, and the different strains, and the different THC and the different terpene profiles and all of those things, If these were the guys completely running – men and women – were running this industry, it would be a lot further along and a lot more mature.

But the problem is because it’s going legal, now everybody and their mama want to come into the space. Every doctor, every lawyer, every this, every that, every investor, and they’re trying to make cannabis a commodity, and it’s not. It’s not copper. It’s not avocados. It’s cannabis, and the culture of cannabis doesn’t work the same as it does for soft drinks or those other products. It’s different.

Chris Walsh

Yeah, it’s very different. And a lot of people don’t understand that until they’ve been smacked in the face a couple times, you know, over the months after they get in.

I want to come back on this point, because I think it’s important to talk about these differences and where the mainstream professionals and industries and where the people who have been on the streets involved in cannabis, and where those can come together. But first, I’d like to back up to when you were first trying to get a license trying to go legal.

So you went to this planning meeting, you found some people that took an interest in you that were going to support you, and you started trying to transition what you were doing to this legal market. Can you dive in a little deeper there? I mean, what are the big steps you had to take to get a license? It sounds like you had to get your building up to code and regulations in different ways. But can you give us some insight into that?

Chris Ball

Yeah, you know, Chris, it wasn’t easy. And you know, I’m not going to sit here and act like I had all the answers. I didn’t. What’s made me successful is my 1 million failures and trial and error and learning from my mistakes.

Trying to get that social equity license was an uphill battle. For one, the verbiage on that paperwork in that application was completely – I didn’t understand it. And I’m a Berkeley graduate. I can read and write …

Chris Walsh

And you minored in business.

Chris Ball

And I minored in business. So I’m very in tune. I understand business. But the way that application was worded, it was just, it was amazing.

All the things that had to be done, because we’re in the middle of prohibition, and there isn’t any really set rules, everything was changing on the regular, every day. So you really, really had to jump through hoops all the time. And if my brother and Ebony weren’t as savvy as they were, I wouldn’t be sitting here today having this conversation with you because I wouldn’t have a company.

For us to get that license … the application process online and the server crashed. And then I mean, all these different hoops you had to jump through, even as far as you know, the building, trying to get the building back up to code – because when we built, I built illegally, I didn’t build to code. That wasn’t even a thing. So now you got to kind of reverse engineer and have people come out and redo this and open up your walls and redo your electrical. And you need ADA compliance. These walkways aren’t wide enough if somebody is in a wheelchair. You know just all these things you never ever think about. I know I’ve never thought about them.

I’m an ex-pro football player and trap god, so to speak – a drug lord – trying to do something legal and trying to do something right. So it’s been a huge education. I’m still learning to this day, being a CEO and being in charge of 40 employees and team members and partners and everything like that. I’m still learning to this day. It is definitely not an easy mountain to climb at all.

Chris Walsh

Yeah, well, we’ve been in this for 10 years and I’m learning new things every day as well. This is a crazy industry. And it’s very complicated. It sounds like it was doubly complicated for you.

Walk us through some of these parts of the licensing process. I think, you know, our listeners may not be familiar with this, and they’re looking at, how do I get a license? And what does it entail? So talking about application, what did you have to fill out? What did you have to plan for? What did you have to show in this application?

Chris Ball

Yeah, no problem. So basically, the application, I think, was about 70-some pages long. That’s first and foremost. It was a mini book. And the things I had to do, let’s just put it out there. The application fee itself was $11,000 per license. So since I was going for three, my bill was 36 grand.

Chris Walsh

What three were you going for?

Chris Ball

Cultivation, manufacturing distribution.

Chris Walsh

OK, you were doing all that in 2018?

Chris Ball

Yes. So my bill was 36 grand to the city just to apply. That doesn’t get you anything. That’s just so your licensing fee can be looked at by the powers that be, by DCR (Department of Cannabis Regulation). And then they can determine whether you’re actually eligible and they want to give you one or not.

So that’s one. You’re going to have to spend a lot of money.

For two, I had to go out to all the Prop D-compliant shops that I was providing cannabis for. I had to go out and had to get a letter from those shops verifying that I, in fact, was providing cannabis for them. And they wanted to see some sort of receipts or anything like that, you know, that could prove that. So I had to go out and do that.

What else did we have to do? I had to go get my felony paperwork. I had to drive down to San Diego, go to the courthouse, get my paperwork that stated I, in fact, was charged with the distribution of cannabis to prove that I was eligible for social equity. I had to turn that in with the application process.

