In the latest episode of Civilized's new podcast 'Cannabis & Main,' host Ricardo Baca spoke with Rick Petersen - Principal at Blu Communications - a firm that specializes in helping many industries set standards for proper Corporate Social Responsibility (CSR). Ricardo and Rick discussed the importance of CSR for the cannabis industry, which existing industries offer useful examples for cannabis businesses to learn from and how having the right CSR policy can make your business profitable as well as ethical.
Transcript, Cannabis & Main: Cannabis and Corporate Social Responsibility
Ricardo Baca: Hello, hello, and welcome to Cannabis & Main, a Civilized podcast where we extract one sliver, one tiny little slice from today's cannabis scape and go deep. I'm your host, Ricardo Baca, founder of Grasslands and The Cannabist, and it's great to be here with you today. Of course you can learn more about this show, alongside the marijuana news and cannabis lifestyle coverage you crave from Civilized, found on the world wide web at civilized.life.
Now, we're going to shine a light on cannabis and corporate social responsibility with a guest who is an executive, who's worked with Walmart, Shell, and The Gap and been described as "One of the world's leading experts in corporate social responsibility."
Nikki Barua [excerpt from a 2018 Fortune Magazine interview with the Beyond Curious CEO]: The days where corporate social responsibility was a department and a side initiative - that's dead. If it's not part of who you are as a company, if it's not connected to your mission and values, you will not truly have a relevant role in society or in business anymore, because your customers are making those choices based on what brands they're choosing to spend with, and your talent is choosing who they want to be part of. It's really important to be purpose-driven out of your core and thinking about how do you want to create impact in society and how do you fashion all your products and services and your entire culture around?
Ricardo Baca: Now, corporate social responsibility, or 'CSR' as it's known, is near and dear to my heart. You see, my communications agency, Grasslands, is in the thick of implementing its very first CSR campaign. And while it's been a lot of work, I can't wait to get it all out there and make the world a better place.
For those who are new to CSR, The Financial Times describes it as "a movement aimed at encouraging companies to be more aware of the impact of their business on the rest of society, including their own stakeholders and the environment. Corporate social responsibility is a business approach that contributes to sustainable development by delivering economic, social, and environmental benefits for all stakeholders."
I dig it, and I'm psyched to explore CSR further and talk about its potential impact on the cannabis industry. So producer Vince, let's jump on in. All right, and my guest this week - thrilled to have him in the studio with us - is Rick Petersen, who is the Principal at Blu Communications. Rick, thank you so much for joining us on Cannabis & Main.
Rick Petersen: It's a pleasure, it's an honor.
Ricardo Baca: Rick, your company's tagline is Sustainable Business Advisors. Tell me what that means.
Rick Petersen: Every company - or every organization in a way is sort of floating or trying to navigate waters that are changing on a regular basis. We'll talk about cannabis in a minute, but it's a classic example of a rapidly changing landscape. And, in fact, most corporations - whether they've been around for seven generations or are relatively new, like some of the companies I work with - are continually navigating changing stakeholder expectations, changing legislation, changing business environment, changing business models, and they're all wondering, "well, how do we navigate this?"
Some use models that have been very successful for a very long time. Some realize, though, that their business models and their ways to deal with society and their responsibilities vis-a-vis society have changed.
Again, we'll come back to cannabis in a minute, but they're looking at how do we navigate these sometimes very sort of tormented waters in order to maintain profitability, be attractive to young employees - the millennials who tend to move quite often. How do we be attractive to them if you're an old stock industry? How do we make sure that we meet the new rules and expectations of society?
It's a big challenge. It's a big challenge for some of the largest retailers, it's a big challenge for the big energy companies, the big apparel companies, etc. So the question they always ask is, "How do we define our roles regarding the environment, regarding ethics, regarding good corporate governance, regarding responsible marketing, responsible packaging, managing the supply chain, making sure that we can prove what we claim, the claims we make?"
In my case, most of the work I do is around environmental, social, and governance practices. And that affects how they are perceived by investors, how they are perceived by regulators, and whether consumers will choose - everything else being equal - will they choose a product that is certified organic? Will they choose a product that is certified by FSC, the Forest Stewardship Council, in terms of logging practices? Consumers are very aware, governments are very vigilant, activists are extremely demanding, and shareholders and investors are increasingly demanding on including environmental, social, governance factors in their investment decisions, so called social responsibility investment or impact investing.
