Creating wealth — particularly generational wealth — can be a complex process. Building wealth in a traditional sense using savings and investment tools has been documented at length in the financial sector. However, creating financial security in an emerging sector like cannabis presents a whole new set of challenges for business owners. This can be especially true for minority entrepreneurs, who aren’t widely represented within the booming global industry.
In actuality, many entrepreneurs in cannabis, CBD, and ancillary businesses have experienced huge challenges and some form of bias, not only due to ongoing federal and state-level debate and legislative changes but also because of social and cultural standards. The complicated history of minority communities being disproportionately impacted by marijuana laws and discrimination is well-documented but under-discussed — at least until recently.
Major advocacy and industry groups such as NORML, the Drug Policy Alliance, the National Cannabis Industry Association, and Minority Cannabis Business Association have worked tirelessly over the years to help reform cannabis policy and push for social equity. The Last Prisoner Project (LPP) and the National Association of Criminal Defense Lawyers (NACDL) launched efforts to help individuals negatively impacted by the war on drugs. The Cannabis Justice Initiative focuses on providing clemency for people who have been penalized for cannabis violations that no longer are illegal in their state. LPP and NACDL also are pursuing broader policy change at local, state, tribal, and federal levels.
But has enough been done? Westword recently reported “when Colorado became the first state to legalize recreational marijuana in 2012, it didn’t have a playbook … and Colorado is now playing social equity catch-up. On October 1, Governor Jared Polis pardoned 2,732 past marijuana possession convictions. When he signed Senate Bill 111 earlier this year, he approved $4 million going to support social-equity marijuana entrepreneurs. And on April 20—the unofficial ‘stoner’ holiday — Mayor Michael Hancock signed into law Denver’s social equity program, which began accepting applications for licenses in June.”
The Cincinnati Enquirer reported, “The Ohio Board of Pharmacy moved ahead with plans to more than double the number of medical marijuana dispensaries in the coming months despite objections from Black legislators and business owners who want expansion to wait until state officials have a plan to diversify the industry… Ohio has fifty-eight licensed dispensaries, with only nine that are owned and operated by someone who identifies as African American, Native American, Hispanic, Latino, or Asian.”
It’s clear things are changing. It’s also encouraging and exciting to see more and more organizations emerge that are working together to close the gap in social equity and justice within the cannabis and CBD industries. Some great examples include Minorities for Medical Marijuana, Asian Americans for Cannabis Education, and the National Hispanic Cannabis Council.
There’s no denying the cannabis industry is on a roll (pun intended), and people everywhere are eager to capitalize on new opportunities as acceptance continues to grow. A recent Business Insider article noted “marijuana is legal in eighteen states and Washington, D.C., and medical marijuana is legal in thirty-seven. Most recently, New Mexico, Virginia, and Connecticut legalized recreational cannabis.”
This fast-paced, constantly evolving industry has seen all kinds of individuals, creators, artists, chefs, educators, athletes, and celebrities tapping into opportunities for both existing and future entrepreneurs. The possibilities seem limitless in this environment, whether the inspiration comes from a great product idea, a new service that’s perfect for the industry, or a problem that needs solving. But key challenges remain, as does plenty of room for improvement.
Challenges for people of color
The Guardian recently published an honest, informative perspective about the challenges people of color face as they navigate the cannabis business landscape, which notoriously is riddled with barriers, stigma, fees, licenses, and complex regulatory challenges. According to Tahir Johnson, director of social equity and inclusion at the U.S. Cannabis Council, “It’s only right to level the playing field and give priority to people who have been victims of the war on drugs.”
Aside from the numerous elements needed to start a business—from concept to development and growth—access to capital is a significant challenge that doesn’t receive enough attention. Many aspiring entrepreneurs don’t understand the resources they may have to tap into, and when faced with roadblocks for raising money or securing a loan, they might make choices that compromise their personal financial situation. In turn, this can negatively impact their entrepreneurial dreams and financial future.
One of my colleagues shared how he had to use the majority of his personal savings to get his business up and running because he wasn’t able to secure a bank loan—not because of collateral concerns, but because he is in the cannabis space. Of course, this is just one unique example, as many entrepreneurs don’t have personal funds at their disposal and likely will face bigger hurdles when it comes to securing capital or obtaining financial assistance.
Most banks will not fund a cannabis company, making it harder to find the required capital to start a business. This is a huge obstacle for many people, particularly minority entrepreneurs who often do not have the benefit of inherited wealth and are thus starting from nothing. Many solicit help from friends and family, which sounds like a good proposition from a trusted network of support, but the strategy dilutes ownership by adding more “investors” into the mix.
My own experience becoming a business owner in this industry was driven by my years in the National Football League, where I saw firsthand the detrimental effects of injury and overprescription of painkillers on my teammates. I saw the long-term impact on their physical and mental health, as well as the secondary effects on their families and friends.
I’ve also been active for many years in pushing back against the war on drugs and its impact on minority communities. My motivation to seek better alternatives and share more education and resources for safer pain management led me to launch a CBD company with my partner Dallas Austin, where our mission is to promote overall health and wellness for mind, body, and spirit. Together with my passion for social equity and justice, it was a natural transition to join Suite 420 Access to further promote equitable access to capital for minority entrepreneurs.
Minority entrepreneurs continue to seek change
As minority entrepreneurs establish ourselves in a new industry, we’ve seen the many challenges cannabis companies have faced and continue to face. Everyone has a unique story to tell, from being unable to access capital to having to jump through a bunch of hoops just to process payments and transactions. It’s incredibly frustrating.
There’s nothing more discouraging than having a great business idea and plan but not being able to get it off the ground because of lack of funding. Avoiding pitfalls is another issue, since people may trust the wrong partners or sources and end up worse off than before they started. Another big mistake is seeking too many investors. None of these things bode well for the future of a business. Bottom line: To create generational wealth for you, your family, and your community, you must retain ownership of your business.
The cannabis industry has proven there are countless opportunities for minority entrepreneurs to make a positive impact on individuals, businesses, and communities. Minorities deserve to have a seat at the cannabis table, and lack of access to funds shouldn’t stand in the way of pursuing one’s business dreams.
Tavarres King is CEO of Suite 420 Access, a Denver-based, minority-owned financial company providing access to capital for minority-owned cannabis businesses. He also cofounded CBD brand Rowdy Wellness after witnessing the damage injuries and painkillers inflicted on professional athletes during his seven years in the NFL. Passionate about social equity and justice, he’s an experienced speaker and community advocate.