“Reefer Madness.” Cheech and Chong. “Half Baked.” American pop culture tends to depict cannabis as either a joke or a danger. But amid a shifting legal landscape, an active group of entrepreneurs now see it as a serious business.
Of course, in most places and cases, cannabis is illegal. In the United States, the federal government classifies cannabis as a Schedule 1 Drug, and most states similarly consider at least some forms or uses of it to be illegal. However, over the past three years, four states — Alaska, Colorado, Oregon and Washington — have fully legalized both medicinal and recreational cannabis, paving the way for a lucrative new industry.
Clearly there is a market for marijuana, as many Americans already use it, regardless of its legal status. A study from the Pew Research Center conducted earlier this year found that nearly half the nation has at least tried cannabis, and that 53 percent of Americans — an unprecedented majority –think cannabis should be legalized.
To many business owners and investors, research like this indicates an opportunity to build a very large, very new industry — one that, as Troy Dayton, CEO of The ArcView Group in Oakland, Calif., put it, “looks like America.”
A Growing Sector
As it is, legal murkiness isn’t exactly stifling the growth of the cannabis industry. In fact, it grew 74 percent to become worth $2.7 billion in 2014, according to a report from the ArcView Market Group. Compare that to the 12.5 percent growth rate anticipated this year for the technology industry, one of the United States’ largest and most powerful industries.
And that’s just the revenue recorded on the books. The illegality of cannabis makes it difficult to be precise about market size, but some estimate it could be worth as much as $36.8 billion if legalized federally — and that more than $3 billion in tax revenue goes unclaimed by the U.S. government each year because most cannabis growers and sellers do business under the table.
Yet already, the legal industry’s growth pace is generating some positive buzz. Inc.com named legal cannabis one of the best industries to start a company in for 2015, and Forbes referred to it as “the best ground-floor opportunity we’ve seen since the early days of the Internet.”
Unlike tech, though, anecdotal evidence suggests the cannabis industry is rather welcoming — even supportive — of female entrepreneurs. And women are taking advantage of that fact.
Women in a Weed Boom
Take Amy Poinsett and Jessica Billingsley, two serial tech entrepreneurs and current cofounders of cannabis point-of-sale system MJ Freeway. In 2009, they noticed a lack of business-tracking software that was suitable for this new group of entrepreneurs, and came together to form a venture that’s now making them millions. Billingsley was even named to Fortune’s 2015 list of Most Promising Women Entrepreneurs.
And they’re not alone. THC Staffing Group partner Danielle Schumacher — who is part of a successful all-female founding team herself — works with numerous female entrepreneurs who are starting pot dispensaries and gardens, edible and topical product companies, consulting firms, travel destinations, professional associations and more. And in addition to creating jobs, many of them are turning profits as well.
That women are making big moves in marijuana has not gone unseen by industry outsiders, either — everyone from Time Magazine to Newsweek is taking note. Yet while cannabis seems to be a great space for women to start and grow successful businesses, many say it is still male-dominated.
Schumacher, an early entrant into the cannabis business, saw some sexism early on, as well as objectification of women in marketing tactics. But she says that, “as the industry continues to evolve, this issue is being discussed, and I see many activists and companies making a good effort to correct it.”
That would be wise, considering women will likely be important customers for the industry, if cannabis is fully legalized, says Jazmin Hupp, cofounder and CEO of Denver-based Women Grow, an entrepreneur networking organization for women in the industry.
“Women are the chief medical officers in families. They are the ones making the medical decisions and purchases in a household. And they are already the biggest participants in the wellness market as well,” she says. “Plus women are consuming more alcohol, so they are actively looking for that alternative for a relaxing Friday night.”
That’s part of why the industry’s startup teams have tried to be diverse and inclusive, she says. But she adds, “it’s already socially conscious, so people are already looking to have more balanced teams.”
Billingsley has experienced a similarly supportive climate. “I’ve seen nothing but support from any player, male, female or otherwise. I don’t think there’s a ‘good ol’ boy’ culture in any way, that’s keeping women out,” she says.
Good thing, as there’s certainly no shortage of female entrepreneurs with whom to build a gender-balanced business. Women Grow, which was established last August, already boasts 35 chapters throughout the U.S. and Canada. “The response has really shown us that we have this neat opportunity to build the foundation of this industry in a conscientious way,” Hupp says.
The Driving Forces of Finance and Justice
For quite a few women, cannabis entrepreneurship isn’t just about profits — fiscal and social responsibility are big motivations for many involved in the industry.
