The fledgling commercial cannabis industry in Illinois – which includes plant-touching companies that cultivate, process and sell the plant as well as specialist suppliers and service providers – has a lot of economic upside.
Yet, despite “social equity” provisions baked into state law as well as the plant’s kumbaya reputation, it remains unclear to what degree African American entrepreneurs, executives and investors will enjoy the generational wealth that upstart industries historically provide to early stakeholders. Adding pressure: the State of Illinois is now more than a month late to award 75 cannabis dispensary licenses, on which hang vast expectations of social equity reparations.
In a series of interviews conducted by Grown In, African American entrepreneurs, community organizers, lawyers and managers currently working in cannabis-related professions say that while they are hopeful that people of color will own flourishing businesses and serve on leadership teams of cannabis corporations, evidence of this actually happening remains to be seen.
The presence of African Americans on Illinois cannabis company boards and leadership teams is still minimal, despite Cresco Labs announcing yesterday that NBA Players Association Executive Director Michele Roberts will replace co-founder Joe Caltabiano on its board.
Wes Moore, CEO of the Robin Hood Foundation sits on the Green Thumb Industries board. Combined, the two publicly traded Illinois-based cannabis companies have two out of 16 board members who are black, and scant representation among African Americans on their leadership teams. Privately-held cannabis companies that are based and/or have significant operations in Illinois also have primarily white boards and management teams.
“It’s progress because (Cresco is) diversifying its board, and she certainly deserves to be on the board of any publicly traded company and is beyond qualified” says Akele Parnell, attorney with Chicago Lawyers’ Committee for Civil Rights and former in-house lawyer at Chicago-based Green Thumb Industries. “You can’t go into the past, but would it would have been nice to have [diverse board representation] from the beginning.”
Although it’s federally illegal, the cannabis industry is off to a fast start in Illinois. Despite the onset of Covid and an industry-wide cash crunch, nearly $150 million in legal weed was sold in the state between January and April 2020.
Who knows how much more pot was sold in the illicit markets. Pre-decriminalization, cannabis dealers with black and brown skin were by many estimates at least five times more likely to go to prison than white counterparts. Today, the LinkedIn search query “cannabis sales” yields nearly 40,000 results.
Political promises to impacted communities combined with intense lobbying on the part of incumbent medical marijuana companies was the impetus for the Illinois Cannabis Regulation and Tax Act, which passed nearly one year ago. On December 31, 2019, Governor J.B. Pritzker issued more 11,000 pardons for low-level drug convictions. By then, medical marijuana companies already operating in Illinois were provided the right to expand operations to service recreational demand.
As part of the legislated deal, incumbent companies that expand cultivation and/or dispensary operations in Illinois pay hundreds of thousands of dollars into a Cannabis Business Development Fund. Proceeds from the fund, at least in part, are intended to go to businesses that are majority-owned by Social Equity Applicants, criteria for which includes having an arrest on your record or hailing from neighborhoods most adversely impacted by cannabis criminalization.
“Trying to pimp us out”
After spending much of his career as an executive and financial literacy educator for insurance and real estate companies, Gary Little, 55, started ColaGroup in 2019 with the aim of bringing his skill-set, network and experience into the cannabis industry.
Little determined that it was better to partner with an existing cannabis corporation than apply for a dispensary and raise hundreds of thousands of dollars to build a business if he and his colleagues won a longshot bid. He decided to have a bake-off, so to speak, with several cannabis companies operating in Illinois who were looking for Social Equity Applicants to back.
Many incubator programs from cannabis companies operating in Illinois emerged over the last year that provided resources including application-writing services, industry education and unsecured loans to predominantly African American entrepreneurs. These programs are created at least in part to fulfill social equity requirements from the Cannabis Business Development Fund.
Little, whose stated mission with ColaGroup is to “engage community members to seize the opportunity presented by the legalization of cannabis”, says he and his partners felt like they were treated as pawns.
“We had several conversations with people trying to pimp us out,” he explained. “It was pretty apparent that they just wanted to make money off of you and really didn’t care if you were even qualified. I told them they were high.”
Community and company collaboration
Through networking and persistence, Little was introduced to Acreage Holdings, a New York-based company that operates the Nature’s Care Dispensary in Rolling Meadows. Nature’s Care at the time was seeking community approval for a West Loop location.
Little was adamant that he would only partner with a company that would implement a community plan that guarantees living wage jobs for workers hired from impacted communities, invests in career development programs and agrees to contract 10-percent of its product and services from minority-owned social equity businesses.
Working with Acreage executives as well as Parnell and the Chicago Lawyers’ Committee for Civil Rights, ColaGroup established a Community Benefits Agreement that helped Nature’s Care secure zoning approval while also passing muster with community organizers.
“With respect to this particular dispensary, Acreage put their money where their mouth is,” says Parnell, who served as in-house counsel for Green Thumb Industries prior to his current post. “That company’s [Acreage] commitment to doing something that is equitable is real.”
Chicago NORML advocates more legislation for social equity
Beyond economic opportunities that emerge from growing, processing and selling the plant, ancillary software, hardware and other “picks and shovels” companies selling into the cannabis sector are emerging.
The leadership teams, investors and boards of those companies that are raising the most venture capital in Illinois and beyond also lack diversity in their leadership teams and boards. Edie Moore, an entrepreneur and Executive Director of Chicago NORML (a chapter of the 50 year-old National Organization of the Reform of Marijuana Laws), is advocating for laws that support social equity businesses that sell into the cannabis sector.
“The MSO’s (multi-state operators) have to hire companies for legal, lighting and cleaning needs. But they stay in their own collective.” Moore said. “There needs to be compliance and hiring requirements for contracting and Chicago NORML is working on that.”
Moore added that in addition to legislation and more support from incumbent industry players, she is hopeful that civic organizations led by African American executives including the Business Leadership Council provide more support for an industry that exists in Illinois at least in part to address historic social equity issues.
Growing from within
Although looking to retire from the cannabis industry, Ingrid Joiya, a former board member of the National Cannabis Industry Association, last year decided to collaborate with family members to apply for Illinois social equity licenses.
“We don’t need any more crumbs,” explains Joiya, a cannabis entrepreneur from Chicago (now residing in Arizona) and author of Being Black or Brown in the Green Rush. “We paid too much of a price to not have a right to be at the table.”
The holding company they created, 40 Acres And A Mule, takes its name from the post-Civil War proclamation by general William Sherman stating that freed people had the right to own the land in which they once served as slaves.
40 Acres and a Mule, which is comprised of dozens of family members living mostly within impacted neighborhoods on Chicago’s South Side, last year raised $100,000 and pooled together resources to apply for 60 dispensary licenses and 21 craft grow licenses.
That scale, at least in application numbers, is comparable to that of multi-state cannabis companies that operate in the state. Joiya says that the entity is built so different stakeholders with different skill-sets can serve the common whole regardless of whether their name is or is not attached to a license.
“We have all the pieces in the puzzle, from legal to real estate to selling weed on the corner,” she said. “You have to pull everyone together with a plan.”