Ricardo Baca: You're a CSR expert coming into the cannabis space. I'm curious what you're seeing now. What is corporate social responsibility looking like in cannabis from your eyes?
Rick Petersen: I think the key probably is you've got issues around public health and public security. Those are the two drivers, two proxies, two comparables, two interesting examples for the cannabis industry. The lottery and gaming sector would be one for sure, because it was a prohibition situation up until the '70s. It became [legal] for exactly the same reasons: we want to remove the criminals, we want to limit access, we wanted to protect young people, etc. And so the governments took it over and they developed a retail model, the casinos and video lotteries, etc. And lotteries began down this path of becoming more and more responsible.
Back in about 2003, they kind of hit a wall. Despite the fact it was legal for 20-some odd years. They were getting bombarded by the public. There was pathological gaming behavior, like addiction - very similar with devastating consequences to the public, to individuals, to families, to people's savings and all the rest of it. They realized that they had to find a way to do better. And so that became a story which we could talk about, but a story towards developing a global framework of responsible gambling, and that's what I was involved in back in 2003, helping be the architect of that particular framework.
In the cannabis sector, they have the luxury, I think in a way, of having all this history before them with many interesting proxies.
Ricardo Baca: Yeah, exactly.
Rick Petersen: And they could do it right from the start.
Ricardo Baca: I want to do a case study on something that was just announced recently, and I don't know if you were paying attention, but apparently, it was last week, Canopy Growth is now funding a professorship of cannabis science at the University of British Columbia. And the entire purpose of the professorship is to research the role in cannabis in addressing the opioid crisis. I think this is really fascinating. This is a lot of money that Canopy Growth is contributing - $2.5 million to the University of British Columbia to fund this research and to fund this work. Would you consider that CSR from a cannabis company and maybe dissect this as a case study on the fly?
They're sponsoring science. They don't have to. Nobody's telling you you have to do it, there's no rule saying you have to do it, but they've identified that as being an issue and an opportunity. From a corporate point of view, I'm assuming, they know that they need to advance that cause, because it's good for their business and it's good for reputation, both, not one without the other. Good corporate citizenship essentially requires that.
Ricardo Baca: That it be valid for both.
Rick Petersen: Exactly. Because you could be purely compliance based, say, "The law here is 18 years old, but there is no law in [this] other country." Well, if you're a good corporate citizen, you would apply the best standard wherever you operate. The law doesn't say you have to fund research because somebody else is supposed to do it, but if nobody else is doing it, it behooves you to do it, because you're a good corporate citizen. It absolutely is a good example of that and it's done with rigor and with standards. Academic papers are gonna come from this, and they're gonna say, "Look, we sponsored good research, not something else." So for sure they're doing absolutely the right thing for the right reasons.
Ricardo Baca: Good to hear. Yeah, I was very excited to see when that news came across my feed, I was thrilled. I think, of course we need more research. We have three pretty compelling all academic studies revolving around the presence of opioids and the devastation of opioids in the states that have access to legal cannabis, but just something interesting.
Rick Petersen: I think it is really critical too, because it's certainly going to be a big part of what we're doing at the Global Cannabis Partnership, because globally there is a bit of a gap there, in terms of research, because it's been illegal for so long. Therefore, you can't fund research in the States, for example, and many other places. So yes, we know a lot but we don't know enough. Clearly, we know enough to know that we can move forward carefully and incrementally and do that like we're doing in Canada, but clearly there's a lot of work to do in that front.
Ricardo Baca: I know, you're right. There's a tragic void of research right now and it's truly awful. It's kind of crazy when you think about it. This is being legalized federally in Canada and all across the U.S. in a multitude of states and really on every continent, and yet there's still so much more that we don't know about this substance than what we do know.
