HOOG tests the legal frontiers and encounters the hurdles that cannabusinesses will face in Westchester County as the industry expands.
When Governor Andrew Cuomo signed legislation earlier this year legalizing adult consumption, possession, and sale of cannabis earlier this year, part of that legislation included the creation of the new Office of Cannabis Management (OCM) to regulate authorized businesses in New York. Experts believed at the time we would not see the first recreational dispensaries and commercial grow operations until late 2022 at the earliest. One local startup, however, looks to get a jump on the new industry.
HOOG — a clever play on the strain “High Octane O.G.” and the Dutch word for “high” — is a socially responsible tech startup and specialty nursery that seeks to disrupt the legal cannabis space that’s newly opened up in New York (with aspirations beyond).
“The ‘seed’ for this idea was planted in my head back in December of 2020 when one of Governor Cuomo’s aides informally spoke to the media about a planned push for full legalization sometime in 2021,” says HOOG founder and White Plains resident Deniz Ozkaynak. “Even months before that story broke, as I walked around my town and the greater Westchester area, I saw scores of retail businesses and other shops vacant.”
“Although it was a rather depressing sight for many months throughout the pandemic,” he says, “after I saw the potential legalization news, the very next vacant shop I saw no longer saddened me. Instead, I saw a huge opportunity for … something. At that time, I didn’t know quite what it would be yet, of course, but I knew it would involve whatever legislation would come to pass and hopefully, if I executed it just right, a minor revitalization of the local economy.”
Ozkaynak, a graduate of the Katonah-Lewisboro school system, holds a dual degree in computer science and game design from Northeastern University and has spent nearly a decade as a software engineer for everything from healthcare, education, and finance to game development and national defense. He also runs an Instagram account for his three-legged beagle-lab mix, Wrango.
Going from dev to horticulture may seem like a grand pivot, but Ozkaynak is quick to point out that HOOG is not a cannabis grower. HOOG is primarily a “software firm/plant nursery.”
While the eventual plan may include working with the state to facilitate the cultivation, sale, and distribution of legal cannabis, all of that is a ways off. First, the OCM must develop and implement a process for businesses to actually get licensed, after which local cannabis companies can apply, get their certifications, and begin the process of actually doing business. Ozkaynak hopes that by incorporating early with a declared intent, HOOG will be at the forefront when that time comes, though being the first at anything is rarely easy.
“With the advice of counsel, I chose a Canadian-headquartered bank and sure enough had no issues opening an account with their U.S. counterpart,” says Ozkaynak. While cannabis remains federally criminal as a Schedule 1 drug, many financial institutions still refuse to do business with even legal growers and distributors.
“Traditional financial funding routes such as bank loans are unlikely to pan out well for HOOG regardless of cannabis’ federal status, since we’re a startup with no revenue,” Ozkaynak adds, “so, I’ve been exploring the small business loan rates offered by alternative lenders to absorb some of the initial costs of raising capital effectively.”
Digital advertising for a cannabis-adjacent tech company has posed similar — though not unexpected — hurdles when dealing with Big Tech companies like Instagram and Google through their respective Promotions and AdSense platforms.
“What was unexpected for me was how wildly different the experience was in overcoming those challenges and actually getting ads published. Creating an Instagram promotion that complies with their advertising requirements was very simple, relatively speaking,” admits Ozkaynak. “On the other end of the spectrum, Google’s AdSense sales and support team explained to me that not only would the ad itself need to be ‘clean,’ but also our entire web presence — our own website, our Google business page, etc. — which was, to me, an unexpectedly strict policy considering that another part of Google’s own ecosystem allows businesses to categorize themselves as a cannabis store.”
Currently, HOOG has a simple boutique online-only merchandising presence while it fundraises for its open-source development. After three rounds of capital acquisition, the plan is to move to a small retail space in Westchester County for a specialty nursery growing tomatoes — “Mostly for donation to local pantries,” Ozkaynak says — while developing its content-as-a-service business model. Once that’s up and running, HOOG with broaden its product range to include crops like geraniums, basil, and possibly fungi — and yes, one day soon hopefully cannabis.
“My hope for the industry at large is a surge in cultivation information transparency,” Ozkaynak says. “Public/private cooperation and cultivation efficiency – all driven in response to the disruptive threat my startup poses.”