Chris Walsh

Did you have to detail your business plans or provide financial proof of financial resources or anything like that?

Chris Ball

We did have to submit a business plan of what we were going to do. So as far as cultivation, we had to provide them: How we were going to grow? In what mediums we were going to grow in? How many lights were we going to have? How many pounds was that going to produce? What we were going to charge for it? We had to do all of that.

On the finance side, there wasn’t any financial requirements, because they knew we were a cash business. And they knew we were coming from the illicit market. So there weren’t any taxes or anything like that. Basically, when it came to that, they asked us, how much business would you say you’ve done over the past two years? And then once you say that, then they, in turn, come back to you and say, OK, your taxes would have been this. So here’s your bill.

They wanted to bring all of us black market guys into the light, so they knew they couldn’t scare us too much, or we wouldn’t come out. They kind of had to lure us out a little bit and let us know like, “Hey, we’re not going to penalize you for this or that. It’s safe to come out. Just give us a business plan. Let us see how you’re going to do this the correct way, and then you’ll be fine.”

Chris Walsh

So how long did that process take you? You see the application, you look it over, and you say OK, now we’ve got to dive in and fill this 70-page monstrosity out. How long did that take?

Chris Ball

I think our time limit was like two months. So it was about 60 days. But then they winded up extending it because nobody was ready within that time. We weren’t ready in 60 days.

Chris Walsh

Kind of an unrealistic goal there.

Chris Ball

Completely unrealistic. I mean, they didn’t know that, you know, they didn’t know what they were doing. They were figuring it out as they went as well, just like we were.

Chris Walsh

Well, it sounds like this program, you know, the intentions are strong, and they’re really trying to bridge the gap. But you submitted the application, and what happened next?

Chris Ball

So we submitted the application, and then we were on wait. I think it probably took about a month. And then DCR posted a message saying that they would start emailing the applicants who were awarded the license. So I think ours came probably about three or four days after we read that. We were actually the seventh cultivation license, social equity license to be granted out of I think it was like 177, or something like that.

Chris Walsh

Congratulations. That’s a huge accomplishment. So what were you doing during that time? They just allowed you to continue kind of doing what you were doing before?

Chris Ball

Yeah, they kind of you know – it was kind of an unspoken, yeah, you’re not supposed to, but we understand you kind of have to in order to sustain. For us, we weren’t really operating or selling anything at that time. We were still in the process of trying to get our facility up to code, because we felt very strongly that we would get this license. I mean, why wouldn’t we, right?

We had everything that they asked for. I had the letters from all the shops that I was growing for, I was a tier one social equity qualifier and applicant, I paid all of my fees in cash on the first day. I didn’t ask for a payment plan. We were fairly confident that we had dotted all of our i’s and crossed our t’s and checked every box.

So at that point, we just kept trying to – because Ebony was so knowledgeable on the city and the things that we were going to need to get our building up to code and be compliant, we just kept going on that, you know. We kept focusing on that kind of stuff, even though we needed permits and stuff like that. Our philosophy was, Hey, this is new, they understand what we’re doing. So let’s ask for forgiveness instead of permission. And that’s what we did.

Chris Walsh

So you obviously eventually won the license and, transitioning from the illegal market to this, what were the steps that you took? What was the research you had to do? What is the additional help? You know, you had a business minor, which is helpful I’m sure, but talk to us about how you go through that process and what you need and what skill sets you had to develop.

Chris Ball

I know what we needed to do, right? I knew that, well, you have to stop completely once we’re applying for a license. There’s no more illicit work. And they have stopped the whole co-op model anyway. Once it went rec and they started giving out these licenses, you weren’t able to go sell to Prop D-compliant shops or these pre-ICOs anymore. That was over.

So luckily for me, because I had been in the illicit market so long, I had a bunch of money in, you know, brown paper bags and safes stashed all over the place. So I said, OK, I know I’m going to have to invest in mysel. There were investors out there, but the investors had these really aggressive predatory practices when it came to social equity applicants. You know, “Oh, I’ll give you a million dollars, and I’m going to pay you a $10,000 a month salary, and we’re going to run the business. You don’t have to pay for anything, you don’t have to do anything, we’ll take it from here.” I wasn’t going to do that.

