Joel Schneider had a long and successful career as a lawyer on Wall Street. “I practiced law for 30 years and hated it.”
So once his kids graduated from college, he decided to pursue his passion: Pot.
Now he runs three Bud+Breakfast hotels in Colorado.
“There is no place like this,” he said while giving a tour of his first B&B in Denver, a 7,000 square foot home built in 1892 that gives new meaning to “high end.”
The six suites range in price from $299 to $399 a night. Guests have included musicians and former NFL players, as well as cannabis fans ages 21 to 80, who enjoy the well-appointed rooms, fully stocked bar, and meals prepared by a chef.
“Wake and Bake breakfast is something that we invented,” Schneider said. “Every day there’s a different 420 Happy Hour.”
Revenues last year averaged $110,000 a month, as Schneider expanded to three properties with hopes of franchising to other pot-friendly states like California.
But the journey to this strange success was filled with some pot holes, too.
For one thing, Schneider jumped in with both feet. He didn’t know Colorado, he didn’t know the marijuana business, and he’d never run a hotel. When he arrived in 2014, he “bought a bunch of businesses,” including a tour company, a lounge, a bus, a newspaper, a radio station, and a glass-blowing company.
“I was so amped up to get into this business,” he said, “so I acquired these companies, and I find out that really there’s no revenue.”
At the time, Schneider was commuting from his home in New York and staying at a hotel in downtown Denver. “I find myself smoking in my bathroom. I find myself hiding with a towel under the door and the shower on,” he said. Even though he was in a state where recreational marijuana is legal, “there was no place to smoke, and it wasn’t fun.”
That’s when he got the idea for opening a cannabis-friendly hotel, even though smoking isn’t allowed in hotels. Schneider discovered that B&Bs are considered private property, which would give him more flexibility. “Now it was up to me to find the right private property,” he said.
He persuaded his wife, Lisa — who does not smoke marijuana — to join him in the venture.
Schneider sold all of his other cannabis ventures and used $100,000 to buy his first B&B. Since then he has invested over $1 million, partly by going public with a penny stock he named The MaryJane Group. (More on that in a minute.)
Occupancy rates are high — most weekends are sold out. Guests are booking reservations for April 20 (4/20) a year in advance, and in 2016, Schneider estimated the company took in $1.2 million.
However, unlike other hotels or B&Bs, Bud+Breakfasts don’t allow any guests under the age of 21, and the front doors remain locked.
Still, it’s been a stressful couple of years.
- Two “Canna Camps” that Schneider tried to organize fell through. In one case, the lease was pulled at the last minute.
- He originally provided a “bud bar” with free marijuana for guests, but since the guests had paid to stay at the B&B, Schneider was cited by local law enforcement for selling drugs without a license.
- Finding and retaining competent staff has been a challenge. Schneider fired the entire crew at one of his Bud+Breakfasts after receiving complaints. “Our staff was partying to 5 o’clock in the morning,” he said.
- He regrets taking the company public to raise money, only to be delisted. “If I could turn the clock back, I wish I could, and I wish I had the opportunity to raise private capital and stay private.”
Financing has always been a challenge, which is typical for the legal marijuana industry. Banks and credit card companies shun these businesses, fearing they are fronts for money laundering.
“When we first started, I couldn’t get a bank,” Schneider said. Even though he’d been a client at Chase for 20 years, “Chase closed me down.”
He tried using Square to process payments. “After two weeks, they held $19,000 for three months saying I ran a risky business…money that I could not afford for them to keep.”
Schneider said he survived it all, and now he sees only upside. Many guests are repeat customers, telling him his properties are the first time they’ve openly enjoyed cannabis in a social setting since college.
“I get up at 4:20 it seems like every morning to get high,” Schneider said. “I tell my guests, ‘Come down in your underwear, probably there’s going to be someone else sitting in their underwear, too, and you can just pass a joint with each other.’ That’s what I want, I want them to feel like they’re home.”
That “home,” however, is only one DEA raid away from closure. Marijuana remains a Schedule I drug at the federal level, and an incoming U.S. Attorney General could move to shut down an industry just starting to exist on the legal side of the law.
The post-election threat hangs over Bud+Breakfast like a purple haze, but Schneider remains optimistic.
“How do you turn back the clocks? How do you turn back the tax revenues the federal government receives?” he asked. “I really do see the big picture. I will get through this.”
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