The State of Michigan is on the verge of implementing the Solomonic solution for cannabis social equity that leverages the free market. Last month, the state’s Marijuana Regulatory Agency proposed creating the Michigan Marijuana Market, “a crowdfunding platform housed and supported on the MRA website that serves as a portal for local investors and local marijuana businesses located in disproportionately impacted areas to gather and invest.”
If enacted, the Market would be a unique way for individuals to make small equity investments in cannabis businesses in local communities of color.
“For the opportunity to invest in that cannabis market, I want to be the first one to be able to invest and hopefully create some wealth for myself and my family,” said Justin Williams, a Black long-time investor based in West Michigan. “I’m not low income, but I’m not a multi-millionaire also. This is a way to invest.”
The brainchild of insurance broker Cimone Casson, the Michigan Marijuana Market (MMM) is a potential game changer for Black and brown entrepreneurs who don’t have access to wealthy investors, but do have broad support among middle class communities of color.
“We could leverage it, because it’s legalized in the state, we could have businesses in the racial equity program to raise capital and offer an opportunity for local people to be able to invest,” said Casson. “That is a big problem. There are people that say, ‘I want to get into the industry, but I don’t want a job. How do I get into the industry? Where do I invest?’”
The MMM would be operated by the MRA, but overseen by a broker dealer with assets held by a state-chartered custodial bank. This concept is possible because of Michigan’s Uniform Securities Act of 2002 which provides a regulatory framework for an intrastate securities market. Under the MRA’s proposal, cannabis companies with approved state and local licenses, as well as properties for a facilities, could list a portion of their company for up to $2 million of equity investment, according to Casson and MRA documents.
Listed companies, which would have to be based in an MRA-determined disproportionately impacted area, would be verified and underwritten by a state approved broker dealer, and would have twelve months to seek investment. During that time, listed companies could only seek equity investment through MMM. Then, entities or individuals, which would not need to be accredited investors, could invest up to $10,000 in each listed company during that twelve month period. All investors would have to be based in Michigan – thus making it a solely intrastate investment system. After the twelve month period, says Casson, companies leave the listing and can revalue their shares and seek other forms of investment.
Ensuring MMM provides total transparency is one of Casson’s top priorities.
“Some of this is novel investing. I did not want to create a Ponzi scheme. Although we are creating a wonderful pathway [for investment], it doesn’t make sense if we don’t protect both parties, the business side and the investor,” said Casson.
For small cannabis entrepreneurs looking to put together equity capital, MMM could be a big leg up.
“I think it would be a great idea,” said Biyyiah Lee, a nurse and co-founder of Midwest CannaNurses, who are seeking to build a medically-oriented cannabis consumption lounge in the Detroit area. “A lot of folks looking to get into the industry are pressed for capital and they don’t have the resources to gain more capital. To have an organization play that middle role would be integral for the [new] business owner.”
Lee and her partner, Ebony Smith, are working to increase awareness of medical cannabis in the Black community, and demonstrating that they are a Black-owned, Black-capitalized business is key to establishing credibility in their community.
“I think that representation is huge, being a model,” said Smith. “Being cannapreneurs saying we can come together and make this a sustainable [Black] industry and not just be marginalized as employees. We want to see folks from the communities we’re from [have ownership] and not just be consumers.”
The proposed MMM could also be an important tool for small entrepreneurs with a foothold, but not enough capital to build out their business. For instance, Kevin Currier and his family business, Neighborhood Provisions, have acquired three different properties in three different Michigan municipalities, but have been waiting over two years to obtain local licenses.
“The only people that can hold on are larger companies, out of state players who gobble everything up. If we’re going to see any change in who gets licenses, there needs to be financial backing,” said Alpena-based Currier, who believes MMM would be an ideal vehicle for his business to collect small backers supporting his company through the lean years while they wait for licenses to come through. “It takes two years to get a retail license. In that two years people have to purchase property, hold on to that property, maybe work in another town to get another license.”
Casson is working with MRA now to develop a budget, to identify a broker dealer and a custodial bank, and a web developer to build the market.
“The Marijuana Market proposal will likely require some funding for the administration, so in that sense it will require a legislative component,” said MRA spokesman David Harns. That means MRA will have to seek funding for the program from a Republican-majority legislature.
“We believe the MRA’s social equity efforts need to be completely 100% funded,” said Robin Schneider, executive director of the Michigan Cannabis Industry Association, and perhaps the state’s loudest voice on cannabis issues.
“I think the reason it can happen is because there are many voices for this,” said Schneider. “I think that every Republican should naturally support it.”
“You know what happens for our middle class Black people: There’s never any provision for them. We have welfare, but we leave out our best talent,” said Casson. “We need a situation where it is not predatory. We need someone who has a propensity for pot, and has a business mindset. If I have those two, I can build a platform that builds generational wealth.”