Rick Petersen: Well, I would also sort of balance that notion with the fact that on the other side, the opioids and the pharmaceuticals - and I've done a lot of work in pharmaceuticals with some of the major brands - there's a lot we don't know about the long term effects of a lot of things. In substances that are legal and they've gone through the process, but there's a lot of things we don't know about a lot of effects from the pharmaceuticals, but a point of view of many of the other areas I've talked about, from climate change to the impacts on habitats and biodiversity and on and on and on. I think the notion that - in Canada, we are applying the precautionary principle. If we don't have all the answers, you've got to go slow, essentially is what it comes down to.
Then test it, and figure it out. And test it some more, and figure it out. I think that's the approach we're taking in Canada, so it's not a free for all. We're not saying, "we're promoting more cannabis use." Although I expect there will be a bump in consumption, just because people will say, "well now it's okay." But the essence of it is that we need to take a very conservative cautionary, if not precautionary, approach to cannabis production distribution and marketing and consumption in Canada, because we don't have all the science. Let's just be restrictive first and then move down a more opening of that as we go forward.
Ricardo Baca: In the States, the statistics from the Centers for Disease Control tell us that 90,000 Americans die every year from alcohol and 30+ thousand die every year from heroin and other opioids. And the CDC number for cannabis fatalities is zero, and that's the U.S. Federal Government telling us that. And of course, we know the U.S. Federal Government was in charge of spreading misinformation and wrecking worldwide drug policy, especially as it relates to marijuana. So I definitely don't mean that it's terrifying, but we do have these massive studies that can tell us the true impacts of legal alcohol, legal nicotine products on an entire community, studies that involved tens of thousands of individuals. And I just look forward to the day when we have that equivalent to cannabis.
I think it is a responsibility industry and the government agencies to do that, to fund that — without waiting for somebody else to do it for them. I think as we open up the marketplace, the funds will become available, because it's certainly not getting done by the people who are running the cannabis business right now necessarily. The gangs aren't putting a percentage of profits into research right now. Let's put it that way.
Ricardo Baca: I wonder if you might be able to maybe look at this industry as a whole and perhaps give our listeners, what are some CSR programs, or angles, that maybe they should be considering - whether they're a grower or a retailer or they're both or they're a lab - what kinds of CSR initiatives maybe should a cannabis-specific business consider, in your head?
Rick Petersen: For me, there's probably two or three that are common among that space, because - don't forget - each one has its own set of opportunities and impacts, so it being somebody's growing seedlings does something and their impact on climate change is relatively small because at that point, that doesn't really matter. But if you're a major producer, it could be a big energy consumer, so obviously some things around the environment are more important.
Ricardo Baca: Good point.
Rick Petersen: There is a distinction to make there. But I think clearly there's something in common in all of them. I think the environmental component is gonna be really important, and we don't talk about it much. We talk about responsible use. I'll get to that, but clearly that's gonna be the big one. The environmental component in terms of water use, pesticide use, organic certification, impacts on climate change, waste management to some extent, packaging will become a problem at some point because there's gonna be a lot of product being sold and it's being packaged.
Ricardo Baca: That's already a problem.
Rick Petersen: Already an issue. It will be like many other industries, the same way. I think people need to be thinking, "Are we good environmental stewards? Are we thinking about environmental sustainability and how are we doing that and where are our key levers? What are our practices? How do we improve those practices?" That's gonna be one of the ones, like I said, we don't talk about much, but that's gonna be a huge one.
On the other side is obviously the responsible use piece. And I think everybody has to be thinking about how do we raise the bar in terms of our commitments, our policies, our programs, our performance indicators, the protocols we apply to our operations, and how do we communicate that to the public given the constraints? All those P's that I use, that's a methodology I use with my clients. But all those things point towards something about proving that you are promoting responsible use, in very practical terms. I mentioned mystery shoppers, I mentioned a whole bunch of things, traceability in terms of the supply chain management, the chain of custody of your product so that the consumers know that they have what they're supposed to have, the right levels of THC, etc., etc. The responsible use piece is multifaceted, but I think every player has to be thinking about that.
Ricardo Baca: Even customer education would fall into that wouldn't it?
Rick Petersen: Absolutely. That and employee education are probably the two biggest pieces, because you can't just say, "Well, we don't sell to young people," and that's it. We can't advertise, so we don't advertise. That's not good enough anymore. It's not good enough. It's the same in all these other industries I spoke about. The expectations are that you make the money from this, you have to be part of the solution. You can't just sort of hide and hope that nobody's gonna shine a spotlight on you, you have to be proactive.
