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SXSW Put Cannabis on the National Stage, But I Learned There that Progress Depends on Local Activism

I first went to South By Southwest (SXSW) in 1997. It’s gotten a little bigger since then. So much bigger my thumb got tired scrolling through all the sessions and bands on the “South By” app. Luckily, being the dutiful cannabis writer that I am, I focused on the new and more manageable “cannabusiness” track.

Attendance was decent, but as Mary Pryor, a venture capitalist advisor and founder of Cannaclusive, put it, cannapreneurs would’ve been wiser to attend the first half of SXSW. That’s when more tech companies were present. Pryor said tech investors, a lucrative bunch, are interested in cannabis, but don’t know enough about the industry. They have to meet people doing the work.

Instead, the cannabusiness track was in the second, quieter half of the festival, when most tech companies had already left. This lack of investor access only emphasized the central conclusion I drew from SXSW 2019:

The cannabis industry is becoming dominated by big money that won't benefit small businesses or the communities impacted by the Drug War, unless changes happen at the local level.

It’s a more complex issue than just a white, male takeover of the cannabis industry, but the numbers are pretty staggering:

The two panels in the program that covered race and gender inequity in the industry shared theoretical and practical ideas for change.

One of them, “The Evolution of the Pot Dealer,” covered how the demographics have shifted quickly in just the last three to four years, enough to give old-timers whiplash. There was a sense of urgency that things had to change now before it’s too late. State licenses are often limited.  

Oakland cannabis regulatory commissioner, Lanese Martin, also founder of Hood Incubator, which helps people of color enter the industry, proposed that tax revenue go primarily to entrepreneurs and communities impacted by the Drug War. “It was the government’s law enforcement that arrested a disproportionate amount of black people for cannabis-related offenses, and, therefore, it’s the government that should be denied industry revenue," Martin said. "When I think of my lived experience, when I saw who was busting up my cousin or any black man, it was a cop."

Also on the topic of equity within the cannabis space, Amy Margolis, an activist and lawyer, discussed how female owners have had a difficult time gaining capital for their businesses. To help them, she created an accelerator in Portland, Oregon called The Initiative. The education and networking program teaches female business owners about finance, capital structure, and branding.

Margolis said she believes things have become tougher for women since these new “Greenrush” investors have entered the industry. New investors really need to believe their money will grow fast and trust is easier between people you already know or identify with. As a result, they tend to invest in entrepreneurs from their own (predominantly white, male) circles. She also finds that women have a lower level of confidence. “Speaking persuasively is the first thing women struggle with.” Because of this, an important part of The Initiative curriculum is teaching the art of pitching.

Her session sparked my interest in going to a following presentation by a representative from CanopyBoulder, which focuses on cannabis. He explained the various areas of the industry, from cultivation to retail, and which ones have the most potential for growth.

When I asked him at the mic why so many female cannabusiness owners face challenges raising capital he denied the data was true. He said investment in women’s businesses is increasing, just not as fast as men. Or something like that. His answer was unclear to me; I was still too dazed by his denial.

One legitimate point he made was that all cannapreneurs need to find niche areas of growth. Health and wellness, a sector popular among female entrepreneurs, is saturated and won't easily attract investment. One example of a niche company that he gave is Abaca, a fintech company that noticed cannabusinesses are having trouble raising capital and so built a platform to help people get loans and other types of financing. That is definitely a niche to fill.

But I still wanted to know, why are these new investors, usually white men who have the money, not investing in businesses owned by women and people of color? Not only do these demographics have the talent, experience, and skills to be successful, but they also identify with a wide swath of consumers, especially women. Still, venture capital firms have blinders on. Only 2 percent of VC funding, over all industries, went to women in 2017.

It’s easy to believe this is just the natural order of things, right?

Wrong. People had higher hopes for cannabis and for good reason. It’s different from other industries because it’s actually an old industry built on the backs of hippies from the Emerald Triangle, black and brown entrepreneurs, HIV activists, cancer patients, and the parents of epileptic kids. I don’t see white men in suits anywhere in there.

And because cannabis is federally illegal, banks don’t often lend money to these businesses. This makes it even more difficult to raise capital. So, no, big money dominating the cannabis industry in such a short span of time and to such an extreme is not the natural order of things.

There are exceptions. I know of a few men who have worked for many years in the industry and went through hell getting licensed. But, it's the wave of Green Rushers of the past three to four years to whom I'm referring.

To me, cannabis is a plant that is all about giving. People who have been in this tough industry for years are usually interested in how it can impact and change the world. These new guys don’t get that. How could they?

So the SXSW cannabusiness track made me angry that so many entrepreneurs are being excluded. And I have little hope federal regulation will prioritize social equity when cannabis is finally removed from Schedule I. In fact, I predict there will be resistance to social equity reform.

We saw this recently with the Farm Bill of 2018. The government is banning people with felony records from entering the industry, a sign that white supremacy will shape federal legalization, given that the demographic of those with felonies skews disproportionately toward people of color. And we’re talking about hemp, which doesn’t even intoxicate.

I had a brief interview with Patrisse Cullors, co-founder of Black Lives Matter and active in fighting for Proposition 64 to legalize cannabis in California in 2016. I asked her how she thinks we can implement inclusion in the industry. Her answer was simple:“City by city, state by state. Local implementation [and] local oversight of the industry is going to be key.”

Thank you SXSW for stirring me up. This national perspective of the industry was a wake-up call that local just might be the only way to make any real, initial change.

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