I said, you know what, I don’t want anybody to get control of this. If I get this license, this is a way for me to change the trajectory of my family’s name. I can really create some generational wealth, because I know how big this is going to be. So I’m going to … I’ll break myself and spend every dollar out of my piggy bank and under every mattress, under every brown paper bag I have if that’s what it takes. And that’s what we did.

We started building. We started taking the proper steps we were going to need, I went and spoke to all of my people who had a legal retail location – so all of my buddies over at Cookies, Connected, the Doctor Greenthumbs, all of these popular retail locations who I know were thriving and where everybody went. I knew all of the owners of these places because of our “traditional” market relationships.

So I just went to them, and I said, “Look, if I get granted this license, will you guys carry the product?” They said, “Chris, we’ll give you your first buy, no problem, because it’s you. You come from the culture, you are one of us. But if it’s no good, we ain’t buying it again.” And that’s, you know, I understood that. And I knew that because of where I come from selling weed in the black market. You could be sitting in a room with five other guys with the same pack of weed that you got, just grown by different people, and the one with the best pack is going to win the sale. So that competition I already knew.

So once I had locked those in, I went out, talked to my buddies and locked those in, it was a waiting game. And once we were granted the license, it was like now we’re ready to go. And all we did was we lit up one room at a time. We lit up one room. Once we got that license harvested, I got it out to market, sold it, got back the profit and built out another room. And so forth and so on until the whole top facility was built.

Chris Walsh

So you took a slow and steady approach and built and expanded based on revenues coming in the door that can fund that?

Chris Ball

Absolutely. I mean, in my mind, I said, look, I’m not going to take any money from anyone. And if we can’t do this correctly, we’re going to find out really quick. And then we need to get out of the business, I need to figure out something else.

So I said, once we do this first room, if we can get this first room down and get it sold, and you know, take our profit margins and reinvest in ourselves, instead of taking money from someone else and giving away half the company, that’s what we need to do. If we can’t, if we harvest this out and nobody buys it, then we don’t need to be in this business. And we all need to start looking for a different job.

Chris Walsh

How did you build your initial team? Did you rely on your previous connections and your network and circle? Did you reach out to the illegal side and try and bring people in from there?

Chris Ball

No. What I did was I knew that everybody I knew they come from the black market. And I said that mentality only works for growing the product and building the brand. Nobody from the black market knew how to run a legal business. So I’m not going to go … I wasn’t going to go find any of those guys.

What I did was once I found Ebony – Ebony is the one who kind of started transitioning the way my mind worked. I was used to just growing weed, taking it over here, getting my cash, putting it in a bag and storing it away and taking out my living expenses. But Ebony was the one that said, OK, if we’re going to do this, right, you need to learn how to run a business.

My brother Charles came from corporate America. So he understood numbers, he understood money, he understood management, he understood employee taxes, he understood HR. Him and Ebony together provided me with all the legal training and support that I needed – Ebony from a compliance and city standpoint, my brother from a corporate America/employment/managing money/managing HR standpoint.

So I said, this is the perfect team. I’m the brand, right, I’m the culture. I’m the feel good. I can go out there and sell the brand. Ebony, you keep us compliant. Chuck, you take care of the money and make sure we don’t get sued. And we’re off to the races.

Chris Walsh

So you brought in some fairly heavy duty experience to help you launch and to help you make this transition.

Chris Ball

100%. And the reason I went to my little brother to protect the money and be our CFO is because I knew he would be the only person that would never hurt me. Growing up in the illicit market, I’ve been robbed by friends. I’ve gone to jail. That in itself is an experience and a whole ‘nother story of how you can’t trust people in the illicit market. Right?

So I knew: Let me get my brother, my brother will protect the money, he’ll protect us and make sure that we’re OK.

Ebony, because of our relationship that we built over the course of trying to get the license, became like an honorary Ball sister. And she grew, we grew to love each other, and she grew to care and really care about what I stood for and what I was trying to do.

Chris Walsh

So part of the family.

Chris Ball

Yeah, she became a part of the family.

So with us three, I said, you know, I don’t need anything else. And don’t get me wrong, we didn’t know everything. There were things that we would be confused about and have to reach out, maybe to an attorney or a business attorney or this or that and get the answer, but that’s what we did.

Chris Walsh

How much did you spend to make this transition?

Chris Ball

$1.5 million. (pause) $1.5 million.

Chris Walsh

I think that’s a lot more than people think it would be.

Chris Ball

Yeah, I get a lot of people reaching out and wanting my help and advice and want me to consult. “Chris, how can I get in? I got about $30-$40 grand. Chris, how can I get in? I got about $100-$200 grand.” And it hurts me to tell them that that’s not enough.

