Economist, Beau Whitney, released a report on the 2024 Cannabis Business Conditions and Sentiment Survey. It states that the legal cannabis industry remains structurally unprofitable for most operators—an issue that disproportionately impacts social equity entrepreneurs. The survey found that only 27.3 percent of U.S. cannabis businesses are profitable, while 40.6 percent are breaking even and 32.2 percent are operating at a loss. Profitability gaps are even more pronounced along racial lines: 33.7 percent of white-owned cannabis businesses reported being profitable, compared to just 17.5 percent of non-white-owned operators. Whitney attributes these outcomes to systemic barriers, including limited access to capital and banking, heavy regulatory compliance costs, and punitive federal tax policy under IRS code 280E, which can push effective tax rates above 50 percent.
The same story keeps repeating over and over again. States launch social equity grants with promises to provide financial, business, and technical support to equity applicants. Time and time again, lives are ruined and dreams broken because there isn’t adequate business planning support to mitigate the risk of failure.
BIPOCann Leads In Colorado
Founded in 2020 by Ernest Toney, Colorado-based incubator BIPOCannwas created to address this gap, which he saw early in the rollout of social equity cannabis programs around the country, where many states were focused on license access, few invested in the long-term business planning, capital support, and operational infrastructure needed to help equity operators survive beyond launch.
BIPOCann works with minority and social equity entrepreneurs to support the full lifecycle of a cannabis business, from license applications and business planning to capital raising, operational setup, and product launch. Although the organization works with founders nationwide, its core programming is centered in Colorado through a partnership with the state’s Office of Economic Development. Beginning in 2022, BIPOCann helped pilot a model that paired state-issued social equity grants of up to $50,000 with structured mentorship, ecosystem introductions, and technical assistance designed to help founders avoid common pitfalls and accelerate time to market. The program has since expanded from an initial eight-week pilot to a 15-week accelerator, and in late 2025, BIPOCann secured its first state contract. In 2026, the organization expects to support up to 60 Colorado-based cannabis businesses through a year-long combination of structured programming and ongoing advisory services.
Four years into the program, BIPOCann can produce solid data on the efficacy of the program, says Toney, “We’ve worked with over 50 unique social equity licensed businesses and helped some get their doors open, expand throughout the state, expand to multiple states, and last year, a few of our participants were awarded about a quarter of a million dollars worth of investment funds.” He estimated that about 60% are license holders and 40% are service-based businesses seeking support from the BIPOCann program.
Toney also points to the advantages of launching a cannabis brand in a mature market like Colorado. With decades of legal market history, the state already has a dense ecosystem of established operators, retailers, and service providers, giving new brands multiple avenues to promote products and build distribution quickly. That existing infrastructure—from cultivation and manufacturing to storefronts and marketing channels—can shorten the path to market and reduce the typical early-stage friction. By contrast, while newer markets often generate significant excitement, Toney notes that brands entering those markets may face delays as foundational infrastructure is still being built, limiting immediate opportunities despite long-term potential.
Financing Remains The Biggest Obstacle
Access to capital remains the most persistent barrier for social equity entrepreneurs. Investment opportunities have largely dried up over the past several years, particularly for first-time founders who lack operating history or personal wealth to self-finance early stages.
Toney says BIPOCann places heavy emphasis on financial literacy, pitch development, and helping founders clearly communicate their brand story. “Ultimately, we want them to be in a position where, at the end of the program, they have a pitch deck to approach angel investors or friends and family,” he says. “Even better is when they can show revenue history to demonstrate business capability.”
The program relies heavily on experienced cannabis professionals who volunteer their time to mentor participants and share real-world operational expertise. That peer-driven support, Toney says, often fills gaps left by state programs that stop short of providing ongoing guidance.
It is unclear why states continue to repeat the same mistakes. Program after program has failed to meaningfully support social equity entrepreneurs beyond the point of licensure. States need to partner with organizations like BIPOCann to implement comprehensive business training programs with ongoing operational oversight, more closely resembling how venture capital firms engage with portfolio companies. Capital alone is not enough.
