If you’ve ever sat on your couch one night while buzzed and wondered why a young woman couldn’t just one day decide to start two companies in four years that would use cutting edge technology to transform the cannabis business from end-to-end–well, you don’t have to be high anymore to see that reality.
It’s 2018, and the smoke is clearing out of the way for Jessica VerSteeg. The 30-year-old Dutch-Puerto Rican model and former Miss Iowa beauty queen (as well as one-time Amazing Race contestant) also happens to be the CEO of Paragon, a first-in-class blockchain platform built for the cannabis industry.
Paragon offers everything from a cryptocurrency (ParagonCoin, traded as PRG) to a blockchain solution (ParagonChain) designed to expedite and digitize the marijuana supply chain. For a burgeoning industry that is still fighting for legalization while drowning in an analog cash-based economy, Paragon promises information security for consumers and safe, quick transactions for sellers. Now, VerSteeg’s latest venture is Paragon Space, Los Angeles’ first cannabis co-working space set to open on September 1.
Feel a bit like worlds colliding? VerSteeg chuckles wryly when asked to connect the dots between what seems like two disparate chapters of her life: the lingerie model and the crypto businesswoman. “This is always the question that everyone asks.”
And there is a compelling answer. VerSteeg dropped out of college and worked as a professional lingerie and fashion model for ten years before a life-shattering event caused her to do a complete 180 into cannabis entrepreneurship.
From Tragedy to Technology
In 2013, VerSteeg was dating Tyler Sash, a breakout NFL player struggling to deal with pain from his football injuries. When he was let go by the New York Giants from suffering too many concussions, he no longer had access to his normal dose of painkillers, she said, and turned to pills to cope.
“While we were together, he would ask, ‘Jess, can I smoke weed for my pain?’” Versteeg said. “I didn’t understand marijuana at that time, and I said no, it’s not legal here, I trust the NFL doctors, they know what they’re doing. Little did I know, they didn’t know what they were doing.”
VerSteeg thought it was dementia when her boyfriend “became a different person” and started to “do crazy things.” She begged the NFL to help, but they didn’t do anything. He became addicted to opiods and she had to end the relationship.
A year later, he died of an overdose.
Devastated, VerSteeg said she spiraled into a suicidal depression, consumed by guilt that she hadn’t listened to her partner more seriously about the uses of medical marijuana. She credited her mother for noticing the dark place she was in and helping her turn her pain into an outlet for entrepreneurship and technology.
“Because of everything I went through, I needed something strong to hold onto,” VerSteeg said. “My passion became changing the way other people saw cannabis so that this would didn’t have to happen to anybody else. Nobody else would have to lose their partner to an opiod addiction.”
A New Joint Venture
In 2014, VerSteeg founded her first start-up, AuBox, a luxury marijuana subscription service that delivered products like weed-infused cake pops, CBD bath bombs, and supplements discreetly to customers’ doorsteps. The blockchain technology she developed alongside AuBox, which she dubbed AuChain, then transitioned into an idea for Paragon, a cryptocurrency and blockchain offering designed specifically for the cannabis world.
It was a perfect business opportunity just waiting to take off. The cannabis industry is expected to grow 35% a year to amass to $35 billion in retail sales by 2022, according to Matt Karnes, Founding and Managing Partner at GreenWave Advisors, a leading cannabis industry research firm. That figure is based on the assumption that every state will legalize marijuana either medically or fully in the next five years.
“I don’t think that’s unrealistic, given that we’re already at 30, and there’s several states that have bills on the table to legalize,” Karnes said. “Once this next wave of states occurs, it’s just going to accelerate the timeline for other states.”
Given that the current administration hasn’t cracked down on weed on the federal level two years in, Karnes said that it was unlikely that there would be massive legal problems on the horizon for the industry. And because Paragon doesn’t deal with the physical product of marijuana itself–rather, it’s just a cannabis-related technology–it isn’t breaking the law.
So how did the formerly anti-weed Iowa beauty queen make the jump so smoothly to the world of Bitcoin bros and bongs? For VerSteeg, technology runs in the family. Her father was a MIT graduate and Pentagon worker, her mother worked on encryption for the government during the Gulf War, and her sister is a computer scientist. Then there’s her husband, Russian technocrat and millionaire Egor Lavrov, who backed Paragon and currently serves as the company’s Chief Creative Officer.
