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April 2018

Diversity is Hot in Cleveland

The Business Growth Collaborative or BGC is made of 10 Cleveland organizations that aim to promote business growth opportunities for minority business owners in Northeast Ohio. BGC will do this by making entrepreneurial resources more readily available to low-income and disadvantaged communities.

Cathy Belk, president of JumpStart Inc., the venture development organization that helped found BDGC said, “At its core, the BGC is about putting the needs of diverse entrepreneurs and small business owners first. Each organization in the BGC has their own unique strengths and way of doing things-but the best way to help the people we serve get the knowledge and support they need is to work together whenever and wherever possible.” Just as the BGC can recognize and appreciate “unique strengths” and techniques in each other, they can also appreciate they unique strengths and skills brought on by minority businesses and entrepreneurs.

BGC was created by JumpStart and Greater Cleveland Partnership’s Commission on Economic Inclusion. According to Greater Cleveland Partnership’s, “The collaborative will connect individual service delivery of multiple organizations while they maintain their independent functions, structure, and identities. This will be done by:

  • Assessing each organization’s mix of services; and the geographies, industries, and size of clients served.
  • Agreeing to a joint method of assessment and growth continuum classification.
  • Developing protocols for client intake and sharing of information as well as joint assessments.
  • Subscribing to a client management/contact system which is shared among the collaborative.
  • Ascribing and assigning organizations to segments of the client services based on the fit.
  • Monitoring and holding providers accountable for service delivery and results.
  • Evaluating performance of the collaborative annually “

The coalition is also made up of eight other organizations: the Economic Community Development Institute, the Presidents Council, Ohio Minority Supplier Development Council, Magnet, the Hispanic Business Center, the Urban League of Greater Cleveland, the Council of Smaller Enterprises, and the Ohio Aerospace Institute.

The organization is further aided by supporting organizations like the Burton D. Morgan Foundation, the Cleveland Foundation, the city of Cleveland, Cuyahoga County, the Gund Foundation, and PNC Bank. The support for such initiative is strong in the area.

Ted Carter, chief economic development and business officer of the office of the Cuyahoga County Executive, said, “The County is pleased to support the Business Growth Collaborative, which provides tech assistance and (business to business) procurement opportunities to minority business. This investment, with one of our key strategic partners, leverages and compliments the county’s other capital programs directed to minority small businesses.”

Cleveland is one of many cities that are beginning to value and encourage diversity in businesses within the city and state. With these initiatives in place, minority-owned businesses will now have the resources and skills to compete with more mainstream businesses. These minority businesses will add creativity and innovation to the community creating a stronger economy and city.

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5 Up and Coming California Cannabis Stocks

California has been a leader in medical marijuana for nearly two decades. The state recently opened the adult-use market on January 1st, gaining investor interest. California, unlike other states with legalization, permits publicly-traded cannabis companies, and investors who want to capitalize on this market several companies to consider.

Before we discuss those companies, we would like to mention that stocks include in this article should not be considered a recommendation to buy the stock. This information is simply a starting point for your own research in cannabis investing. Now on to the five companies with potential in California cannabis investors should investigate.

  1. CannaRoyalty (CSE: CRZ) (OTC: CNNRF) is based in Canada and invests in royalty agreements, equity stakes, licensing deals, debt, and strategic partnerships. CannaRoyalty has built a large platform in California, which includes an equity interest in River (RVR), a quality craft distributor. The company also has 100% ownership of GreenRock Botanical, Soul Sugar Kitchen edibles, and Alta Supply and an exclusive distribution deal with Bhang, California’s best-known brands for edibles and concentrates. This company is fairly newCannaRoyalty look at their website and recent corporate deck.
  2. LifeStyle Delivery Systems (CSE: LDS) (OTC: LDSYF) is also based in Canada and was originally intended to license its own CannaStrips product, but became a vertically integrated producer out of its 20,000 sq. ft. Southern California growing and processing facility. The company had over C$6.8 million invested in the facility at the end of September 2017. For more information on the company visit lifestyledeliverysystem.com
  3. MedMen is not publicly traded as of yet, but it announced its intention to go public through a Canadian listing in the next few months. The company has several operations in Southern California and runs a retail store in Las Vegas. It also plans to build three more stores in Vegas and operates two medical dispensaries in New York. To learn more about the company, look at this annual report.
  4. Sunniva is a relatively new company that started trading this year. It’s based in Canada and is pursuing a license for a large facility in British Columbia. Sunniva is developing a 325,000 sq. ft. cultivation facility in Cathedral City, California. It believes this facility will produce 60 million grams per year. Check out Sunniva’s investor deck to get more information.
  5. Terra Tech is one of the original cannabis stocks and began publicly trading in 2012. It started recognizing sales from California cannabis products in 2016 with its IVXX brand. The company reported its full results for 2017 on March 15 and is expected to see major growth in 2018. For more information visit terratechcorp.com.

There are several other companies you could invest in, but with any company, you need to be cautious and research them thoroughly before investing. Cannabis is one of the fastest growing industries in the United States and is definitely worth looking into.

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Do you Dare to Invest in Cannabis? The Risks You Should Be Aware of for Future Investing

It’s clear that investing in cannabis could lead to some big returns, but it also comes with a risk. Zachary Venegas, CEO of Helix TCS Inc., a cannabis security and transport company and an intelligence firm for venture capitalists recently spoke on cannabis investing.

