When starting up in 2015, Whitney Beatty pitched her marijuana storage box, The Apothecarry, as a product consumers would clamor for in what she anticipated to be a high-end, bustling cannabis industry.
She recalls investors looking at her as though she were, well, stoned.
Of course, her predictions proved to be spot-on — cannabis is everywhere. Luxury stores like Barneys and Neiman Marcus now carry cannabis-derived products. Celebrities like mogul Martha Stewart and Academy Award-winning actress Whoopi Goldberg are investing and launching in the space. Industry trends are reported on regularly by publications like Forbes, Inc.com and Entrepreneur. The interiors of dispensaries are often compared to Apple stores and Sephoras.
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Numbers tell the story more succinctly: The global cannabis industry’s revenues reached $12.2 billion in 2018 — and are expected to rise to $16.9 billion in 2019. The American cannabis industry accounted for $10 billion of 2018’s figures, with the average U.S. dispensary pulling in $3 million a year.
This boom comes thanks to a shifting legal landscape and significant changes in public opinion. Roughly two-thirds of Americans now support federal legalization, and cannabis is already legal on some level in 33 states — 11 of them, including newcomer Illinois, permitting recreational use. Thanks to its “hot new commodity” status, cannabis is now attracting large amounts of venture capital, too — 2018 was a record year, with investors pouring $881 million into it.
But with the newfound popularity comes a troubling and familiar trend: The majority of industry leaders are white men, and women are needing to fight for their spots more frequently.
“As much as we want to talk about the low barriers to entry — and to an extent, there are in this space, because we don’t have legacy brands taking up so much air — at the same time you still run into a different level of issues” as women in cannabis, Beatty says.
As the prospect of federal legalization looms — and experts agree that it’s fast-approaching — what roles will women get to play in the cannabis industry? And will legalization make things better or worse for female founders?
Women in Cannabis
When we first wrote about the cannabis industry in 2015, it was heralded as an emerging space where women could find better leadership opportunities. That year, around 36 percent of cannabis executives were women — a far better ratio than was seen other large, buzz-worthy industries like tech.
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Four years on, a number of women in cannabis are, indeed, making names (and money) for themselves. As the cannabis industry has grown, however, representation has worsened. One new study shows that women now make up just 17 percent of executives. Some 12 percent of the 166 companies surveyed by researchers had no female executive representation at all.
The decline of women’s participation as the industry booms, especially on its highest levels, is troubling to insiders like Dr. Chanda Macias. She’s a business owner and CEO of Women Grow, an organization that advocates for and informs other women cannabis entrepreneurs. Contrary to earlier beliefs, “the glass ceiling is pretty thick in the cannabis industry for women,” she says.
Funding is one significant reason why. Macias notes that anyone who wants to open a dispensary must now “have at least $150,000 in cash,” which is “an immediate barrier for a lot of women in the industry.” It’s not just growers or sellers, either — Beatty of The Apothecarry says she has also grappled with fundraising problems, even though her venture doesn’t actually dispense cannabis.
Add in the issues plaguing all businesses in the cannabis space, like not being able to get bank loans or work with the Small Business Association, and you have quite an uphill battle for these women.
David Abernathy, vice president of cannabis investment and research firm Arcview Group, says it’s especially frustrating since women-run ventures make about three times as much as male-led businesses, among companies that successfully raise capital.
He attributes that, in large part, to women having to work harder to establish themselves. “One interesting thing we noticed is that, for women to succeed in this business — because of a host of realities — they may have gone through enough and proven themselves enough to be better than the average applicant.”
Of course, that’s nothing new for women — in particular, women of color. Indeed, while women of many races and ethnic backgrounds report grappling with obstacles in the cannabis industry, it’s this specific group who faces yet another significant barrier.
Effects of the War on Drugs
Nearly 50 years ago, the U.S. government organized the “war on drugs” campaign to discourage illegal drug use and sales. The term was first coined by President Richard Nixon in 1971. But it was President Ronald Reagan’s prioritization of anti-drug legislation — combined with his wife, Nancy’s, “Just Say No” public awareness campaign in the 1980s and early 1990s — that sent drug arrest rates skyrocketing and established mandatory prison sentence minimums.
Cannabis was one of the many drugs the effort targeted — and still does. According to the American Civil Liberties Union, cannabis arrests accounted for just over half of all drug-related arrests in the U.S. between 2001 and 2010. That percentage has dropped in recent years, but was still at 40 percent in 2017, the nonprofit Drug Policy Alliance found.