VerSteeg herself was an early investor in Bitcoin since 2010 and is obsessed with crypto, choosing to do as much of her grocery shopping and dining at crypto-friendly establishments as she can. When she was raising capital for ParagonCoin, she chose to do an ICO (Initial Coin Offering) rather than go to VC firms, which she found difficult to break into as a female entrepreneur.
“If I had an ICO, I wouldn’t have to go through this weird process with this group of guys,” VerSteeg said. “It was just me pitching my idea to the entire world, and what mattered more than the sex of the CEO was my code and my blockchain work.”
Weed and blockchain, perhaps a little like VerSteeg’s past and present, are an unexpected pairing that quickly starts to make a lot of business sense upon deeper consideration. Cannabis is a rapidly growing industry, with more and more investors jumping onboard as the world’s first weed-based E.T.F. has attracted nearly $400 million since December. It is also an industry ripe for technological disruption, considering its current dependency on cash.
Because federally insured banks cannot transact with cannabis-related businesses, most companies deal completely in cash, which slows down operations and poses serious security risks. Meanwhile, due to lack of federal consumer oversight, buyers are susceptible to falsified or impure products, with no real idea of where or how the weed they’re consuming was grown.
Blockchain could solve all of that. The technology, which essentially acts as a decentralized ledger, introduces incredible transparency and efficiency into the marijuana supply chain process by providing information on a product’s origination, farming data, lab results, and ingredients, all impervious to fabrication.
“Over time, I realized it could actually be something beneficial for the cannabis industry,” VerSteeg said. Now, at Paragon, she is working on everything from cryptocurrency to blockchain solutions, digital wallets to a mobile app that can scan QR codes on Paragon-friendly products to reveal a wealth of product data.
The Cannabis Coworking Vertical
As if starting two companies before the age of 30 wasn’t enough, there is one final challenge that Jessica VerSteeg is trying to solve at the junction of cannabis and technology: affordable cannabis co-working spaces.
Over the years with creating her two startups, Versteeg discovered how hard it was to find a suitable office space due to landlords skittish about the legal ambiguity of her industry. Competitive co-working companies like WeWork were not always amitable to their clients bringing in pre-rolls or CBD products on premises to observe or demonstrate, and many normal office spaces were uninhabitable due to Green Zone regulations that prevented weed-related businesses from being located too close to, say, a daycare.
“When I had AuBox, it was really difficult to find an office space in the neighborhood that wouldn’t charge me ten times more just because they found out I was some form of a cannabis company,” she said.
Enter Paragon Space–a four-building campus for cannabis co-working, set to open in Hollywood, Los Angeles in a month. Companies will be able to rent private and shared office spaces with access to conference rooms, outdoor spaces, a cafe, and common areas. A hot desk membership is priced at $449 a month, a four-person company desk at $1996 per month, and a three-person private office space for $2070 a month.
Interest is high and clients have already signed up to move into the space, according to VerSteeg. As for the legality, Paragon Space isn’t in danger, since it is dealing just in the technology and co-working space.
“If you’re not touching a plant and not doing anything that’s physically related to marijuana, I don’t think that should pose any legal problems,” Karnes of GreenWave Advisors said. “It shouldn’t really be different from any other business.”
Green Helix, a West Hollywood-based start-up that sells CBD infused products, is one of the companies that will be leasing from Paragon Space. When Nick Palacios, Director of Product and Development at Green Helix, met VerSteeg and heard about the space, he was instantly intrigued.
“Something we were noticing with competitive workspaces was that we couldn’t bring certain products on premises,” Palacios said. “We didn’t want to spend money to get an office space and not be able to utilize it the way we wanted to.”
Green Helix will be moving into Paragon Space when it opens next month. As a young marijuana and hemp company, Palacios said the team would benefit immensely from being in a co-working space with others in the same vertical without having to worry about judgment or bias.
“For us to come together and work collaboratively, network and bounce ideas off of each other, I think that’s only going to breed success and legitimacy that the industry really needs,” he said.