In 2017, cannabis-related cultivation and retail investments reached a stunning $718 million. This revenue helped cannabis agricultural technology infuse products and software to attract more investors. The industry is getting so large that it’s projected to exceed $50 billion by 2022.

Venegas claims California has the leading market on cannabis. He said, “California’s medical cannabis market is already as big as the total markets in Colorado, Washington, and Oregon combined by most market participant’s estimates.” Venegas also believes that “the legal cannabis market could reach sales of over $20 billion in the next few years.”

However, even Venegas recognizes caution is needed when looking at investing in cannabis. He warns investors, “No profit-minded professional would prudently ignore such a market, but one must be mindful that this unique sector is rife with complex legal and regulatory risks.” Venegas has covered many cannabis related topics in previous talks and speeches. This includes the legal distinctions between recreational and medical marijuana, the risks in each industry for producers, retailers, and other ancillary support businesses, the regulatory environments in the U.S. States, the cannabis “frontier market,” and the differences between a marketer or an operator.

Of course, the biggest risk to consider when investing is the legality of cannabis, particularly regarding Schedule 1 of the Controlled Substances Act, a federal statute that places cannabis on the same level as heroin and other narcotics.

Despite the overwhelming support from 30 states for medical marijuana and the support from 9 states for recreational cannabis, there are still federal restrictions in place on production, distribution, and possession. Cannabis laws also vary from state to state and within states.

However, Venegas isn’t opposed to investing. He states, “For 2018, private and public funds are investing tens of millions of dollars in anticipation of several industry catalysts that will be seen. New Exchange-Traded Funds (ETF) are coming online that are heavily investing in companies in the cannabis industry.” Canada is also a spot of interest for cannabis investors.

There are other risks besides the legality of cannabis to consider before investing. Venegas states, “Many people assume that having a license to operate a cannabis dispensary is a golden ticket to automatic riches. That assertion is flawed, as profitability and ultimate business success will still be subject to adequate capitalization, sound business practices, and as we are seeing in Colorado, the law of supply and demand…before it can grow and move away from a model that heavily relies on cash, the cannabis industry needs to secure access to financial markets. But due to federal regulations, banks, and even insurance companies stay away…growers, dispensaries and research labs have to secure financing from credit unions or ‘angel’ investors.”

Cannabis comes with a few more risks than the average stock. Understanding these risks is the key to making a good investment.

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Can Diversity Help the Economy?

Diversity builds the ecosystem, health, productivity, longevity, and resilience. This has been seen in nature and communities. However, society has often denied itself of these benefits in the past. For a community to have sustainable economic and social systems, it must be diverse and inclusive to all.

Gender and ethnic diversity concerns have grown politically and corporately in the past several decades. Economic inclusion or equal opportunity to participate in the economic life of a community as employers, employees, consumers, and citizen, has become a Sustainable Development Goal by the United Nations.

The first of these goals was created in 2015. It was to “end poverty in all its forms everywhere” and was quickly followed by gender equality.

Achieving diversity is much harder than it seems. Verna Myers, Harvard trained lawyer, entrepreneur, author, and cultural innovator from Baltimore wrote, “Diversity is like inviting people to a party, inclusion is asking them to dance.” However, businesses and companies are striving to promote diversity in their everyday practice.

Sustainability membership group BSR saw that social resilience is a rising corporate concern that puts income and gender inequality on the same level of risk as cybersecurity and natural disasters. BSR President and CEO Aron Cramer said Businesses have an increasing stake in helping create “a social contract for the future.”

A few businesses that are participating in creating a more diverse work place include Google, which partners with Howard University to hire black computer science majors in 2017, HP, which diversified its corporate boards and workforce by bringing more women to the executive level in 2017, and Salesforce, whose CEO Marc Benioff spent $3 million to create equal pay for men and women. These companies and many others are becoming more open about their diversity and inclusion initiatives.

These programs help society and the businesses themselves. Public companies in the top 25% for ethnic and racial diversity are 35% more likely to have above-average financial returns, and those in the top 25%  for gender diversity are 15% more likely to perform better financially.

Diversity is the way of the future, and many have found that going green is one of the best ways to produce diversity. Around the world, people of color, rural communities and women feel the worst effects of climate change pollution, and some have become climate refugees. Businesses are taking initiative on this. IKEA and the United Nations High Commissioner for Refugees partnered to provide solar panels and biodigesters to refugee camps in the Middle East. “Pay as you save” (PAYS) financing, pioneered by Holmes Hummel uses a tariff structure to provide energy efficiency and renewable power to low-income rural residents at no upfront cost. These low-income communities are the people who suffer most from sustainability crises in a climate-unstable world.  For example, four out of five white residents believe that New Orleans had mostly recovered from Hurricane Katrina in 2005, but three out of five blacks believe it hasn’t. To address this gap in thinking New Orleans appointed a chief resilience officer.

Many believe that diversity will lead to new techniques, attract new talent, and ensure sustainable economic growth. JPMorgan Chase invested $900,000 in sustainable infrastructure projects in Detroit. These funds will be used to make vacant spaces between commercial properties available for green infrastructure, which can mitigate storm water drainage fees, and turn vacant land into commercial spaces that support minority-owned businesses.

True diversity adds many benefits to our global society and is why we at C.E. Hutton believe so strongly in helping minority businesses through our business development resources and through real estate, technology, and bio-tech investing.

 

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