Learn From Past Mistakes
Even in states that have touted early social equity wins, the outcomes have fallen painfully short. New York, for example, successfully awarded roughly 54 percent of adult-use licenses to social equity applicants, but its promise to deliver turnkey storefronts and meaningful financial support ultimately unraveled. The state’s reliance on public-private partnerships, including DASNY and private investment partners, led to delays, cost overruns, lawsuits, and allegations of misconduct tied to how funds were allocated and how executive compensation was structured. For many licensees, the result was months or years of uncertainty rather than the operational head start they were promised, leaving some entrepreneurs carrying rent, legal fees, and licensing costs without ever opening their doors.
California offers another cautionary tale. While the state has distributed hundreds of millions of dollars in social equity grants through local jurisdictions, the support has been uneven, slow to reach operators, and heavily dependent on municipal capacity. Many equity entrepreneurs report receiving funds after critical startup windows had already passed, or without the technical assistance needed to deploy capital effectively.
In Richmond, California, a local equity program illustrates how these breakdowns play out at the municipal level. As reported recently, the city returned more than $1.1 million in state cannabis equity funding after failing to meet reporting requirements, while a separate $600,000 grant allocation has remained stalled, leaving qualified equity applicants waiting more than a year for promised support. In some cases, California grant dollars have helped cover rent or fees, but they have failed to address deeper challenges, such as cash flow management, compliance costs, access to the supply chain, and long-term business sustainability in one of the country’s most competitive cannabis markets.
These failures are too common across state and local equity efforts. Access to capital without execution, accountability, or ongoing operational support is not equity. It is a system for failure. States need to partner with organizations like BIPOCann that work hand in hand with entrepreneurs to build viable businesses, not just issue licenses and grants.
Minnesota has one of the most progressive markets in the US to normalize cannabis. Liquor stores can sell certain hemp-derived THC products, and restaurants are serving THC drinks. They continue to introduce new ways as they roll out their adult-use market.
Minnesota’s medical market has been in place since 2014; adult-use was legalized in 2023. While tribal nations quickly launched their markets, licensed state retailers didn’t open their doors until September 2025.
According to a recent press release from the state’s Office of Cannabis Management, “Since June 18, the state has issued 37 business licenses, including 23 licenses to microbusinesses with plans to conduct retail cannabis sales. Those businesses have been waiting for cultivators, manufacturers, and testing facilities to establish a supply of products to sell to customers. With Tribal-state cannabis compacts now in place with the White Earth Nation and Mille Lacs Band of Ojibwe, state-licensed retail businesses are working in partnership with Tribal Nations to procure safe, tested cannabis products at wholesale to stock their shelves.”
Why Minnesota’s Rollout Is Earning Industry Praise
Panelists at the recent MJBiz conference praised several policy decisions that have positioned Minnesota for a more successful adult-use launch than many earlier states. Chief among them was the legislature’s decision to prohibit local governments from opting out of allowing cannabis businesses in their communities.
“If you allow localities to opt out, many of them will—and the illicit market will be happy to fill the void,” said Jason Tarasek, partner at Vincente LLP. While the policy has generated pushback from some Minnesota communities that feel it is being forced upon them, Tarasek argued that opt-outs will undermine a balanced cannabis ecosystem. “If you want a legal, regulated marketplace, then you simply cannot allow local communities to opt out,” he said. Ensuring statewide access, rather than concentrating retail solely in major cities like Minneapolis and St. Paul, is critical to avoiding a lopsided market.
Minnesota is also breaking new ground with the nation’s first municipal-run cannabis dispensaries, a model similar to the state’s city-operated liquor stores. Several municipalities are preparing to open their own retail locations, and industry observers are watching closely, as Pennsylvania has considered the same model.
Tribal-State Compacts and a New Supply Chain Model
Panelists highlighted Minnesota’s tribal-state cannabis compacts as one of the most groundbreaking accomplishments of the state’s market design. Formed by the legislature and now available to all 11 federally recognized tribes in Minnesota, the compacts create a formal framework between the two sovereign governments.
“Cannabis compacts sit at the intersection of sovereignty and cannabis law,” said Mitch Chargo, Esq., who works closely with tribal clients in the state. He described compacts as negotiated agreements designed to clarify regulatory standards, enforcement authority, and intergovernmental coordination, with the goal of reducing uncertainty and conflict across the supply chain.