And for those convicted and subsequently incarcerated, there were punishments that awaited them after time was served, including difficulties finding employment, driver’s license suspensions, the denial of voting privileges — and if convicted in the past decade, the inability to file for a dispensary license.
The ACLU also found that black people have been disproportionately affected by the government’s efforts. African-Americans are roughly four times more likely to be arrested for possession of cannabis, despite black and white people reportedly using it at roughly the same rate. The DPA similarly found that, of those arrested for drug-related offenses in 2017, 47 percent were black or Latino, despite those groups making up 31.5 percent of the population.
The result? People who were convicted for having or selling cannabis illegally, most of them people of color, are often blocked from re-entering the industry as it becomes legalized — that is, if they aren’t still serving time for sale or possession while cannabis businesses open up nearby.
As Beatty summarizes it, “While Jerome is in jail, Chad owns a dispensary.”
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At present, about 5 percent of cannabis executives are women of color — roughly 1 percent higher than the overall national average across industries, but still a small minority. Beatty has seen and collaborated with activists working to affect change on this. But it’s not the big industry players who are taking up the cause, she adds. Instead of top-tier firms, it’s the ventures “that are smaller, the mom-and-pop companies, the ones most affected by these issues, they end up fighting.”
Abernathy adds that “the problem is becoming a harder one to solve as more mainstream institutions and capital get more involved, and as the size of businesses grow.” He says there are a couple of reasons for this: “One, implicit biases in a lot of bigger industry players, who are more used to dealing with white people; and two, a lot of people of color don’t have opportunities to experience running larger businesses or [to learn] investment terminology.”
Macias and Beatty both advocate for programs that encourage and assist women of color in launching cannabis ventures, as well as funneling cannabis profits back into communities that were hurt by the war on drugs in the first place.
That is, if those businesses can still compete in a marketplace transformed by possible federal legalization.
Change on the Horizon
At present, cannabis is still considered a Schedule I drug by the U.S. government. But if federal cannabis legalization becomes the law of the land, it could quickly pave the way for the involvement of big businesses from the tech and pharmaceutical industries. Deep-pocketed, conservative investors who have largely steered clear of the emerging market would be expected to sign on, too — especially over the past year, Abernathy has already seen “an explosion in interest.”
But their arrival would also likely exacerbate the representation problems already plaguing the cannabis industry.
“The big companies and dispensaries are pushing out the little guy because they can afford to,” Beatty says, adding that she has seen it happen on both the seller and grower side. “For some of my friends in the space — and lots of female-run businesses — it’s been a real do-or-die year. And they’re dropping off like flies because they can’t get the funding to survive.”
Macias adds, “What we see is the Walmart effect — big companies take up the majority of a marketplace and are able to control what medical and adult-use marijuana looks like. This is what we’re on the verge of.”
This shift toward a marketplace dominated by big cannabis businesses is aided by the myriad licensing and tax costs facing legal ventures. “Unless you have a high-yield business,” you may be sunk before you start, Macias says. “Mom-and-pops are forced to sell because they cannot pay off the bills that have accumulated over the course of several years. Only big businesses with deep pockets can sustain all of that.”
So how can women in cannabis stay competitive — and stay afloat?
Beatty ended up turning to angel investors for seed funding, though she notes that most of the ones she met with were older white men, who are statistically far more likely to invest in people who remind them of themselves. And “they don’t see themselves as a 40-year-old black woman and single mother,” she adds.
Women should also consider selling cannabidiol — also known as CBD — and hemp if dispensary costs are prohibitive, Macias says. “That’s where you see an explosion coming from,” she notes — medicinal products, cosmetics, “all of these things are now being created … and [provide] the best opportunity to be able to grow exponentially.”
Ancillary products like Beatty’s storage case could also give women ways to break into the space, Macias adds. Abernathy, meanwhile, sees new possibilities in cannabis connoisseurship, in the spirit of specialty chocolate makers, coffee sellers and microbrewers.
Whatever the venture, Macias encourages women to form or seek out business communities, so that they can ride the wave together. “We have to establish our own power, our own voices in the industry,” she says.
And the time to do so is here, Abernathy says. “The next couple of years will be super interesting, both because of the possibility of federal legalization and the changes in cannabis laws around the world,” he says. “The industry … has been on this sort of steady growth curve for quite some time. I expect the curve to continue — to accelerate — into the future.”
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