It should be enough. The social equity program should be offering these people some sort of financial aid, but it’s just not enough. It takes money to get into this. I think that’s where the social equity program is a little bit broken today.

Chris Walsh

And you were able to fund this through your illicit market activity, correct? What is the cost tied to that million dollar plus? Where’s all that money going?

Chris Ball

That money went to licensing fees. It went to building. It went to plans from the city. It went to architectural fees. It went to power upgrades. It went to lights, tables, plants, soil, employment. It went to every place it takes to run a business, to run a small startup business.

Chris Walsh

Yeah, I can hear the air being sucked out of the room for hopefuls who want to come into the industry who don’t have access to that amount of capital. Do you have any thoughts? Have you met others that were able to navigate this in different ways?

Chris Ball

Yeah, for sure. So I definitely don’t want to discourage anybody who wants to get in and don’t have $1.5 million. $1.5 million helped me start a 300-light situation. If you want to start with 50 lights, you know, it’ll probably cost you somewhere in the range of maybe $100-$200 grand, maybe, maybe $250. It just depends on how big you want to go.

And that’s where I can be a resource to someone and say, “OK, you know, these are your hard costs. You’re going to have to pay a licensing fee, you’re going to have to get your MEPs (mechanical, electrical and plumbing) done. That’s going to cost you about this. If you only want to start with a 50-lighter, here’s how we can, you know, structure that out, get that build-out going.”

I can kind of help people break down those costs and say, here is your total, your all-in number will be somewhere around here. My situation is relatively large, you know. It’s not the biggest, but it’s definitely not the smallest. But I would suggest if someone does want to come into the space, and they’re new, to start small, and let your profits get you to grow. Try not to take any money from someone who’s going to practice predatory practices on you.

Chris Walsh

Yeah, I like that advice. At MJBiz, we’ve done the same. We’ve grown over time just through revenues. And we missed some opportunities, because you can’t grow fast enough without that money. But it served us well in the long run. Sounds like that approach is working for you.

As we come to the tail end of this, a couple things I wanted to touch on. We had been talking about people in the illicit market and the benefits they can bring to the legal market that are not always apparent – and they’re not always able to make this transition. And you’ve got all these new people coming in who aren’t connected to the culture, and in a lot of cases don’t know what they’re doing. So talk to me. What are some of the benefits that you’ve relied on that you’re bringing that you think are unique from your experience that a pure business person wouldn’t have getting into this?

Chris Ball

Absolutely, Chris. And I’m really, really passionate about this question, because it’s what has made my company successful.

The illicit market is where all of this stems from. This is where cannabis consumption has lived, was born, has thrived and will continue to thrive. So everything that I’ve learned from being out in the street in the illicit market is … I’m just bringing all of that knowledge and those tools into a legal framework. And it’s working.

And my team relies on me for that. I am the voice. I’m the story. If somebody wants to partner with us or wants to do a collaboration, and I say no, my team doesn’t fight me on it. The way we grow our cannabis, we want to be the best growers and have the some of the best medicine on the face of the earth. And because of my 15 years of experience in, not necessarily growing but knowing good weed from bad weed, that has given me the knowledge and the discernment to know when I get a strain that we grow ourselves, I can go this is a yes and this is a no. The people are not going to like this, but they will like this. And that is so important.

A lot of these new people coming into the space, these businessmen, they’re not from the culture, they don’t understand what makes the consumer tick or the patient. They don’t know what strain is going to help them sleep, get rid of their pain, make them feel happy, make them feel level throughout the day. They don’t understand terpene profiles, what’s going to taste good, what’s not going to taste good. All they’re trying to do is run into the space, run into the green rush. Throw millions of dollars at it, pay some graphic designer to make some pretty marketing, attach this celebrity and think that it’s going to sale. It doesn’t work that way.

Celebrity does not sell cannabis. Cannabis sells cannabis. It doesn’t matter what you call it, it doesn’t matter who you are attached to it. I could call it “Crap in a Bag,” and if I hit the big three right, that it smells good, tastes good and the terpene profiles and the THC content are all in harmony, people are going to come back to the shop after they bought it and say, “Can I get another ounce of that crap in a bag?”

Chris Walsh

Let’s put that to the test. That should be your next offering.