Under the compact model, tribes such as the White Earth Nation operate their own cannabis regulatory authorities, which oversee both on-reservation and off-reservation cannabis operations. These tribal regulators coordinate directly with Minnesota’s Office of Cannabis Management, which has dedicated staff focused on tribal relations. “The most important part of the compact is establishing a constant and reliable line of communication between the two governments,” Chargo said, noting that the collaboration is designed to protect tribal sovereignty while ensuring public health and safety through consistent testing and compliance standards.
While panelists acknowledged that friction is inevitable when multiple sovereign regulators operate in the same marketplace, they emphasized that Minnesota’s compacts proactively include processes for resolving disputes through ongoing communication rather than enforcement escalation. “The goal is to resolve issues before they become conflicts,” Chargo said, pointing to in-person coordination as a key feature of the framework.
Tarasek, who has worked on multiple Minnesota tribal compacts, said the model is drawing national attention. “The opportunities in Minnesota for tribal nations are incredible,” noting that the compacts allow tribes to operate cannabis businesses beyond tribal land while maintaining independent regulatory authority. As a result, Minnesota could soon have a dozen cannabis regulators operating in parallel, including the state Office of Cannabis Management and 11 tribal regulatory bodies.
“That simply does not exist anywhere else in the country,” Tarasek said. “Other states and other tribal nations are watching Minnesota very closely.”
Strong Intentions for Social Equity
Panelists agreed that Minnesota’s social equity framework was designed with well-intentioned goals, but some provisions have created challenges for applicants rather than protection.
Minnesota moved early to support social equity applicants that include individuals impacted by cannabis prohibition, veterans, residents of high-poverty areas, and emerging farmers. “When we talk about who our social equity applicants are, it is important to remember that more than half of them are veterans,” said Jen Reise, founder of North Star Cannabis Consulting. “That veteran application pathway was simply much easier for people to get through.”
One of the most debated aspects of the program is the requirement that social equity applicants maintain at least 65 percent ownership of their businesses. The rule was intended to prevent predatory behavior and out-of-state interests from co-opting equity licenses. In practice, however, panelists said it has significantly limited access to capital.
“That 65 percent ownership requirement did a huge disservice to social equity applicants,” said Chargo, “Trying to raise money when you can only sell 35 percent of your company makes it virtually impossible, especially for microbusinesses that already face serious financial constraints.”
Chargo added that the ownership structure often forces social equity operators into retail because it is the least capital-intensive option. “You may be able to get licenses for cultivation or manufacturing, but without capital, most of these businesses end up funneled into retail simply because it costs less to launch,” he said.
Panelists also discussed Minnesota’s microbusiness license, which was created to support small, vertically integrated operators. Reise noted that while the license aligns with the spirit of social equity, the low barriers to application have resulted in many first-time operators entering a complex and highly regulated industry. “We have a large pool of excited but inexperienced operators who are trying to stand up businesses and need significant support to have a real chance at success,” she said.
Tarasek echoed concerns raised by national equity advocates. “Social equity is a wonderful idea, but one of the best ways to help these applicants may be to give them flexibility,” he said, referencing feedback from the Minority Cannabis Business Association. Tarasek noted that not all social equity licensees will be positioned to operate long-term and that allowing license transfers or sales may become a critical exit option for some.
“I hope they all succeed, but the reality is that not everyone will,” Tarasek said. “Some of these applicants have no business experience, no cannabis experience, and limited capital. For some, selling a license may be the most viable way to create value.”
Minnesotans Embrace Craft Brands
Panelists said Minnesota’s licensing structure and canopy limits were deliberately designed to prevent market domination by large multistate operators. “They kept the canopy limits restricted, and that has largely succeeded in keeping the big MSOs out,” said Tarasek. While the rollout has not been without delays, Tarasek noted that the market is now moving and that opportunities remain for experienced operators, investors, and entrepreneurs. “There are still plenty of licenses available, and there are quality operators in Minnesota who are actively looking for capital and partners,” he said.
For many panelists, Minnesota’s greatest opportunity lies in its support for craft cannabis and differentiated brands. “One of the strongest attributes of our program is the ability to build a craft business and tell a story that distinguishes your product from your neighbor’s,” said Chargo. “If you want to create a brand that tells a story, Minnesota is the market for you.”
