Can Philly’s Weed Queen Survive in the World of Corporate Marijuana? – Philadelphia magazine

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The first man through the door had waited so long for this day that he collapsed, sobbing, in Chris Visco’s arms.

Visco, co-founder and CEO of TerraVida Holistic Centers, a three-store medical marijuana dispensary chain, didn’t expect that. But the man pressed his face into her shoulder, and instinctively, she hugged him back.

Before she opened her Sellersville store in February 2018, Visco enjoyed multiple careers: marketing and buying for retail stores Boscov’s and David’s Bridal, a brief foray in manufacturing, a run as a political consultant. Pot, however, always held allure. She first smoked weed in high school. She also understood the promise of medical cannabis for her new customer base. But this embrace — she calls it “a big-guy bear hug” — cemented a new sense of personal responsibility.

“His hands trembled,” she says, describing how excited her first customer was to finally legally buy the medicine he needed to treat his pain and PTSD.

The experience of running TerraVida turned into a calling. “I’m going to do this,” she says, “for the rest of my life.”

Medical marijuana came to Pennsylvania in April 2016 with a stroke of Governor Tom Wolf’s pen, and Visco has emerged as Philadelphia’s Empress of Weed — knowledgeable about the product and passionate about helping patients. The complication is that the emerging marijuana industry isn’t so much about big hearts as deep pockets — a new frontier not unlike the Wild, Wild West, one in which the rules that exist are easily subverted and the rough-and-tumble pioneers are joined by wagon trains of lawyers and accountants.

“It’s all about the money,” says Robert Rudnitsky, executive director of the Philadelphia chapter of NORML, a national nonprofit that’s been advocating marijuana legalization for 50 years. “Plain and simple.”

This isn’t just partisan, hippie carping, either. In June, marijuana grower Canopy Growth in Canada agreed to buy New York-based Acreage Holdings, a cannabis operator in 20 U.S. states, for an amazing $3.4 billion. And medical marijuana businesses throughout the U.S. are already consolidating, putting independent operators at risk. These big players are getting in largely as speculators — gambling that the loosening of state laws for medical and adult recreational use will lead to full federal legalization, generating many billions in profit.

Even Visco, who vows a lifelong commitment to medical cannabis, already has an exit strategy of sorts in mind — an exit strategy, fittingly peculiar to her, in which she gets to keep operating TerraVida. And it is precisely this goal — to keep running TerraVida stores — that makes her such an interesting case study. Can an independent operator with a passion for the product find a place in this new frontier?

Getting a “yes” to that question will likely require luck, a dose of corporate benefaction, and, thankfully for Visco, a tireless marketing effort. But even then, her future might be out of her hands. “I think Chris, within the standards of this industry, has good intentions,” says Rudnitsky. “But this will all be controlled by big corporations. It’s happening already.”

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The point of medical marijuana is to help patients, and two years in, the effort appears to have stalled.

More than 220,000 Pennsylvanians have obtained medical marijuana cards, and each week, dispensaries see about 65,000 patient visits, with the average customer spending $120 per visit. But that’s really just scratching the surface of who might be helped. Compare, for instance, these numbers to the total number of people with any of the state’s 23 qualifying medical conditions, including anxiety, which afflicts an estimated 18 percent of the population (2.3 million in Pennsylvania); cancer (an estimated 79,000 new cases diagnosed in the state last year); epilepsy (110,000 in Eastern Pennsylvania alone); or Alzheimer’s and related diseases (400,000 across the state). The under-use of Pennsylvania’s medical marijuana program might be for the best, however, given the frequent product shortages that leave even active customers without the medicines they need.

In response to the marijuana program’s shortcomings, the Lehigh Valley chapter of NORML has been a regular presence protesting at the state’s department of health in recent months. And the problems are, mostly, about money. Because weed is still illegal under federal law, insurance companies can’t cover cannabis treatment. Meanwhile, dispensary prices are often high and can be inconsistent from store to store. (Cannabis oils can run $80 or more per gram — making them, as one writer has noted, more valuable than gold.)

The high prices, though, aren’t generating short-term riches. The quarterly statements of medical cannabis companies often look like murder scenes, red with losses. The industry includes biotech firms, growers, packaging manufacturers, and retailers like Visco, whose biggest problem is dubbed the “Al Capone tax.” Federal statute 280E prohibits businesses engaged in trafficking an illegal narcotic from taking tax deductions. It’s a relic of the Reagan era, nicknamed, ironically, after the Prohibition gangster who once proudly claimed the government “can’t collect legal taxes from illegal money.” That means cannabis entrepreneurs must pay tax on all their revenue without claiming business expenses to reduce their burden. The law in its current, outdated form cements the medical marijuana dispensary as a long-term play. And early investors without deep corporate pockets have a choice to make: Sell out to bigger players, or hang on and hope for future changes in the law.