Chris Ball

I will definitely think about doing that. Because I make this parallel all the time. But I think I want to do it just to prove a point and tell people and show people like, look, good product and good medicine is good medicine.

The first thing you need to do is focus on the product, not the bag, not the marketing, not the million acres. Get you a small grow and focus on your genetics, the health of the plant and understand what you’re doing. And if you do that, the people will come back. I love the movie Field of Dreams, when he tells him if you build it, they will come. You just got to build it correctly. And once you build it correctly, these companies will start to have some success.

The reason why they go out of business is because they don’t want to go get the Chris Ball who’s sitting in jail right now for a nonviolent cannabis crime, who’s actually sitting there because they had success. I wasn’t indicted because I didn’t know what I was doing; I was indicted because I was making a whole lot of money, having success with doing something that was considered illegal and taxes couldn’t be put on it.

There’s a million other Chris Balls out there in the world that can come into these companies and show them, hey, this is not going to work. This will work. This is how we need to approach the consumer. This is the strain we need to put out. But they’re not doing it.

Chris Walsh

Yeah, so the intimacy, familiarity and understanding of the plant really gave you a leg up. Let me ask you the reverse of this, though. What experience from the black market does not translate well, or what was your biggest challenge?

Chris Ball

The money. The money doesn’t translate. And that’s been the biggest challenge.

Chris Walsh

It’s not as lucrative.

Chris Ball

It’s not as lucrative. And there’s a lot more things that need to be taken out of your money than commission. So in the black market, you know, maybe you got a lead from a friend. “Hey, my boy wants to buy 10 pounds, right?” So I go take the 10 pounds, and I tell the guy I’m going to give you 50 bucks per pound if he buys. But I go sell those 10 pounds for three grand apiece. I just made 30 grand. I take out five grand for my guy for the hookup, or for the referral. And then I’m done. I walk away with $25,000. And it’s not on a net 30.

So now you run that same deal, but you take it to the dispensary. And the dispensary says OK, we’ll pay you in 30 days. And then as a matter of fact, you need to take out 9% for your cultivation tax, we need to take out, you know, another 7% for state tax, we need to take out this, we need to take out employment insurance, we need to take out all these different things. So you’re not left with that 25 grand anymore. Now I’m left with 15.

But it’s the long play. It’s the long haul. Now if I can duplicate myself in California, in Michigan, in Colorado, in Oklahoma, now that 15 grand per pound times 10 other locations, well now it’s 150. Now, all the overhead goes up as well, but now we’re getting into big business.

But a lot of guys that come from where I come from, they’re used to fast money. And they don’t want to make that transition or they don’t want to be patient and keep building their business. So they come in, it’s not lucrative, lucrative enough, and then they go right back out.

Chris Walsh

So you have to be patient and have the long game in mind. It sounds like now you’re finding yourself competing with the illicit market. And how do you approach that? Do you have some of these former friends and connections that maybe look at you in a different light now? Or what are you competitors?

Chris Ball

Yeah, well, we don’t compete anymore because, fortunately for me, my brand has now crossed over. My brand is now considered one of the premier brands in the cannabis space, especially with me being a social equity applicant and my story, but my product is superior. And so what people are starting to figure out as the cannabis industry matures, kind of like the alcohol industry had to mature back during the prohibition days, people are starting to figure out now good cannabis from bad cannabis. Five years ago, it was just cannabis and only the connoisseurs in the street or in the illicit market knew the difference between good and bad because you couldn’t get it at a dispensary. The soccer mom and all these different people couldn’t go pick up their cannabis.

Well now in the legal framework, in the legal market, cannabis has to be tested. It has to be clean. No more microbials, no more PGRs (plant growth regulators). These are the type of things that go into cannabis in the illicit market that may give a person a bad high or give them anxiety after they smoke or make them feel sick the next day because nobody’s regulating what these growers are putting in the cannabis to get more weight out of it.

It’s basically like the cannabis in the legal market is organic. You know for a fact that this is clean, and there’s nothing in here that can hurt me. So the high and the taste of the cannabis is different now. And as the cannabis industry matures, we’re no longer … I’m no longer in competition with the illicit market grows anymore, because what I’m growing is of complete and utter quality.

Chris Walsh

And a different customer base.

Chris Ball

And a different customer base, 100%.

Chris Walsh

I’d like to wrap up by asking you where you think the illicit market is going to go long term, and what you would tell people in it right now who are weighing whether to try and go the route that you did.