Social equity in cannabis looks different in every state. At MJBizCon, the people working hardest to open doors for others came together to trade insights and discuss what it really takes to succeed and get a leg up. Kicking off the session was Cash Color Cannabis founder Mehka King, who urged the room to keep the “spark of social equity” alive by staying vocal and showing up for the work.
Get in the Room With Regulators
Panelists agreed that one of the most effective ways to advance equity is by getting directly involved in policymaking. Regulators often lack on-the-ground business experience, especially in cannabis, and need industry voices to help them understand the challenges equity operators face. Ernest Toney, founder of BIPOCANN, a nonprofit that supports minority entrepreneurs in business planning, noted, “A lot of times the folks who are in positions to make the rules and create programs may not have been business owners themselves, so your perspective is really helpful.”
Wesley McWhite, NJ, Director of the Office of Diversity and Inclusion, emphasized that advocacy can’t end once a license is issued. “Social equity operators need to be on the front lines, not just through licensure and operations. Your stories, your identities, and the work you do on the front lines shape regulation and policy. We want to create opportunities for you, but we need your input, your support, and your services.”
Beatrice Carranza, founder of the gummy brand BACHAZ, said the regulators she’s worked with “have not been well-informed and seem disconnected from my community and the struggles of a social equity entrepreneur.” But she stressed the responsibility goes both ways: “Entrepreneurs need to be more involved in that space, helping influence regulations. Getting a seat at the table will create a better roadmap for the people coming behind us.”
King underscored the same point: “You can’t just be a shop owner. You have to be an advocate.” McWhite agreed, noting that success for an equity operator means not just complying with the system, but working to improve it.
Economist Beau Whitney called for a data-backed framework for policymaking. “It’s important to set up measurable policies—if you don’t measure something, it’s tough to manage it or assess its impact.” But numbers aren’t enough. “Tell your story,” he added. “It shows up in the data, and it creates the emotional connection regulators need to understand the stakes.”
Build Your Tribe
Whitney urged entrepreneurs to invest in community-building. “A community will amplify your voice,” he said. “By participating and having a large presence, you can help shape policy. And it’s important to collaborate with other organizations so they can amplify your voice, too.”
McWhite said the industry is surrounded by potential allies, and tapping into those relationships can create a stronger, more unified push for equitable policy. He pointed to healthcare professionals who are witnessing declines in opioid addiction where cannabis access is available, as well as seniors turning to cannabis for sleep and pain relief. Both groups, he noted, have powerful stories and established credibility that can reinforce the industry’s message.
These partnerships can take many forms. Cannabis operators can team up with healthcare providers to host educational workshops or co-sign letters of support for harm-reduction policies. Senior advocacy groups are eager to collaborate on safety education and can be valuable voices during legislative testimony. Small-business associations can help cannabis entrepreneurs push for fair permitting and access to capital, and social justice organizations can join forces on expungement clinics or criminal justice reform campaigns.
McWhite added that regulators themselves need to break out of their own silos and bring more state agencies into the fold. “For us as regulators, our advocacy means educating other state agencies and breaking down silos, like environmental agencies, economic development agencies, and energy agencies, to get everyone involved to work together.”
Lay Your Foundation
Ernest Toney has worked with more than fifty businesses in Colorado through BIOCann to help navigate the industry’s steep learning curve. In addition to the lack of access to capital in this capital-intensive industry, he sees the bigger hurdle for new entrepreneurs is understanding business fundamentals. He says a solid business plan is the first step in building a strong foundation for success.
Beau Whitney highlighted that lenders often perceive higher risk among social equity applicants due to factors such as past criminal records or limited business experience, which drives up the cost of accessing capital and makes profitability harder to achieve. His research shows that in 2022, 45 percent of white operators reported being profitable compared with just 32 percent of non-white operators. Last year, profitability for non-white owners dropped to 17.5 percent, though it still marked an improvement from the previous year’s 15 percent. Whitney said, “There’s a disproportionality in the profitability of social equity motives that just desperately needs to be addressed through policy, the regulatory practices, and knowledge and understanding of education within the community.” Despite the challenges, he noted that recent data shows signs of improvement, suggesting there is still real opportunity for operators who have the right support and resources behind them.
