Sweet On The Medical Marijuana Market
Special to CNBC.com
Mark Mallen, owner of Mile High Ice Cream, pictured with a 10-gallon ice cream maker at the commercial kitchen near downtown Denver where employees make cannabis-infused “edibles” for medical marijuana patients.
Mark Mallen was already a highly successful, ice-cream entrepreneur when he decided last year to start a separate company that infuses cannabis into his product, providing a tasty alternative for Colorado’s fast-growing medical marijuana market.
Mile High Ice Cream now offers more than 60 “medicated” flavors, ranging from Brown Sugar Cinnamon Pot Tart and High Country Chocolate to Peanut Butter Kush Cup and non-dairy Coconut Fudge.
Fresh fruit sorbets and lower-fat gelati round out the product line that rolls out of two commercial kitchens near downtown Denver. A sales force of eight independent contractors crisscrosses Colorado, selling the frozen desserts and other medicated edibles made in Mile High’s kitchens, which employ another 15 people.
A native of Youngstown, Ohio, Mallen moved to Boulder 10 years ago. Nine years ago, he founded Glacier Ice Cream and Gelato.
“I just thought there was no ice cream in Colorado that really stuck out,” says Mallen, 48, who estimates he’s started 20 businesses since he was 13 years old.
Glacier has consistently topped the area’s “best of” lists, supplanting other super-premium brands like Ben & Jerry’s and Haagen Daz.
A year ago, Mallen’s 20-year-old son suggested a foray into Colorado’s burgeoning medical marijuana market.
“He wanted to do it, but he wasn’t old enough,” says Mallen. “I already knew that many chemotherapy patients bought our regular ice cream, because it was one of the few foods they can eat.
“I remember meeting a young woman with a doo-rag covering her head, obviously a cancer patient,” he adds. “She said, ‘Your ice cream was the only thing I looked forward to while I was going through chemotherapy. All I could think of was how I would have some afterwards.’”
Mallen eyed the target market—more than 100,000 Coloradans now hold doctor-approved cards that allow them to purchase cannabis legally for medical purposes.
“I did a cost analysis and studied how and where you could market the product,” he says. “I didn’t do as extensive a business plan as it takes for a bank loan, because they don’t loan on this stuff.”
The city of Denver began regulating its medical marijuana sector last January, collecting stiff licensing fees, and a retail sales tax from dispensaries.
Mallen pays $1,250 for his annual Medical Marijuana Infused Products Manufacturing License, and is careful to abide by the new regulatory framework that has sprung up.
Colorado’s legislature passed a host of additional regulations and (as yet unpriced) fee structures last summer, intent on cleaning up the “Wild West” atmosphere that had pervaded the rampant growth of a controversial new business sector.
“This business is like ‘Deadwood’, without the killers,” says Mallen, referring to the TV series chronicling the rocky birth of a South Dakota mining town. “I created the separate brand because our Glacier stores are family stores, and I did not want to advocate casual use for minors and non-patients.”
Under state and local law, Mile High’s products are prepared in commercially licensed food kitchens used exclusively for cannabis-infused products. The equipment cannot be used for anything else sold commercially. The products are sealed and “conspicuously labeled,” and may not be consumed on the premises.
An employee packages orange-flavored white chocolate Halloween candy infused with cannabis extract at Mile High Ice Cream’s commercial kitchen near downtown Denver.
Mile High contracts legally with marijuana dispensaries that supply the cannabis used in ice cream, usually the leaves that are left over after dispensary workers separate the more desirable flower buds for retail sale.
Other kitchen workers produce produce medicated caramels, chocolates, granola bars – even skin creams and salves used in the treatment of psoriasis, excema and carpal tunnel syndrome.
Mallen keeps his ice cream-making trade secrets as close to his vest as his revenues.
In a “good week,” Mallen says he’ll sell 3,000 containers, which dispensaries retail for $8-$10 apiece.
He sells only one-cup containers because that’s as much as Mallen thinks anyone should ingest at a time.
Mile High uses the same techniques and recipes used at Glacier, but different equipment.
A crockpot is used to boil down the marijuana leaves into a sort of reduction sauce, which is added, at some point, to milk cream, butter, sugar and natural stabilizers. No eggs are used. Natural flavors, fruit for the gelati or sorbets, chocolate, ground nuts and other ingredients are added in before the mixture is frozen.
“I’ve been through all the trial and error to achieve a dosage and consistency that works. For instance, you want it to have a slight taste of marijuana,” he says. “Otherwise, patients think it’s not in there.”
Jason Lauve, editor of Boulder-based Cannabis Health News, says, “When you eat cannabis, you are using the product in a different chemical state. It lasts longer, maybe 3-5 hours, and has less of a psychoactive component, less of a head high.”
How does it taste?
“They do a good job of mitigating the cannabis flavor,” Lauve said. “It has a nice palate, no grittiness or aftertaste.”
“The Butterfinger ice cream tastes just like the candy bar,” says Ali Herman, an employee at the Herbal Connection dispensary in Denver. “You can taste the medicine in it, especially in the sorbets. But it’s not gross at all. And I can definitely feel the effects. It’s good for people who want pain relief.”
“I like the Vanilla Bud flavor,” adds Jake Browne, general manager of the Releaf dispensary in Denver. “It sounds boring, but throw it into a mug of medicated root beer and it’s amazing.”