3 Women Who Are Trailblazing Social Equity Programs
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More and more states are joining the drive towards the legalization of adult-use cannabis. One aspect of the current and impending state laws require businesses applying for cannabis licenses to have social equity programs (SEP) in place. Most of us hope that the emerging cannabis industry will lead in the fight to create a fair playing field for those looking to compete. While the details behind SEPs are a work-in-progress, many people believe the success of the cannabis industry rides on setting these fledgling entrepreneurs up to win.
It won't be easy. The financial and societal barriers to entry into the business of growing and selling legal, adult-use cannabis are high. According to MJ Business, opening a dispensary can cost upward of $312,000, or $500,000 to operate a cannabis processing facility, and a hefty $2,500,000 for a vertically integrated operation. Couple the start-up costs with the societal barriers that disadvantage women and persons of color, and you have a recipe for excluding the persons most legislation aims to help.
The solution is developing business incubator programs that include, as a core principle, social equity programs designed to lessen the negative impact caused by marijuana criminal laws and how those laws were enforced.
These business incubators are at the core of SEPs and are meant to prepare participants for success as business owners.
The question is: What's the best way to get there?
I spoke to three women—Angela Dawson, Denavvia Mojet, and Michaela Toscas—who are leading, developing, and guiding social equity objectives in incubator programs within the cannabis industry.
Giving entrepreneurs access to contacts and resources
At Fluresh, Denavvia Mojet works on a business incubator program to help qualified participants compete in the cannabis industry. She gives participants access to the Fluresh facilities and resources, making the difference between success and failure.
Denavvia has been an activist fighting for those impacted by the war on drugs since she was seventeen years old. She co-founded the Black and Brown Guild, an organization providing advocacy, networking, and guidance to its members to amplify her work and passion for social justice.
She believes the success of her program is the ability to be agile and pivot when needed to accommodate participants with different skill levels and needs. Her current participants range from business newbies, those in the illicit market, and business professionals looking to transition into the industry.
For example, Ciarra Adkins, a participant and lawyer, wanted to expand her knowledge and experience of the cannabis industry to broaden her services when she entered the program. Dennavia paired her with Fluresh's in-house counsel to navigate the industry's new legal regulations and compliance issues.
Says Ciarra, "Having direct access to the Fluresh general counsel as a mentor has been an amazing resource. He gave me strategic advice on how to pivot my firm, and I recently started accepting clients in the cannabis industry."
Such access to professionals is a standard feature of incubator programs. The difference is that Fluresh has shared its resources with potential future competitors because Dennavvia believes competition and diversity in the cannabis industry will make it a better business for everyone.
Fluresh's employees and business partners share their expertise with the participants through interactive workshops and onsite facility tours. For instance, a construction company contracted by Fluresh taught participants what it takes to build a cultivation and extraction facility. A venture capital firm that raised funds for Fluresh taught participants the ins and outs of how to create pitch decks and secure investors.
Denavvia says her end goal is to graduate the SEP's participants into vendors of Fluresh as a way to build an equitable cannabis business ecosystem for all.
Advising minority farmers
Forty Acre Co-op, a mentorship program founded to help minority farmers gain access to valuable and vital resources of the burgeoning cannabis industry, is the brainchild of Angela Dawson. Angela is a farmer fighting against the racial discrimination black farmers have faced for centuries. As a black woman in the farming industry in Minnesota, she brings her knowledge and experience to her mission.
According to the US Department of Agriculture, in 1920, black farmers operated over 925,000 farms in the United States; in 2017, the United States census identified just under 50,000 black farmers in the US, accounting for 1.4 percent of the country's population 3.4 million producers. In 2020, 98% of COVID-19 emergency funding by the federal government went to white farmers. The non-profit, Environmental Working Group calculated that the average white farmer received $3,398, whereas the average Black farmer received $422.
Angela faced this same type of discriminatory practice when she applied for a small grant from the USDA to purchase farm equipment to help her business stay competitive. During the process, one USDA agent told Angela that she had never before seen a woman farmer seeking government funding and implied that, as a woman, she was in over her head and not qualified to run a farm.
The agent suggested that Angela re-apply with a man to increase her chances for the grant. Angela did not re-apply, and she did not receive the funding. Many state laws recently enacted to legalize marijuana identify the elimination of these discriminatory practices as a matter of public interest. By prioritizing assistance to minorities, SEPs will serve that public interest.
Angela fought back against the discrimination she faced with grass-roots activism and co-founded 40 Acre Co-op. And she's not stopping there; she is actively seeking a seat on the Minnesota Cannabis Board to make sure legislation does not exclude the underserved from a lucrative cannabis industry and includes SEPs as an essential element of the laws.