Whitney also added that being hyper-focused on a specific target market can be just as powerful as funding. After analyzing small and social equity businesses across the country, he found that success doesn’t always require vast amounts of capital or massive production infrastructure. Many of the women- and minority-owned brands he has studied built multimillion-dollar companies by starting with as little as 250 to 500 pounds of biomass and transforming it into products designed for a clearly defined audience. Whitney emphasized that understanding your market, refining your product for that customer, and staying disciplined in your strategy can matter more than having deep pockets.
Mehka King ended the panel with, “Having an understanding of the use of data, understanding of the risks that you’re entering into, and developing processes to address those risks when they come about is critically important. So, understanding and educating yourself on what’s going on in the industry and where things are going, and then reaching out to other members of the community, is powerful for developing a community and supporting each other throughout this process.”
A panel discussion at the recent Business of Cannabis event in NYC analyzed the serious issues still facing the industry rollout in New York. What has been touted as a social equity-first initiative has been riddled with significant challenges and lawsuits.
To date, the Office of Cannabis Management has awarded 56% of licenses to those who paid for the war on drugs. While this is the most any state has done to be fair, the road to success is still a long way off.
Panelist Ethan Nadelmann, Founder of the Drug Policy Alliance, called New York the epicenter of racial inequity, where young men of color were overwhelmingly arrested on marijuana charges. Even though it has been a rocky rollout, and New York was a laughing stock for a couple of years, he praised the accomplishment so far and reminded everyone that it wasn’t too long ago that the notion that people who have a marijuana conviction should even be allowed to get licensed was inconceivable. “So the kind of 180 on that, where people who actually have a conviction are in the head of the line, is a remarkable breakthrough development,” he said.
Nadelmann posed the questions: What will all of this look like 5 or 10 years from now? What percent will still be equity licenses? To what extent are just a small number of people benefiting from this equity thing? Will we see the continuing equity? Will it be meaningful? Were there better ways that equity might have been done? Should the OCM be given a time limit to accomplish its goals, similar to other industries?
The True Party of Interest Debate
The conversation then turned to one of the biggest sticking points in the state’s rollout — the True Party of Interest (TPI) rules, which determine who can invest and own across different parts of the supply chain.
Attorney David Feldman explained that while the rules were originally designed to prevent “Big Cannabis” from dominating the market, they’re now creating unintended barriers for small operators. “They’re actually hurting small businesses,” he said, noting that restrictions prevent multi-state operators and out-of-state investors from putting capital into New York dispensaries if they own cultivation or processing assets elsewhere. “Small businesses need access to experienced investors and operators to survive, and right now, they can’t raise that capital.”
Simone Washington, Head of Equity at the Office of Cannabis Management, defended the policy’s intent, emphasizing that the agency’s Trade Practices Bureau was established to monitor ownership and ensure the market remains rooted in equity. “We hear the concerns,” she said, “but we must protect the spirit of the MRTA and make sure this market primarily benefits people harmed by past drug laws.”
Nadelmann added that other states have found a more balanced approach. In Connecticut, for example, larger operators can hold minority stakes in equity businesses — a model he called a “net positive” that brings both capital and expertise. He also cautioned that the industry must prepare for broader shifts ahead. “If federal legalization comes — and it might — many of these restrictions could vanish overnight. We need to be ready for what a national market could mean.”
A Call for Unity
If the TPI debate highlighted how regulatory complexity is stifling opportunity, the next topic revealed an equally daunting challenge: the lack of unity across the industry itself. Despite sharing common goals, operators, activists, and policymakers often find themselves working at odds with one another — sometimes in court.
Moderator Sam Reisman noted that despite common ground under the pro-legalization umbrella, competing interests have fragmented the movement. Advocacy groups, equity operators, and businesses have pursued separate agendas, occasionally securing injunctions that slowed the entire rollout.
Ethan Nadelmann acknowledged feeling “deeply conflicted” as both a reform advocate and a board member of a multi-state operator, but emphasized that industry and activism have more in common than they think. “We all want intelligent regulation,” he said. “Bad regulation helps no one.” He praised collaborations like the Last Prisoner Project, which unites both sides to address lingering injustices from the War on Drugs.
Simone Washington called for more open communication, noting that “people are very siloed” and rarely come together to identify shared objectives.
Attorney David Feldman agreed, pointing out that the industry’s fragmented advocacy sends mixed signals to lawmakers. “What we need is a single, strong trade organization that represents all sides under one coherent vision,” he said.