Chris Ball

If I’m being 100% completely honest, I don’t think the illicit market is going to go anywhere anytime soon. Reason being is for the taxes. The taxes don’t allow for the illicit market to go away because of the price of cannabis.

The illicit market has been around for so long, and it’s so heavy. I was one of these guys who was providing for an entire city in the illicit market. A lot of families are being funded because of the weed sales in the illicit market. And that’s not going to go anywhere.

The cities and the states would have to allow high-end drug dealers to come into a dispensary and buy 100 pounds at a time and tax them on it and give them a good number for the illicit market to go away.

It’s just, we’re a long way away. And I don’t know how, or if, they can even rectify that problem.

For a person trying to come from the illicit market into the legal space, I would just tell them, and I would caution them, it’s not going to happen overnight. But if you want to do it, and you understand the culture, and you understand good quality cannabis, and you can get your brand off the ground, then it’s completely worth it. I don’t make as much money as I did in the illicit market. But I’m getting very close because of the popularity of my brand. And because of the pricing of my cannabis now that I can charge. I’m not one of the most expensive brands in the retail location, even though I should be. I’m not because I want everybody to be able to experience quality cannabis. But I’m not that far off.

But it isn’t the same, you know, money wise.

Chris Walsh

Thank you so much for joining us, Chris. That was fascinating, great insights. And I’d like to give you a chance, where can people find out more about you and your company?

Chris Ball

Sure. Absolutely. On Instagram, we are @ballfamilyfarms. If you want to follow me personally, it’s @ChrisBall45. And then if you want to buy maybe some merch or things like that or just learn more about the company, you can visit us at www.BallFamilyFarmsLA.com.

Chris Walsh

Thank you again for joining us, and I can’t wait to talk to you down the road and see the numerous states that you’re in and how much you’ve grown.

Chris Ball

Thank you so much, Chris, and I just want to say thank you again for letting me tell my story and share. I’m absolutely obsessed with MJBiz. We will be there this October again, as we have been for the past four years. So thank you very much. And I really appreciate what you guys are doing with MJBiz and trying to keep the cannabis culture alive and thriving. So thank you.

Chris Walsh

Well, let’s toast at MJBizCon in October. It will be great to get around people again. And we’ll let you go now so you can get out of your car.

Chris Ball

Thank you. Appreciate it. K guys, have a great rest of your day. Thank you.

Chris Walsh

And that’ll do it for my conversation with Chris Ball of Ball Family Farms. As the industry continues to grow and social equity programs crop up, I hope to hear more success stories like this one.

Chris managed to change his life by securing one of the first social equity licenses in Los Angeles. While this program and others still have room to improve, for sure, it’s what paved the way for his remarkable transition.

It’s worth remembering that the cannabis industry and its culture stem from the illicit market. While some newer entrants believe they should steer clear from anyone with that type of background, Chris fully believes that it’s what gave him a leg up. He also believes it’s what’s missing from the industry, especially in more recent years as this corporate business-focus mindset takes over, and new people come in with little knowledge of cannabis.

For those looking to transition as Chris did, lean into your experience and your knowledge of what high-quality cannabis is. Chris recommends starting small and growing along with your revenues and profits, rather than piling up massive debt before you even prove your concept – or possibly losing control or focus by taking on investors or just trying to do it all right out of the gate.

I’d echo this point. Success in this industry largely does not happen overnight. And while you can have big, bold, long-term plans, in many cases, you need to establish yourself and your product and your brand first before going too big.

Chris also highlighted the importance of finding the people who can complement your skill sets and fill in your weaknesses. And he’s a big believer in investing your time and energy on the plants if you’re in cultivation, not the marketing or the name or the packaging or getting some big celebrity behind you. You have to have a good product to bring to market. If you do that you could probably successfully sell marijuana even if, as he said, you call it “Crap in a Bag.”

And with that, I thank you all for listening. Feel free to share this with anyone who might be interested and post a review on whichever platform you use for podcasts.

You can also follow us on Twitter. Our handle is @MJBizDaily.

Next week, I’ll speak with Al Foreman, the managing partner and chief investment officer for Tuatara Capital. We’ll explore what kinds of companies he looks to make investments in, how he finds those companies, what types of due diligence he performs, and we’ll hear about the key attributes and benchmarks and other factors that stand out when he’s examining possible investments.

Until then, make sure to check out mjbizdaily.com for the latest news, analysis and data on the cannabis industry and sign up for our newsletter while you’re there. See you next time.