Armored cars and facial recognition: Meet the startups securing California’s pot industry

A pair of California business partners think they’ve found their niche in the burgeoning cannabis industry: Armored cars that move money and marijuana across the state.

Because marijuana is still illegal on the federal level, few banks will open accounts for marijuana businesses, meaning most operate entirely in cash. To buy supplies or pay taxes, they need to move that cash.

Then there’s the products themselves — marijuana plants, edibles, CBD oil, associated equipment, all valuable in themselves.

“We’re either going to triple or quadruple in size in 2018,” when sales of recreational marijuana begin in California, Hardcar Security CEO Todd Kleperis said.

Founded in late 2015, the Palm Springs-based company generated “a few hundred thousand” dollars in revenue in 2016 and will be “well into a million” in 2017, Kleperis said.

They have eight full-time and 20 part-time employees — most of whom Kleperis expects to bring on full time after recreational sales begin in California on Jan. 2, and most of whom are military veterans.

Kleperis said Hardcar has 25 regular clients, most of them in northern California. His drivers move cannabis products from growers and manufacturers there to dispensaries in southern California.

Kleperis and COO Jeff Breier met more than a decade ago in China, where both worked in security technology. By 2015, both were closely watching the cannabis industry. They partnered and opened an office in the California desert, hoping to serve the fast-growing industry.

Terry Blevins, president and CEO of Santa Monica-based Armaplex, saw the same opportunity. About eight months ago, the former police officer and longtime security professional launched Armaplex, which offers transportation and on-site security as well as consulting services.

“I just saw there was going to be a huge opportunity for security,” Blevins said. “I knew it was going to be a highly regulated industry. I knew that a lot of the people who have been in the industry for decades may not have the security experience to secure their own product and cash, so they’re going to be turning to people like me.”

Blevins, who routinely speaks at industry conferences about security issues, estimated that California’s marijuana businesses will be spending as much as $200 million on transportation and security within two years of recreational sales beginning Jan. 1.

His company currently has about 12 clients. He expects their business alone will generate up to $5 million in annual revenue beginning in 2018.

“I have had an incredible response from investors who are actually standing in line wanting to invest in our company,” Blevins said. “There’s a huge, huge opportunity there.”

Hardcar Security’s Kleperis and Breier are among many cannabis companies prioritizing veteran hiring. For Kleperis, an Army veteran, it’s primarily about skills.

Kelperis said Hardcar’s driver and guard jobs pay about $25 to $30 per hour.

“We think vets are uniquely poised to thrive in this industry,” Seth Smith, communications director for the Santa Cruz Veterans Alliance, a veteran-owned medical marijuana collective, told The Desert Sun in June. Veterans “understand the benefit of doing things right, and we know how that can help (the industry) in the long run. We want to have that track record of doing the right thing the whole time.”

Then there’s the rest of Hardcar’s business: Sophisticated security systems, including an iris-level facial recognition system, a weapons detection system that can be installed inside walls, and sensors that detect movement near perimeter fences.

Most dispensaries don’t need all that, Kleperis said. But the largest cultivators have annual revenues in the tens of millions of dollars now. They can afford to invest — and they need to protect valuable products.

As is the case for many marijuana-related businesses, some companies have flat-out refused to work with Hardcar, Kleperis said. Technology companies have denied manufacturing contracts. He’s not sure whether the company that makes their armored vans knows what they use them for.

“We have all the same licenses” as security companies that work with banks and governments, Kleperis said. “It’s just, we get blackballed because we’re in the cannabis space.”

Blevins said he was denied services from the federal Small Business Administration and relies on private investors and private loans instead of bank loans.

But both companies have faith in their expertise, buoyed by the almost-guaranteed growth of the industry they’re in.

“We plan on dominating,” Kleperis said. “Right now, we’re the largest in our space for transportation and cash and logistics, and by the end of 2018 we’re going to have a very solid footprint, all based here in the desert.”

credit:420intel.com