A Convicted Thief and a Chiropractor Claim Their Pot Company Isn't a One-Hit Wonder

At BC Wellness Center, a small retail shop in Black Canyon City, two black vending machines sit side by side behind a counter, where they can be accessed only by employees.

Instead of Famous Amos cookies or soda pop, packets of buds and various cannabis-infused edibles and juices sit tucked into the rows of dispensing trays.

The machines are the flagship product of Medbox, one of the hottest companies in the burgeoning industry of legal marijuana.

Medbox stock, available for purchase by the public, rates near the very top of the Marijuana Index, an information source for investors on pot-related companies. It's a billion-dollar company — largely because of a stroke of luck during one fateful week in November 2012, when Medbox's stock price skyrocketed.

Though the price fell sharply after the unlikely meteoric rise, it's stayed at roughly 10 times the price each share traded for before its sudden inflation. As of mid-April, the California-based company had an estimated value of nearly three-quarters of a billion dollars. And roller-coaster-style fluctuations have put it at higher than a billion in recent months.

Judging by its stock, this company truly is big time.

Its products and services, however, aren't as impressive.

Medbox machines are by no means in widespread use in Arizona's 80 medical-marijuana dispensaries.

One drawback of the devices, as the unit at BC Wellness Center demonstrates, is that customers can't use them legally.

When a registered medical-pot user decides what strain or "medible" to buy, an employee taps a keyboard, the machine's spirals turn, and the product drops out, to be retrieved by the employee.

Patients can't access the machines themselves, even though "when we met up with Medbox, that was one of the selling points of the box," says John Ferneau, one of the dispensary's owners.

But last year, when state officials gave the dispensary a final inspection before it opened, they spotted the machines in one corner of the shop and asked, "What's that?" Ferneau recalls.

He told them it was a vending machine for pot.

"They said, 'No, no, no — behind the counter!'" he says. Ferneau told the officers that putting it behind the counter would be "breaking the purpose of the machine. They said, 'We don't care.' I said, 'You're kidding me, aren't you?' We spent all this money for the machine, and the customer can't use it."

Buying a cola this way at a convenience store wouldn't be very convenient — or practical for employees who would have to stock the machine so they can dispense the product to themselves to sell.

One of the two units doubles as a refrigerator, but refrigeration is necessary in the short term for only some infused food and drinks, not the pot buds. And the space inside, because of the vending mechanisms, is much more limited than a fridge.

Weighing, labeling, and storing the pot in the Medbox machine "can be time-consuming," says one of the dispensary's bud-tenders. "It's probably no different than putting it on a shelf. But it's a smart shelf."

The machine is connected to the dispensary's computers, duly logging every product sold from it. This is the point-of-sale function, similar to that of other point-of-sale software programs used by Arizona dispensaries, run as nonprofit companies with boards of directors.

Yet no dispensary system's point-of-sale software connects directly to the Arizona Department of Health Services, which oversees medical marijuana. Rules created by the agency require dispensaries to log information about each sale into the state's computer system, which also verifies the validity of patient ID cards.

The tight regulation of medical marijuana in Arizona includes seed-to-sale reporting requirements and surveillance video of employees reviewable by DHS regulators.

State health department director Will Humble says he wouldn't know whether a Medbox-affiliated dispensary is more or less efficient at monitoring an inventory of cannabis than any other dispensary. He's concerned only whether dispensaries comply with state rules, and Medbox affiliates (including BC Wellness Center) haven't brought themselves to Humble's attention.

Another partner at the Black Canyon City shop, California resident Bill Sutterlin, who comes to Arizona monthly to help run the dispensary, says he likes the extra "monitoring" provided by the Medbox machines. It makes the business more professional by adding a layer of security, he says. He pays a monthly fee to Medbox for maintenance and other services, including double-checking inventory. Medbox has been good about fixing problems that come up, he says.

But the machine isn't crucial to the dispensary's operation, Sutterlin acknowledges: "We could do without it."

The bud-tender runs down some of the difficulties of using the machines instead of a system of easily accessed bins and shelves found at other dispensaries. For instance, each shelf in the machines isn't wide, making it difficult to stock them with large items. If the dispensary were to decide to increase offerings substantially — perhaps by adding twice as many cannabis strains — the machines wouldn't have enough room.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.