Black entrepreneurs have found success in the cannabis industry using these tips
Updated: Aug 23, 2022
Cannabis consumption isn't for all of us, but making money is. As legalization of marijuana spreads across the country, cannabis businesses have grown with it, creating an industry expected to gross $70 billion by 2028. Many Black go-getters are eager to get into this space, but few have been able to get through the doors. About 83% of cannabis businesses are White-owned. The remaining, tiny 17% is shared between owners who identify as Hispanic/Latino, Asian, African American/Black, or Other. Black ownership is estimated to be less than 2% across the nation.
To address the lack of diversity, the California Social Equity Program was formed and declared a mission to
"promote equitable ownership and employment opportunities in the cannabis industry in order to decrease disparities in life outcomes for marginalized communities and to address the disproportionate impacts of the War on Drugs in those communities".
The program gave grant money to California cities that were supposed to then award that money to hopefuls from marginalized communities wanting to start cannabis businesses. But according to reports, in the California city of Los Angeles, 100 cannabis retail licenses were given out in 2021, but only about 11 were awarded to Black entrepreneurs. Similar programs were established in Massachusetts, New Jersey, New Mexico, Michigan, Vermont, Illinois, Connecticut, Arizona, and Virginia. Still, the number of Black entrepreneurs who have actually found success in the industry is minuscule. For instance, only 1.2% of Massachusetts cannabis businesses are identified as minority-owned. Though 143 applicants participated in the state's social equity program, only 11 minority applicants obtained licenses in the end. In Illinois, the amount is at 0%. That's right, none of the state's cannabis businesses are minority or Black-owned right now. Illinois state officials claimed they planned to award licenses to minority applicants in July 2021, but took a whole year to finally give them out. Does it seem like the people running these social equity programs are playing games, or what?
One issue is that information about the programs is rarely advertised or promoted. Individuals often are tasked with finding out about social equity opportunities on their own. Of course, this is a problem. How would Black enthusiasts know to go looking for these programs if they've never heard of them?
The lucky ones who do find out must then meet other requirements. According to Edgar Cruz, a recipient of a cannabis social equity grant from Long Beach California, applicants must have lived in a particular city for a certain number of years, been previously arrested for a cannabis-related crime, or be receiving unemployment benefits. Also, applicants must make a median income or less to be approved. This seems like a contradiction to the fact that starting a cannabis business is extremely expensive to do. Why would applicants be denied for making too much money?
But being lucky enough to be approved does not equal success either. Starting a cannabis cultivation plant costs over $1 million. Business owners are tasked with raising this capital on their own. And we all know that racial bias makes fundraising much harder for Black entrepreneurs. In addition, growing cannabis is very complicated, so the founder would need to have extensive knowledge of marijuana farming, or be able to pay a team that does. Apparently, the costs are monstrous.
Even still, if an entrepreneur is able to raise enough money, there may not be space for him or her to actually open up a location. Many states put a cap on how many dispensaries are allowed in the area. If all spots are already filled, the Black hopeful is out of luck again. Putting other complicated conditions on social equity approval is not unheard of. Just two weeks ago, Illinois finally gave out 149 cannabis business licenses to social equity applicants. 41% of the awardees identify as Black. But stipulations come with the deal. The lucky winners only have 180 days to find a storefront location and obtain additional dispensary licensing. Failure to meet these expensive and time-sensitive requirements could result in cancellation.
It's no wonder that Black-owned businesses make up such a tiny percentage of the cannabis industry. The obstacles can seem endless. According to Edgar Cruz, only about 1% of approved applicants in his city actually succeeded at forming a licensed business. It often takes years for those who make it to finally complete the process. For Edgar, it took about three years.
But let's not lose hope. If there's one thing we know how to do, it is overcome. The grit, perseverance, and tenacity of our community is unmatched. If you're interested in getting into the cannabis business boom, don't feel defeated. Let this be another one of the locked doors that you find a way to push through anyway. Here are some tips for business and personal growth from those who've made it:
Edgar asserts that the key for Black entrepreneurs to gain entry is education. He says it's important for applicants to be knowledgeable about
"workforce development, business development, business plan development [and] technical assistance...".
Edgar has started his own organization to address this issue. His company, Long Beach Cannabis Commerce Council, hosts an entrepreneurship academy to help social equity candidates gain knowledge on how to become successful in cannabis business. Loriel and Anthony Alegrete, the owners of 40 Tons Cannabis Brand, have also centered their business around education. In a recent interview, Anthony said,
“The way that we solve this issue and all world problems is through education and opportunity. We need to educate people on how to do what they want to do, then provide the opportunity to take that education and do something with it. That is what's going to make this a better industry and a better world. Period."
In addition, Black entrepreneurs must understand the benefit of unity. Building a strong team of members who will stick together, raise capital together, overcome barriers together, and find strategic partnerships together could make a big difference. The couple also spoke about the need to form partnerships with aligned people; others who share the same mission, not just the same goals. They want to make sure that the people they partner with are in it for the long haul. This idea was shared by another team of successful Black entrepreneurs in the space too.
Tiyahnn Bryant and Precious Osagie-Erese are Black entrepreneurs who have made a successful business in cannabis as well. They are, respectfully, the CEO and COO of Roll Up Life, which is a cannabis delivery company in New Jersey. They agree that forming strong bonds with others of the same mindset is super important. But they stress that a big part of this is making sure to get advice from predecessors. They said their most valuable takeaway from the journey has been,
“Getting to pick the brain of other cannabis industry leaders while simultaneously forming strong relationships with our fellow cohort members.”
There is power in strategic networking and partnering in all business ventures; cannabis is no different in that sense. Tiyahnn and Precious also advise others not to be risk-averse. Taking chances is not always comfortable or the safest way, but as the cliche says: with great risk comes great reward. Be prepared to bet on yourself and step out on faith as you fight to accomplish your goals.
That fight towards success will make you weary at some point, though. This is why it’s important to be passionate about the industry you’re looking to get into. Loriel and Anthony have an emotional, personal story connected to their cannabis involvement. Their 40 Tons brand sells THC products and merchandise to raise money to help release prisoners jailed for non-violent cannabis crimes and prepare them to transition back into the workforce. They are so passionate about the industry because Anthony was imprisoned for nonviolent involvement in cannabis himself. The struggle to the top here can be daunting. It isn't recommended for anyone not passionate about the product to try getting involved.
And finally, it's important to be up-to-date on new marijuana breakthroughs and trends. Following others who have found success in the field or have started organizations to keep people informed is necessary. Several Black-owned organizations have been formed around this premise, including Edgar's own Long Beach Cannabis Commerce Council and the Alegrete's own 40 Tons Brand. Others include the United CORE Alliance and Student MMJ. Let's give some hand claps and snaps for the Black professionals trying to make a pathway for others to join on this money train. Whether you're interested in the cannabis industry or want to make your mark somewhere else, we encourage you to keep pushing and don't forget to support each other along the way.
For more reads like this, be sure to subscribe to our newsletter and follow us on Instagram!