The 40 Acre Co-op Mentorship Program consists of a 12 session course Angela developed based on her years of farming and business experience. She meets, virtually, with cannabis farmers to advise on business development, regulations, cultivation technical assistance, and how to market and distribute their products.
Angela bolstered the program by partnering with Charlotte's Web, a seed-to-sale company, to give her participants access to Charlotte Web's rich resources and expertise. Angela is hopeful that other "privileged corporate companies that have profited so well will equitably partner with the community to help develop legitimate businesses that can compete on a level playing field where all can prosper."
Angela recently applied for another grant to fund cannabis processing hubs needed to meet the increasing market demand for her farmers. "None of the 30 farmers in our program have the money, equipment, or supplies to scale their businesses," Angela says. "I created the curriculum for the 12 session course to be transformational of the cannabis farming experience because our farmers need to know how to grow hemp using regenerative and sustainable practices."
She believes that if states include experienced ethical farmers, dispensary owners, and users on their boards, representing every part of the supply chain, they will make intelligent laws and policies about what is needed to support this new industry. They will also help the under-served enter the cannabis industry.
Leading the way in California
Lawmakers in Oakland, California, are pioneering the path for SEPs in the cannabis industry. Says Greg Minor, Assistant to the City Administrator for the City of Oakland. "We were one of the first to start social equity programs, and we don't pretend our program is perfect; we know it takes trial and error to build on and learn from our mistakes."
California law requires corporate cannabis licensees to provide three years of free work-space to a qualified social equity license applicant. Under the law, offering a simple office space is all that is needed to fulfill the requirement. Unsurprisingly, Greg and his team noticed that most corporate licensees contribute the bare minimum, such as an office only big enough to operate a delivery service. Individual licensees need more than office space. They need facilities to run from that are code compliant and have equipment for processing and packaging the products.
To alleviate the lack of meaningful contributions from corporate licensees, the City of Oakland has allocated funds to create a shared facility for cannabis entrepreneurs looking to process and package their products.
Another critical contribution to individual licensees would be comprehensive education programs to help participants navigate the various laws, develop and implement business plans, and ultimately learn to give back to future participants. Enter Michaela Toscas, an entrepreneur in the cannabis dispensary business.
Michaela Toscas had previous experience helping a friend launch a shared kitchen space for a cannabis-related business. She had her eye on a "shell of a former commercial kitchen" to start her shared kitchen to cater to cannabis social equity participants and snatched it up.
On a leap of faith and with her family's savings, Michaela bought a building. She outfitted it to be a cannabis-compliant commercial kitchen space that accommodates nine participants per program. Greg committed to funding rent for the equity participants, and The Oakland Cannabis Kitchen was born.
Michaela now operates two non-retail cannabis dispensaries from her shared kitchen facility. There are two types of (limited) dispensary licenses available in California- one that includes a storefront or one limited to delivery only. Michaela is disappointed she has not been able to obtain a retail license but will keep trying.
She developed robust business education workshops and mentorships she calls The Success Program. For example, she held a class in her shared kitchen to demonstrate how to make a fully compliant "batch production" record of meeting HACCP compliance, a mandatory requirement under California laws.
One of the most daunting tasks of operating a cannabis business is legal compliance. Michaela eased that burden for her participants by securing pro-bono services from BackBone, a business data-tracking software that integrates with Metrc, California's compliance tracking system required by state law. And with CW Analytical Testing Lab to assist participants in creating a Master Manufacturing Protocol also needed for product development compliance in California.
Another complex challenge for entrepreneurs is the licensing application process. Michaela created a city and state checklist with everything participants need to apply and license application templates that make it easy to fill in the blank and submit.
Her goal is to perfect the business incubator in hopes The Oakland Cannabis Kitchen will be used as a template that can be rolled out in other cities and states.
The Oakland Cannabis Kitchen incubator program is meant to be a stepping stone to a permanent location. Greg Minor's office at the City of Oakland looked ahead to the needs of the equity participants. It began to purchase property for a city-owned shared-use facility where Michaela's graduates will have the opportunity to rent and expand their businesses to a permanent location.
Recipe for success
What do these three women have in common? They are entrepreneurs who understand how to launch and operate a business. Still, most importantly, they are incredibly passionate about the business incubator program and helping historically disadvantaged people thrive in the cannabis industry.
All three women expressed concerns for small business owners trying to enter the industry against well-funded and connected corporate behemoths. But, they promise they will do what it takes to make sure justice is served. And my bet is on them.