Social Equity Businesses Are Struggling. This Startup Hopes to Change That.
There's a real danger that social equity entrepreneurs will not have their rightful place in the cannabis industry due to larger-than-life hurdles. BCubed is offering help.
Four factors are holding back cannabis social equity programs: Funding, compliance, know-how, and the threat of a big corporate takeover. Last week, the challenges played out in Oakland, where cannabis regulators sent several social equity licensees to collections for unpaid loans.
It will be tragic if we look back at this time and find we didn't make the business inclusive and fair for all.
Many state-mandated social equity programs merely checked the box, and businesses entering the industry found loopholes to avoid participating—and a surprising number of states don't even require such programs.
Thankfully, entrepreneurs and businesses have emerged that offer solutions and a path for social equity entrepreneurs, including franchise models to shared kitchen space, farming co-ops, and business plan competitions.
One of these businesses is BCubed Cannabis, a start-up looking to be hands-on business partners with social equity entrepreneurs. We spoke to co-founder Korin Neff.
Would you please give us a bit of your background and how you got into the cannabis industry?
Neff: I'm a lawyer by training. I was with a Fortune 500 company as their Chief Compliance Officer for many years, the company broke apart, and from there, I stumbled into cannabis.
I started engaging in consulting opportunities once I realized the industry's need for someone with a legal, compliance, and business background. I met a few different social equity groups and did pro bono work to both get my feet wet in the industry and offer some help to entrepreneurs.
I saw the obstacles they faced trying to enter the industry, and I thought I could help. In the back of my head, I knew I eventually wanted to help move social equity forward somehow, and I knew if I could partner with a brand that was willing to support these initiatives, we could do some life-changing things. And that's when my wheels started turning.
Who was that partner?
My family owns property on Long Island, where my grandfather opened a liquor store over 70 years ago, and which he built into something that became a multi-generational business for our family.
We began to entertain the idea of turning the property into a dispensary, and that's when my two sisters and I started B Cubed.
I had been in the cannabis industry for three and a half years when I met the team at Fire & Flower US. They are the exclusive licensor of the Fire & Flower brand name and tech stack from Fire & Flower Holdings, one of the largest pure-play cannabis retailers in Canada.
What had started as a discussion about potentially opening a Fire & Flower store on Long Island blossomed into a discussion about social equity and how to incorporate it into our business.
How did you work with Fire & Flower?
After much discussion with the Fire & Flower US team, the B Cubed business model was hatched. Fire & Flower US agreed to finance our social equity business ventures, share their expertise, and allow us to license their name and technology. This is in exchange for an equity stake in our businesses, enabling us to remain truly women-owned. Meanwhile, we will seek social equity partners in the areas in which we plan to operate.
The right partner might have the drive and wherewithal but not access to capital or the knowledge on how to run a business. We can partner with you and say, okay, let's come up with a fair equity split on a case-by-case basis, but one where everybody feels is fair.
We are going to be riding shotgun with that social equity partner. We are going to teach them how to operate every aspect of the business, leveraging the skill sets they bring to the table. Our partner might be somebody with finance background or have a long history and knowledge of the plant. Whatever thier expertise is, we want it to be a give and take where we can learn from one another.
We plan to open multiple locations and lean on our social equity partner for their knowledge of the local market. For example, which site would be best for a dispensary? What are the trends and demographics? So instead of it being a franchise, it's truly a business partnership.
So, to clarify- B Cubed, along with its social equity partners, is the vehicle for Fire & Flower to expand into the United States. In return, Fire & Flower US will provide funding and a successful business model you can use.
Fire & Flower US has access to capital, exclusive US license to the branding portfolio. and tech stack. To start a brand from scratch and obtain financing is a ton of work to do on your own. The idea is really to leverage everything Fire & Flower US has to offer to help grow the Fire & Flower brand while providing access to communities that have been historically disenfranchised.
So, B Bubed will have multiple legal entities and partnerships in its portfolio? That seems like a challenge.
We recognize that it is a lot to manage, and we believe we have the right systems and processes in place to succeed and more importantly, allow our partners to succeed.
While we plan to provide something akin to an on-the-job MBA, we also understand that the value gained from the perspective and know-how of our social equity partners is also supremely important.
Ultimately, the intention is to create a group of people among our partners who find financial, professional, and personal success and then a desire to pay it forward.
How do you vet potential partners?
We're looking for somebody who wants a true partnership where we can both work together. An announcement is coming soon with respect to a new partnership we are forming in a local market. This partner has strengths in certain areas and is willing to leverage their network, just as we're eager to leverage our strengths and network. It's the rising tide lifts all boat theory.
What are the criteria? Do they need a certain amount of money to enter? How do you screen them?
Our current approach is through old-fashioned discussions with folks who are interested in possibly working together.
We're not a broker-dealer. We want to be a business partner with a responsible, hard-driving, serious, yet fun person.
How do you plan to scale this business model?
We'll manage the application process in multiple states. We have an infrastructure in place, a legal and accounting team, and systems on how we do things, and then hopefully, we can plug people into the jobs.
There are multiple stages to this. In the pre-application stage, you're vetting your partner and saying, okay, is this who I want to do business with? Then you hit the application stage, which is where you get down to the grit and grind. You're working, fetching documents from people, and understanding the specific market. The pinnacle is management. We have a management team that we can plugin to both operate and train up local partners.
As we grow, the idea is to allow the different groups to cross-pollinate because they will get so much value, not just from learning from us, but if they start to network within the group, it will make the mesh much stronger.
How do you find equity partners?
We will be announcing a partnership with a well-known training company to provide in-person educational and networking events, which is one avenue by which we can discover potential partners. This training and networking will provide people with the luxury of exploring the market so that we remain true to our mission of empowering women, minorities, and veterans (or any other disenfranchised group). We will be providing scholarships to a percentage of attendees who meet these criteria. Aside from our training and networking events, we are sourcing potential partners through our network.
I think we solve one of the biggest problems facing social equity entrepreneurs -access to capital. We protect our investments and provide value as hands-on partners in the business.
We're looking for somebody to be our partner that will ride sidecar with us, as opposed to throwing capital at them, and let them figure out what to do from there. We give you funding and tell you precisely what needs to be done. We hope this partnership provides the social equity entrepreneur with a valuable experience they might not otherwise have had.