The Big Business of Synthetic Highs

It's a Friday afternoon in April, and Wesley Upchurch, the 24-year-old owner of Pandora Potpourri, has arrived at his factory to fill some last-minute orders for the weekend. The factory is a cramped, unmarked garage bay adjoining an auto body shop in Columbia, Mo. What Upchurch and his one full-time employee, 21-year-old Jay Harness, are making is debatable, at least in their eyes. The finished product looks like crushed grass, comes in three-gram (.11ounce) packets, and sells for about $13 wholesale. Its key ingredient is a synthetic cannabinoid that mimics tetrahydrocannabinol (THC), the active ingredient in marijuana. Upchurch, however, insists his product is incense. "There are rogue players in this industry that make the business look bad for everyone," Upchurch says. "We don't want people smoking this."
From the outside the place looks abandoned. The only sign of life is a lone security camera. Inside, two flags hang above a makeshift assembly line. One shows a coiled snake and reads "Don't Tread On Me." The other has a peace symbol. The work space consists of a long, foldout table containing a pile of lustrous, green vegetation, a pocket-calculator-size electronic scale, a stack of reflective, hot-pink Mylar foil packets, and a heat sealer. Each packet has the brand name, Bombay Breeze, and is decorated with a psychedelic logo featuring a cartoon elephant meditating among abstract-looking coils of smoke and stars.
Upchurch supervises as Harness weighs out portions of the crushed foliage, dumps it into a packet, and slides the top through the heating machine to create an airtight, tamper-proof seal. He finishes about a dozen in 10 minutes, topping off what they will need for their deliveries: two shipments of more than 1,000 packets each. Upchurch points to a disclaimer near the bottom right-hand corner of each package that reads, in all caps: "NOT FOR CONSUMPTION." Says Upchurch: "That's to discourage abuse."
His protests and disclaimers to the contrary, Pandora is getting smoked—it's being packed into bongs and reviewed on sites such as YouTube (GOOG)—for its ability to alter the mind. Like many others, Upchurch is repackaging experimental medical chemicals for mainstream store shelves, most often with some clever double-entendre in the branding. He says he sells about 41,000 packets a month, delivering directly to 50 stores around the country and shipping the rest to five other wholesalers, some of whom use Pandora's products to create their own brands. Upchurch says he ships mostly in bulk orders for larger discounts. He projects his company will earn $2.5 million in revenue with $500,000 in profits this year, depending on what federal and state laws pass. "I think my business model is based less on charts than it is on guts, or something," he says.
"Incense" such as Upchurch's, along with "bath salts" and even "toilet bowl cleaner," have been popping up at gas stations, convenience stores, "coffee shops" that don't sell much coffee, and adult novelty stores. Today, Upchurch's shipments—he uses UPS (UPS)—are headed to places called Jim's Party Cabin in Junction City, Kan., and the Venus Adult Superstore, in Texarkana, Ark. Instate, Upchurch sells to Coffee Wonk, a coffee shop in downtown Kansas City, Mo. There, 28-year-old owner Micah Riggs writes the names of his offerings in multiple colors on a dry erase board near the register. The packets themselves are kept beneath the counter. While Riggs doesn't mind his customers talking about how they will use the incense, he's as circumspect about what he is actually selling as Upchurch. Nearly everything he says is in code. He'll say things like, "Is this your first foray?" and "There are different potencies of aroma..."

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Ben Paynter @'Bloomberg Businessweek'