I think those are the two biggest ones, but I think the third one in the middle is kind of maybe a little bit surprising. I think the whole question of governance and ethics is gonna be really important, because you've got an industry that's been criminal, not criminalized but criminal, for a long time.
And there's a question of amnesty and people working in the industry. All the experts are experts because they were in the business in places where it wasn't legal. So how do you manage that transition as well? Of course, that's a very practical problem too, because the consumers have people they deal with now that they trust, and they're also experts. How do you bring them into the business effectively and appropriately and legally and all the rest of it? How do you manage a business appropriately? When you're now becoming in an industry where that's being financed at a huge, huge levels. The amount of money coming into this and there's gonna be more and more IPOs and there's huge dollars coming into this industry.
Ricardo Baca: Especially up here, yeah.
Rick Petersen: Especially in Canada, but I think you'll see the same wave elsewhere. The standards for ethics and good corporate governance and transparency as a publicly traded company are very different than a private company, let alone a craft artisanal kind of business, so the expectations are gonna be tremendously more rigorous. I think that the companies now have a big challenge, especially the LPs. But I think it will be the same in the government agencies in a way because how do you govern, how do you manage your business ethically and use the world's best standards - and again, back to standards - how do you use the best standards in terms of good corporate governance?
Because the spotlight will be on them and they need to be able to say, "Yes, we're good in environment, yes, we're good in terms of consumer support and consumer behavior." But are you running your companies and organizations appropriately? It may not be for tomorrow, but it will be soon that there's gonna be a lot of high expectations about how you manage your business.
Ricardo Baca: Rick, I appreciate you sharing that. I'm a very new entrepreneur as I told you. I'm a lifelong journalist who opened his own agency a year and a half ago, and we have eight full-time employees. Now is very much the time for me to implement my own CSR and to make sure that we have a giving program in place. I'm a new entrepreneur, as I said, but if you have a profitable business, you need to be giving back in a sustainable way that is directly tied to your bottom line, so ideally you can give more back when that bottom line increases.
Rick Petersen: I would encourage you to go one step further. That you need to think - well, not that you need to. I sound like I'm preaching here, but ideally an entrepreneur doesn't just make a lot of money to give back, he makes the money in an ethical way. He makes money in a way that solves some of those issues and I think you're actually talking about that. You're not making money to give to journalism, you're actually developing your business in a way where you're supporting good journalism, which is gonna be good for your business.
Ricardo Baca: Right.
Rick Petersen: Then you'll have better people coming in, you'll have more people that want to work for you. It's good for your reputation, it's good for your business. You can run a more sustainable business from the get-go and make profits that you can maybe give away too. I would just encourage the folks out there that are thinking about how to get into business, wouldn't it be nice if you could not just get rich and give it away? Wouldn't it be nice if you can get rich by doing the right thing too? That's the paradigm you want to live by. When I talk about values based business, that's kind of what I'm talking about.
Ricardo Baca: I love it, dude. Your tagline is sustainable business advisor, and my tagline is a journalism-minded agency.
Rick Petersen: There you go.
Ricardo Baca: Because we are trying to bring ethics to communications.
Rick Petersen: That's good. It's a win, win, win, win, win.
Ricardo Baca: You're speaking my language. Rick Petersen - the Principal at Blu Communications - thank you so much for joining us on Cannabis & Main. I really appreciate you sharing your expertise and best of luck with everything.
Rick Petersen: Thanks for having me.
Cannabis & Main is a Civilized podcast. Our executive producers are Ricardo Baca and Derek Riedle. We are produced by Katie Labrie and Vince Chandler, along with Civilized, f/4.20 Films, and Grasslands. We are hosted by Ricardo Baca and directed by Vince Chandler. Interact with Vince on Twitter @VinnieChant, Ricardo @bruvs, or Civilized @Civilizedlife. Our music is by Johan Glossner. Thank you to Rick Petersen of Blu Communications for joining us on this episode of Cannabis & Main, Cannabis and CSR.