The marijuana industry's unlikeliest titan

Andy Joseph was never pro-cannabis and he certainly never thought it would make him a multimillion-dollar business

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A Navy veteran and father of five young children, Andy Joseph would never have called himself an advocate for legalizing cannabis.

Twelve years ago, he designed a machine to extract natural flavorings like vanilla and mint for the food industry. Then, several years ago, he noticed an uptick in orders coming from the West Coast.

“We were shipping a fair amount of product – our extraction systems – to California, and that’s when you started to see a lot of activity in the news about medical marijuana and cannabis applications,” Joseph said. “We started to put two and two together.”

The pot industry had discovered a new use for his equipment: extracting cannabis oil from dried marijuana plants. And pot entrepreneurs around the country began buying his machines at $18,000 to $100,000 a pop.

Andy Joseph's invention in action, extracting cannabis oil from dried marijuana.

When we first met Joseph a year ago, he was a small-town businessman, running his operation from a garage next to his house in Ohio, where marijuana's illegal. And he still had reservations about the use of his invention that was about to catapult him into unimagined success.

"Initially, it was very nerve-racking," he said. "When you tell your family, or your parents or your friends, they immediately think you’re a drug dealer. I'm the furthest thing from a drug dealer."

His wife, Kristen Joseph, was skeptical too.

"I kind of laughed at the thought that, 'Oh this is a real business now,'" she said.

In the last year, as a handful of states have approved legalized retail marijuana sales, his business has gone big time, and the engineer has become an unexpected titan of the new pot industry. He said his company Apeks Supercritical has grown from $700,000 in revenue in 2012 to $9.5 million in 2014, and from a staff of one – himself – to 18 full-time employees.

When Joseph made his machine, which uses liquid carbon dioxide to extract botanical oils from plant matter, cannabis was far from his mind. In fact, he's only recently come around to acknowledging some of the benefits of medical marijuana for people who are seriously ill.

“My only exposure to marijuana or cannabis at that time was what I’d been taught in school – Nancy Reagan, D.A.R.E., 'Keep your kids off drugs,' 'This is your brain on drugs' –  those campaigns are really the only exposure that I’d had to it,” Joseph said. “It was absolutely a negative.”

But in the past few years, he's been swept up in the national drive toward legalization. Last year, Colorado and Washington state legalized retail pot sales, followed by Alaska and Oregon (both of which will go into effect in 2016) plus the District of Columbia (pending congressional approval). Another 21 states have legalized marijuana for medicinal use. For a struggling entrepreneur, the opportunities were too good to pass up.

From an entrepreneurial standpoint, there’s no better situation. It’s the perfect storm.

Andy Joseph

Apeks Supercritical

“From an entrepreneurial standpoint, there’s no better situation, it’s the perfect storm," he said. “When I put the budget together for last year, I said, ‘There's no way I'm going to hit those kind of numbers. There's no way. It's impossible.' And we're getting ready to break double-digit millions, which is just phenomenal. It’s beyond my wildest dreams.”

Now, Joseph makes the trip to Colorado on a monthly basis, where he recently opened a satellite office to handle customer service for his new clients, and broke ground on a 65,000-square-foot manufacturing facility in his hometown of Johnstown, Ohio.

Andy Joseph making one of his extraction machines.
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“I’m making the transition from entrepreneur to CEO,” Joseph said. “I left the corporate world so I didn’t have to work for ‘the man,’ and now I am ‘the man.’ That’s been a real challenge.”

There have been other challenges as well. Under federal law, marijuana is still illegal, so credit card companies and most banks won’t do business with companies that derive their profits from marijuana sales, even ancillary businesses like Joseph’s, which don't come in to direct contact with the plant. 

“We had a hell of a time getting a bank loan,” Joseph said. “I finally got one of them to say, “OK, great, let's go ahead and do it.’ We had a long arduous process, but then,  after I celebrated the loan closing, I was fortunate enough to have a piece in a local newspaper that basically tied the bank to marijuana, and the bank had some concerns about that.”

But over the last year working in this industry, Joseph's views on legal recreational pot have evolved. He assumed legalizing the drug would make it more accessible, but he's watched closely how regulated its sale has been in places like Colorado.

"I definitely realized that the controls that are being put in place are so much better, so much stringent, than the Mexican ditch weed that's available right now in Ohio," he said.

And as his business grew more successful, he said people involved in the illicit pot business in his area suddenly came out of the woodwork.

"A light bulb went off for me and I said, 'Wait a minute here, just because it's illegal doesn’t mean it's not available,'" he said. "[And if it's legal] it's probably going to be less available to my kids than it would be if it's illegal and readily available through the black market and the cartels.

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