Thus far, Pennsylvania has awarded 50 dispensary permits — the max allowed by law — each of which entitles the owner to open three medical cannabis shops. But as of December, only 74 dispensaries were actually open. The slow pace stems from a variety of factors: Rushing to open appears foolish, economically, when breaking even looks like a victory. And local governments aren’t helping, often requiring dispensary permit holders to undergo long, arduous and expensive processes to get stores approved for zoning. In this environment, who wants to open at all?

Visco knows the business is a long game. She makes a profit, she says, till the tax bill comes due, at which point TerraVida is more of a break-even proposition. And thus far, at least, she’s been true to her mission — opening three shops and declining to sell out for a short-term windfall.

Of course, selling out is also complicated. State law prohibits the sale of medical marijuana permits, which allow growers to grow and sellers to sell. Big money found a loophole, though, by paying permit holders — often handsomely — in return for management service agreements. Technically, the permit doesn’t change hands. The MSA holder, however, gains the power to make business decisions and takes up to 90 percent of the revenue.

Journalist and longtime NORML organizer Chris Goldstein, the guy who noted that the price of medical marijuana exceeds gold, captures the industry’s resulting dysfunctional state: “Once you get a license to open a dispensary, just being in the business is the business. You don’t even have to open to make a lot of money.”

Close to home, KW Ventures (Firefly dispensaries) and Franklin Bioscience (Beyond/Hello) have already been swept up by larger companies. And, not surprisingly, an industry so ripe for profit has attracted people long associated with money and power, like Chase Lenfest, heir to Gerry Lenfest’s cable fortune, and former Philly mayor Michael Nutter, who’s handling community relations for a Jersey cannabis outfit.

Visco has a political background that started in childhood and extended into work as a strategist for, among others, former Montgomery County sheriff Eileen Behr and current State Rep Chris Rabb. She isn’t exactly in Lenfest’s league, but she is partnered with investor Doug Topkis, a financial industry veteran with a background in pharmaceuticals who was introduced to her, not through political connections, but by a childhood friend. Her efforts to expand are less likely to include a big money splurge for MSAs than a workmanlike, aspirational effort to win new dispensary licenses in other states, including current application efforts in New Jersey and Illinois.

She flatly admits: Raising three kids in their teens, with college tuitions looming, lends selling out some attraction. TerraVida, with locations in Malvern, Abington and Sellersville, could be worth about $100 million right now­. Ilera, a Philly-area start-up with similar holdings, sold in August for upwards of $125 million. But the bigger money involves staying and hoping for further changes, not just in state law, but also in federal law. And staying happens to be where her heart is, too.

In October, Pennsylvania state senators Daylin Leach and Sharif Street put forward a bill to legalize adult recreational use in the state. It isn’t expected to pass in the short term, but if Dems make gains in the House and current polling in support of adult use holds, 2021 could prove realistic. The Street-Leach bill also allows medical dispensaries, which by definition have already met state regulatory guidelines, to “opt in” and sell to recreational users.

This might sound like a clear boon to Visco, whose customer base would expand, seemingly exponentially, overnight. But without some change to the Capone tax, her position might not change all that much. She’d still be one of the smaller players at a long poker table, gambling on an uncertain future.

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In the world of weed, Chris Visco’s bio is a marketer’s dream.

The daughter of Republican Montgomery County sheriff John P. Durante, she worked the polls for Reagan and toed the family line, conservative till high school. Then she discovered pot and came to realize she didn’t “agree with any … or most” Republicans policies.

I meet Visco in early November at her Jenkintown office, a stylish open space with a chill vibe — her employees, dressed in jeans and pullover sweatshirts, thwap computer keyboards to the thump of pop music playing on overhead speakers. At 48 years old, Visco has a youthful demeanor, simply cut brown hair, and a fast way of talking that she punctuates with ecstatic exclamations and dramatic facial expressions. The effect is like meeting a hippie theater major bent on conveying her excitement to everyone in the back row. “I love weed!” she bursts out, her eyes wild. It is a “great privilege,” she says, to be among the few who get to help people with this “amazing plant!”

In her retelling, her career is one of continuous success. She worked at Boscov’s, rising quickly to buyer; she says her eight-year run ended in a memento she treasures: a handwritten note from Al Boscov himself — a retail legend! — reading, “I didn’t really think you’d go.”

She left to work closer to home, in Montco, where she and her husband were raising a family. She still remembers the SKUs — product codes — associated with certain items at David’s Bridal, and can recite the digits for big sellers like the waterfall headdress. Detours followed into manufacturing, where she used prison labor, and politics, where she helped manage campaigns for state reps, judges and the like.

“I love building something,” she says, trying to tie it all together. But when you listen to her talk, what comes across is her natural talent for marketing. “We’re all selling something,” she says, and right now, she’s selling herself.

The product, in this case, is unique. Visco advocates more strongly than most in the industry not only for full adult legalization but for what advocates call “home grow.” This last bit is counter-intuitive, since it would allow people to grow marijuana plants for themselves and possibly shrink her potential customer base. But, she says, it’s the right thing to do. While such stances may reflect her true beliefs, they also endear her to weed aficionados, for whom adult recreational use and home grow are core issues of social justice. And indeed, even Visco’s rough edges can begin to seem carefully calibrated — her imperfections, like those of a diamond, highlighted as articles of her authenticity.

