New York’s famed Rainbow Room glowed green this past Wednesday, as over 300 attendees filled the space for an industry conference on the Business of Cannabis. Presented by the Business of Cannabis and Prohibition Partners, with key sponsorship by Leafly, the event was the first of a series of summits for influential figures to discuss the chief issues shaping the cannabis space. Though a number of panels presented various topics from market regulations to profitability to compliance, the biggest question on everyone’s mind was representation. How will New York, which has enacted the country’s most sweeping social equity-focused cannabis legislation, put diversity at the practical forefront as it opens pathways for a legal industry?
Most speakers at the conference agreed the issue should be addressed by both government agencies, specifically New York’s Office of Cannabis Management, and through industry-wide efforts by cannabis and ancillary companies themselves. “It’s the partnership between public and private,” said Tahir Johnson, Director of Social Equity and Inclusion for the U.S. Cannabis Council. “Because no matter what type of rules you’ve got here… if you don’t get people on the ground to know how to prepare for these types of opportunities, to give them a step-by-step playbook to be able to get there or what the resources are to actually get there, it’s not going to happen.”
Nationwide, the War on Drugs has historically affected people of color at a disproportionate rate; to this day, Black citizens are three to four times as likely to be arrested and incarcerated as white people. This is at odds with the relatively low rate of BIPOC leadership in the cannabis industry, where most C-level executives are white. And as thought leaders analyze New York’s ability to regulate, they hone in on the hurdles that have appeared in other state legalization programs, such as the fact that legacy operators – those who participated in the illicit market – are barred from working in the legal cannabis sector due to their previous charges. It’s clear the laws need to change.
State Senator Liz Krueger, who authored New York’s Marijuana Regulation and Tax Act (MRTA), has made it her mission to steer that change in government. Opening the Business of Cannabis conference, she recalled that seven years ago, she was motivated to become involved with restorative justice efforts when she learned that approximately 50,000 young people each year were being charged with cannabis-related offenses.
“They were not busting white kids in my district,” Senator Krueger noted. “Everybody’s kids use marijuana at about the same rate and it’s insane. I wanted to fix the law.”
To do that, speaker Ruben J. Lindo, a retired NFL player-turned-entrepreneur who is now CEO of Phoenix Nutraceutical Inc. and founder of BlakMar Farms, suggested that the Office of Cannabis Management find new ways of diverting capital from traditional law enforcement to social equity programs. “I’m not talking about a Defund the Police situation here,” he clarified, “but [of funding] a social equity program that will allow for Black and brown people to operate in this space… It’s about giving the rightful ownership of an industry to people who bore the brunt of incarceration.”
Industry insiders and advocates caution that New York needs to avoid the pitfalls plaguing other adult-use states. California’s high taxes on legal cannabis operations have ensured that its illicit market continues, as the underground businesses provide more competitive rates than those in the regulated sector. In Massachusetts, despite an effort to award social justice licenses, few applications have been granted full approval.
“We can’t just tack onto what already exists and hope it works this time around,” said Julie Germaine, Operating Partner of KindTap Technologies.
Some trends of the regulated market are already going in a positive direction. Debra Borchardt, co-founder and CEO of Green Market Report, highlighted the profitability being seen in many cannabis companies’ earnings reports (while also observing that the mainstream stock market’s conservatism prevents it from reflecting that confidence). Kristin Jordan of real estate firm Park Jordan LLC mentioned that “quite the opposite of what opt-out proponents have been predicting,” the property values around dispensaries continue to appreciate. Allowing legal cannabis to flourish opens the possibility of genuine economic growth for most communities.
Other presentations at the Business of Cannabis explored the framework of the MRTA, the logistics of rolling out New York retail for adult-use purposes, and the potential for New York to outstrip California’s economic boom. Speakers including John Hudak of the Brookings Institution, Jeanne M. Sullivan of Arcview Ventures, and Pablo Zuanic of Cantor Fitzgerald offered powerful insights into the industry’s future. Jennifer Drake of Ayr Wellness divulged what she thought made her company a standout name in the sector (“we’ve got great assets and great people”), while Gary Santo of Tilt Holdings and Barré Hamp of the Shinnecock Nation discussed the partnership which allows the tribe to participate in and profit from the cannabis operations established on indigenous land.
Mitch Baruchowitz of Merida Capital, in a fireside chat about the industry’s “State of Play,” noted that cannabis may be the first product to be “normalized before it was legalized,” due to the millions of people who used the plant before prohibition. He predicted that New York could become the East Coast’s center of cannabis business: “There’s going to be a lot of entrepreneurs here. The chance to talk to people and hear their own origin stories doesn’t feel like work.”
“New York is our last, best chance to build a just, diverse, and equitable cannabis industry,” asserted Steve DeAngelo. The “Father of the Legal Cannabis Industry” has spent over 40 years advocating for the plant, and emphasized to conference attendees that measurable impact will only come from collective efforts. He encouraged those with capital, skill sets and employment opportunities to connect with people of color and offer direct mentorship. “It’s going to take a people-over-profits mentality… We need to start thinking about the problem a little bit differently, about not relying on the government to understand. If we want the cannabis industry to look differently in New York, then the leaders of the industry in New York are going to have to come to the table.”
The panel on diversity, which featured DeAngelo, Germaine, Johnson and Lindo with moderation by PR maven Rosie Mattio of Mattio Communications, was perhaps the most inspiring of the day. Lindo, who began as a legacy operator, vigorously reminded business leaders that the entrepreneurs coming from those fields of knowledge have enormous experience to offer.
“For us who operated in the legacy world and transitioned over, you have that fear of losing that dignity,” Lindo remarked, explaining that such entrepreneurs are often hindered financially and mentally by many of the regulated market’s barriers to entry. “We’re proud of the brands we created underground. We’re proud of the movement. That aspect of it can’t be lost.”
He and Johnson agreed that the Office of Cannabis Management should be educating those inside the industry to maximize inclusivity, and those outside it to understand more about the plant and the opportunities open to them.
“Look within yourself and your team,” Johnson advised business owners. “How do you hire? Can you be diverse yourself? Can you hire Black folks [and] minorities? We have a responsibility, as an industry, as companies, to go back out and really make it right.”
For more about upcoming events in the Business of Cannabis series, visit businessofcannabis.com or follow @businessofcannabis on Instagram. To learn more about Prohibition Partners, visit prohibitionpartners.com or follow @prohibitionpartners on Instagram.