The relationship between social justice and cannabis has been written about time and time and time again. The illegality of marijuana is closely tied to mass incarceration in the U.S., according to the American Civil Liberties Union, as more than half of drug arrests are cannabis-related. Cannabis access for medicinal purposes — as an effective treatment for chronic pain, for instance — is also a key political issue.
As such, quite a few cannabis entrepreneurs see themselves as activists, as well as capitalists. “Money is a tool, and we need as much of that tool as possible to make social justice missions successful,” says Melissa Egan, owner of Panacea Dispensary in Portland, Ore., which donates part of its proceeds to causes such as LGBT senior housing. “And there’s no other industry with so much potential profit that’s currently happening.”
Wanda James, cofounder of Simply Pure, a long-time restaurateur and president of PR and marketing firm Cannabis Global Initiative, is similarly motivated. She initially lost her dispensary and high-end edibles business in 2012, not long after Wells Fargo suspended the company’s bank account due to the nature of the business. But she reopened last month, and is excited to be back.
During her entrepreneurial hiatus, James stayed involved in advocacy work, which she entered after her brother received a 10-year prison sentence for cannabis possession at age 17. “I never really doubted I would get back into it — it was just a matter of how I was going to be able to do it.”
According to James, this sort of dual focus is common within the cannabis world. Her conversations with other business owners lead her to believe that, while most everyone involved is drawn by “the allure of great money, passion is definitely what drives a huge majority of people involved.”
That’s a good thing, since cannabis entrepreneurship is not at all easy.
Bumps Along the Road
Starting and scaling a business in an industry built on a product that is, for the most part, illegal, unsurprisingly comes with a unique set of challenges.
Companies must comply with regulations and laws on cannabis businesses that are tricky, because they vary from state to state and change frequently. “There are a lot of rules you have to follow when keeping inventory, in security, data management, all of those categories where marijuana moves through very quickly,” Egan says. “It’s really important to keep on top of it, otherwise that’s where you’re going to get into trouble.”
Jeannette Ward, director of marketing at MJ Freeway, agrees. “I hope [new cannabis entrepreneurs] do their research … because they are dealing in a federally illegal industry, and they need to be very careful,” she says. While landmark laws are being passed, there are still more risks inherent in starting up in this space than in others, she adds.
For instance, accessing and managing money can be especially tough for these women business owners. For starters, cannabis businesses are unable to use traditional banking services and lack access to business credit cards and loans. “It’s absurd what you have to go through, and it’s equally as different no matter your gender,” James adds.
Though some big cannabis businesses have secured significant funding — Yelp-like resource Leafly and pain-medication maker Palliatech have raised more than $10 million each — the industry’s risk profile is a turnoff to many investors. “We’re not selling anyone on getting involved — investing in cannabis is for a particular kind of investor,” Dayton says.
Billingsley experienced that difficulty firsthand, recalling how some would seem on the cusp of backing MJ Freeway, before relatively small matters like the presence of a pot leaf on their website would send investors running over concerns they were “polluting” their portfolios.
Money is a particular pain point for activists in the cannabis industry like Dayton, who believe that “business is going to be the most powerful platform for political change.”
Growth and Possibilities Ahead
Signs of progress for the industry abound. Ballot measures on legalizing cannabis are pending in Pennsylvania and Ohio, with more expected. Luminaries — from artists to presidents — have admitted to partaking, and each confession has chipped away at the stigma surrounding cannabis use. There are even formal schools now, such as Oaksterdam University and the Alaska Cannabis Institute, where one can learn the tools of the trade.
But cannabis is still completely new entrepreneurial territory — territory that will remain particularly difficult to navigate in the near term.
While daunting, Ward sees that newness as an opportunity. “There’s an equality in the ability to enter into the industry that you don’t have in other industries. You don’t need to have a background in cannabis — no one else does. Anyone can jump in and get going. That’s a wonderful thing.”
Hupp is similarly optimistic about the possibilities of building something new, profitable and sustainable. “That old American business culture of caring more about stock prices than customers and employees got us into the financial crisis. Now, I think that style is going out of fashion,” she says.
Egan agrees, adding: “I hope that we continue building our community, and differentiating ourselves through our social justice work. It really feels like all growth lies ahead of us, and we just have to do it with integrity.”
It will be tough, but given the demand for the product, Dayton argues that “once laws change, that market is going to explode.” And when it does, insiders say women will be big beneficiaries.