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February 2018

Is the Marijuana Industry Excluding African Americans?

In recent years seven states and the District of Columbia have legalized marijuana for recreational use. Another 22 states have legalized medical marijuana. Thanks to this legalization, there are now many marijuana products on the market including cannabis-infused candy, cookies, soda, and cuisine prepared by specialized marijuana chefs.

According to ArcView Group Research, revenue from the U.S. marijuana industry is expected to grow to over $21 billion by 2021. However, even with this amazing growth, the industries forerunners are largely white. According to Amanda Lewis, a drug policy writer for Buzzfeed, African Americans own 1% of the nation’s 3,500 cannabis dispensaries.

Few people realize how difficult it is to break into the cannabis industry. The business plan is the first step to creating your dispensary, cultivation center, or store. Without a clear idea of your goals, assets, plans, and projections. It will be extremely difficult to obtain cannabis investors.

Once you have investors and funding secured, you can buy or rent a space, get a permit or license and open your business. The prices of these permits and licenses vary by location and the type of marijuana business you intend to open.

These permits and licenses are extremely expensive. Obtaining the funds to obtain these permits and licenses is one of the largest obstacles black entrepreneurs face. In Texas, the application fee $7,356 and the licensing fee is $488,520 for a two-year license.

There is currently a debate about whether the lack of funding for black entrepreneurs is caused by prejudice or a lack of knowledge about the industry and what it requires.

William Koffie, a Chicago lawyer, expressed his struggle with breaking into the industry. He admitted that he thought the process was simpler than it turned out to be, but he believed that finances and general prejudice were the main reasons he couldn’t break into the industry.

Koffie said, “I think African Americans have organizational issues coupled with the fact that the USA has an agenda against having us succeed. Most investment groups I went to felt that they were not willing to risk the application fees when they thought the chances of them being approved were slim to none. That was frustrating, and I felt that was a ‘nigger complex.’ Regardless whether the system is set up to weed us out, we still need to find ways to overcome those barriers.”

George Allen, co-founder of Comfy Tree, a marijuana consulting company, said “I don’t think minorities are properly informed on what it requires to have a dispensary. Many people don’t have the proper funding, and it’s not like you can walk into a bank and say, ‘Hey, I need a loan for this amount to open a dispensary.’…That’s one of the many reasons why we help minorities get the proper funding as well as knowledge on the marijuana industry through virtual classes online stocked with in-depth, interactive training on all subjects of cannabis.”

While some companies may have some prejudice, it is agreed lack of information and funding is the main obstacle for black entrepreneurs, not race. Companies have been developed specifically to help minority businesses, and problems within the industry have been addressed quickly. While there is a lack of diversity in the marijuana industry, many companies and policies are being put in place to create equal opportunity.



Complete the Circle Started By Martin Luther King

The beginning of the circle in the past, Minority communities was targeted and filled with drugs by the system either by chance or by choice; which actually translated into a new industry called “private prisons”. By targeting minority ownership within the cannabis industry; who better to benefit and why not include these communities?

Beginning February 1st, and in observation of Black History Month, C. E. Hutton celebrates the value of tradition and wisdom. Now, is the perfect time to “complete the circle started by Martin Luther King” and many others by leveling the financial playing field for Minorities with this spark.

America is the “Land of the Free” so as citizens, we should all expect that, but we’re still waiting on promises broken the minute they were spoken. It’s true that nothing can maintain a straight course, but eventually all things must move forward. It will take forward thinking and sound management in the cannabis industry to ignite the fire strongly burning towards federal legalization. There are signs all around us screaming for change. How many natural disasters do you need? We rip and steal from the Earth, and now she’s fighting back with a vengeance proving now more so than ever that it’s time to close the circle. Economic Justice, Social Change and Technology have converged to make “Green” industries not only wanted, but desperately needed.

-Michael Souza

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Author: Michael Souza – Partner at C. E. Hutton, LLC a Business Development and Management Company that helps entrepreneurs and small to mid-size companies gain or even retain customers. They offer business and marketing planning, strategic planning, high-level retainer consulting, market research reports, project-based consulting, and company registration.

Getting to the CORE of Sacramento’s Equity Program

The legalization of marijuana has created the largest business opportunity in America since 1933. The city of Sacramento, California intends to make the best of this opportunity by creating a program that will help minority communities participate in this up and coming industry.

The Sacramento City Council approved the Cannabis Opportunity, Reinvestment, and Equity Program (CORE) in November of 2017.  According to Fox40, CORE “aims to provide mentors who have experience in the marijuana industry to women and minorities that are looking to get into that business.” It also waives some start-up fees for members of minorities and can speed up the permit and approval process for minority business. Overall the City of Sacramento hopes to create equal opportunity for all wishing to enter this field.

The city will also gain considerable benefits from this program. Recreational sales have the potential to create new taxes and fees. The revenue from just 30 medical marijuana dispensaries in 2016 was over $4.8 million.

In many ways, Sacramento’s program, as with all other equity programs, will be a test trail watched by all of America. To avoid criticism Sacramento will have to truly provide small minority-owned businesses with help that will put them on the same level as their competitors. The city must begin by developing small-business support centers, mentoring programs, and provide technical support as needed.