Some of the products she sold at Boscov’s, she says, made her “want to vomit” — little leather-patched purses, for instance; she personally prefers Prada. And recalling her stint in politics, she opines: “Most of my candidates were horrible!”

By this, she means horrible candidates who didn’t understand how to sell their policies to win votes, not horrible people. Visiting with Visco is like sitting through a sales pitch. But this doesn’t mean her rough edges aren’t real.

She has already faced a fair share of upheaval inside TerraVida. Her original business partners, Adina Birnbaum and Valentin Gorski, are gone, the breakup now subject, she says, to a nondisclosure agreement that prevents her from discussing it. TerraVida also originally had two African Americans listed on its advisory board, earning the company some advantage in the application process. One of them, Rodney Little, a former Army sergeant and president of the Fraternal Order of Housing Police, is now out and told me he’s “considering” legal action. Visco responds that her obligations to Little were met with a cash payment, as opposed to an ongoing equity position.

I ask Visco if she can send me a copy of the note Boscov wrote her, which she does. It isn’t handwritten and doesn’t say he never thought she’d leave, but it does say he’d welcome her back. She also tells a story about a manager at Boscov’s who gave her a turkey of a department that she turned into a prime rib roast generating $1 million in profit. He doesn’t quite remember Visco — “She was there a very short time, right?” — or the department she turned around.

Visco, however, can be forgiven if she sometimes positions herself in just the right light. Because her talent for sales is helping her find a future in the marijuana industry — and helping her customers, too.

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“Chris is the best,” says James Brusca, who along with his wife travels miles past other dispensaries to buy from Visco. “Her staff is the best trained, and they really take their time to understand what you need and which medicine you should select. Other places, they don’t know or care.”

Even Rudnitsky, from Philly NORML, who doesn’t speak highly of many in the field, says he “wouldn’t say a bad word about Chris. I’m not saying she doesn’t want to make money. She does, and that’s fine. But she really trains her staff and takes care of her customers — and that’s just not true of everyone in this business.”

Goldstein, the marijuana-industry journalist from NORML, says there are doctors and dispensary employees — dubbed bud-tenders — everywhere who know the product and take their responsibility seriously. What TerraVida offers is consistency in a field that sometimes even doctors aren’t steeped in, requiring budtenders to pick up the slack.

Does this mean Visco can stay in the business? The danger is that conglomerates will ultimately own so much of the industry that she’ll be like an independent hardware retailer who retains a deep knowledge of hammers but can’t meet her competitors’ prices. “I have no intention to sell,” she says. But if she did sell, she knows exactly the conditions that would need to be met. First, she’d need to remain in place as manager, with control over her employees and their salaries and benefits. She also has to retain control over issues related to client care, investing in the time it takes to train staff to really serve customers. And, she says, she needs to like the buyer — to feel that it’s committed to the enterprise.

Experts in the industry, as it’s unfolding, endorse at least pieces of what, in this instance, Visco is selling. Federal legalization, or just a repeal of the Al Capone tax, would make dispensaries more profitable. But “CVS will absolutely be selling these products,” says Jonathan Caulkins, a professor and drug policy researcher at Carnegie Mellon University. “There won’t be much room for smaller players.”

Medical marijuana will be invaded by big pharmacies, and the recreational world will be the province of those big corporations. The real play for someone like Visco, in this future world, is to position herself the way craft beer companies do today, offering consumers a higher-quality experience. “If she can be a brand that is respected and that people will seek out, she might be able to stay in the business,” says Caulkins. TerraVida, in this formulation, would be pot’s answer to St. Boniface, the small Ephrata brewer developing a reputation for quality that exceeds its size.

“That’s exactly our play,” says Visco, acknowledging that the niche also fits her “exit” strategy. She could run a series of TerraVida outlets that sell medicine for getting well and weed for getting high on behalf of some far bigger concern — the way a big brewer like Heineken also sells higher-quality brands like Newcastle Brown ale.

It’s a canny strategy, even though, as Caulkins notes, there’s risk. “No one can say for sure how all this will play out,” he says.

The Trump administration isn’t pro-medical marijuana. Joe Biden still worries pot could be a “gateway drug.” Delays or any action by a conservative administration to roll back medical marijuana use could leave Visco and everyone else crushed. That said, Goldstein — the writer and NORML organizer — thinks the “craft” analogy can hold up in TerraVida’s case: “No one really wants to come out and say they are for this new industry being owned entirely by already wealthy, large-scale corporate interests. And Chris, with her outspoken advocacy for legalization, stands out.”

And so here we are. Chris Visco has crafted a life story that begs for a happy ending, but she could still lose. For now, she appears all right with that. “When you sell someone a handbag, you put a smile on their face,” she says, taking one last opportunity to cement her brand. “That’s great, but doing this … we give people their lives back. We save them from pain. You can’t compare anything else to it.”

Published as “Pot Shot” in the January 2020 issue of Philadelphia magazine.