This program has raised the hope that minority businesses that have been going around the law will be able to come into the light and feel more comfortable and welcome in the industry. The City believes that if minority businesses are given fair opportunities, the result will be legitimate businesses, greater public safety, and more tax revenue for the city.

Bill Lockyer, a former attorney general for the State of California, and a soon to be co-founder of a cannabis distribution business stated: “I think legalizing will help stabilize and help legitimize this industry and result in better consumer protection and other public benefits.”

This opinion is shared by and has motivated the Sacramento and Asian- Pacific Chambers of Commerce to create outreach programs. These programs have been up and running for a little over a year. Through these programs, there have been four roundtables and educational workshops in the past year. All of these events have been widely popular. It was noted that several hundred participants were in attendance at the events.

Many minorities faced business discrimination in the last century over a variety of industries. The Cannabis Industry is an opportunity to right the wrongs of the past by providing truly equal opportunity.  Sacramento is not alone in its fight for equality. Equity programs have been created throughout the state of California in Oakland, Los Angles, and San Francisco. Other states that are supporting minority progression in the Cannabis sphere include Ohio, Florida, Pennsylvania, and Maryland. While many of these programs have flaws to work out, the sheer number of them shows the potential growth the Cannabis industry will have in years to come.



Race to the Top

San Francisco recently announced that they plan to reduce or end sentencings for all criminal convictions, misdemeanors, and felonies, dating back to 1975, related to cannabis. Those who have served time or currently serving time will have their cases reviewed, clearing the way for people to be released from jail and be allowed to look into housing, jobs, and other areas of life previously unavailable due to their convictions. The city is expanding upon Proposition 64, a state law that allowed amnesty for marijuana-related crimes as a condition to legalize cannabis in California.

Cities across California and other states are following suit, creating what seems to be a race to achieve true racially and economically inclusive outcomes. Oakland was the first city to launch a cannabis equity program, designed to help people lacking the capital needed to start a business, or being restricted to do so, because of past weed crime convictions. Twenty-nine cannabis businesses in Oakland will not have to pay rent and will have security costs covered for three years under the program. The city revealed the names of several people who will be receiving permits to open a cannabis dispensary the same day San Francisco made their announcement. Six of the eight permits were awarded to people that either fell under the line of individuals making less than the average Oakland median income, which is $56,300 in a one-person household, or who were convicted for weed dating back to 1996. Some of the companies have also admitted to employing half of their staff with formerly incarcerated people.

Los Angeles is another city with a cannabis social equity program. Business permits are prioritized for people that lived in cities ravaged by drug wars, have criminal records for marijuana, and who will employ half of their staff from residents. Both cities are also willing to help finance or lease spaces to applicants that don’t fall under the two programs criteria.

Sacramento also imposed a Cannabis Opportunity, Reinvestment, and Equity Program. The criterion is similar to other programs and is also looking to help business-seekers with past drug convictions have their records expunged. Ohio, Florida, Pennsylvania, and Maryland have equity programs but are having problems with the roll-outs.

One Oakland organization, Hood Incubator, is coming into the race to help formerly incarcerate blacks and Latinos prepare to work in the cannabis industry. They announced a $1 million partnership with the cannabis technology company Eaze. This is allowing Hood to include clinics and business workshops, and developing progressive policies for cannabis-friendly cities to adopt. Their first joint project will be “Cannabis Equity Strategy Manifesto” which will build upon practices from jurisdictions with an equity program, to create a model policy for future cities and states wanting to get into the cannabis market.

Though regulations for the cannabis market have been heavy, profits and revenue have still grown substantially. In the 2017 Cannabis Industry Annual Report from New Frontier Data, the market was estimated to be worth $6 billion in 2016 but is expected to grow to $24 billion by 2025, growing at a compound annual growth rate of 16%. This statistic is right now solely based on states where weed is legal, so it is expected to dramatically change.



Minorities to Receive Helping Hand in the Medical Cannabis Industry

A report released on January 17, 2018, by Maryland’s Gov. Larry Hogan’s administration has provided data on discrimination in the overall economy toward businesses owned by women and minorities.

Jon Wainwright, an economist and managing director of NERA Economic Consulting noted that last year’s study suggested dissimilarities in economy-wide state contracting within some of Maryland’s relevant markets. These disparities are even greater in the public sector. The reasoning being offered toward the differences is due to a state-operated minority business enterprise program. The program is meant to reduce discrimination in public procurement but does not yet eliminate it entirely.

The evidence would support lawmakers who are sponsoring legislation to create five medical marijuana cultivation licenses for minority-owned businesses. A previous bill failed to pass the prior year.

Maryland’s medical marijuana program began having dispensaries sell within the state. Despite the 14 companies licensed to grow marijuana, however, none are owned by black owners, though nearly one-third of the state’s population is black.

There is a strong interest in Maryland’s marijuana market, as it is expected to be highly profitable. The expectation comes from allowing marijuana to be available to those with severe conditions that other medical treatments prove ineffective. Doctors, as well as nurse practitioners, dentists, podiatrists, and nurse midwives, can recommend its use.

Wainwright stated in his report, “Absent such affirmative remedial efforts by the State; I would expect to see evidence in the relevant markets in which the medical cannabis licensees will operate that is consistent with the continued presence of business discrimination.”



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