The Double-Edged Sword of Federal Rescheduling
As talk of federal rescheduling continues to swirl, panelists debated what moving cannabis from Schedule I to Schedule III could mean for New York’s developing market. Moderator Sam Reisman noted that while the proposal has stalled, its potential ripple effects could be profound.
Attorney David Feldman outlined three major outcomes. First, eliminating IRS code 280E would allow cannabis operators to deduct ordinary business expenses for the first time — a “game changer” that could lower effective tax rates from as high as 80% to something sustainable. Second, rescheduling would open the door to expanded research, long hindered under Schedule I restrictions. And third, Feldman said, it could enable the FDA to establish a federally recognized medical cannabis framework without new legislation. That, in turn, could pave the way for interstate commerce, trademarks, and institutional investment.
But not everyone was optimistic. Simone Washington expressed concern that rescheduling could jeopardize New York’s equity commitments. “This administration has shown it’s anti-equity,” she said. “If the federal government takes control, the businesses will swallow the market, and the equity operators will be pushed out.”
Ethan Nadelmann echoed her caution, adding that full federal legalization — depending on how it unfolds — could also accelerate consolidation. “When you open the door to interstate commerce, it’s not just the MSOs,” he warned. “It’s Big Alcohol, Big Tobacco, and Big Consumer Goods that come rushing in. That could wipe out the small operators entirely.”
Fixing the Fallout from Proximity Rules
Among the most contentious issues now facing New York’s cannabis rollout is the recent reinterpretation of the state’s proximity rules, which prohibit dispensaries from operating too close to schools and places of worship. The abrupt regulatory change has left several operators — who had already secured leases and invested heavily in buildouts — suddenly out of compliance, sparking calls for legislative amendments to the MRTA.
Simone Washington acknowledged the strain the new guidance has created. “We require people to have locations before they can even apply for a license, and that’s causing a lot of friction,” she said. With downstate real estate scarce and landlords taking advantage of operators desperate for compliant spaces, Washington said the Office of Cannabis Management is exploring ways to introduce lease protections and other structural reforms to prevent further exploitation. “It’s not necessarily about changing the MRTA itself,” she added, “but it does mean looking at solutions from a legislative standpoint.”
Attorney David Feldman called for more sweeping reforms. “The proximity rules need to be relaxed so more people can actually participate,” he said, also urging limits on local zoning powers that have allowed some municipalities, particularly on Long Island, to obstruct the state’s authority. Feldman argued that New York should rethink restrictions on ownership caps as well. “If someone builds one successful dispensary, why can’t they have four or five? No one tells Starbucks they can only open three locations in New York City.”
Ethan Nadelmann took a broader view, arguing that New York needs to learn from other states rather than repeating their mistakes. “I’d love to see New York take the lead in bringing together the most thoughtful stakeholders from both the industry and regulatory sides to really assess what’s worked and what hasn’t around the country,” he said. He also warned that regulators must be proactive in addressing the growing overlap between the hemp and cannabis sectors. “This hemp thing is a massive knuckleball coming into the industry,” he said. “One way or another, the two are going to merge — whether through drinks, flower, or something else. New York should be ahead of the curve instead of just reacting.”
Tahir Johnson is the founder and CEO of Simply Pure Trenton, the first black-owned social equity dispensary to receive a license in New Jersey. He’s a well-known cannabis advocate who’s held leadership roles at the Marijuana Policy Project, the National Cannabis Industry Association (NCIA) and the United States Cannabis Council. Tahir was born and raised in Trenton, New Jersey, so coming full circle and starting a dispensary in his hometown is something truly special.
From growing up in New Jersey to graduating from Howard University, working in finance and wealth management at companies like Morgan Stanley, to finally launching a business back in his hometown, he embodies the Trenton success story.
Tahir is speaking at the upcoming Cannabis Quality Conference in Parsippany, New Jersey on October 18. Ahead of his presentation there, we caught up with Tahir to learn a little more about his background, his thoughts on social equity and some advice he could offer to other minority cannabis entrepreneurs.
Cannabis Industry Journal: Tell us a little about yourself – what’s your story?
Tahir Johnson, Founder & CEO of Simply Pure Trenton
Tahir Johnson: My name’s Tahir Johnson and I am the founder and CEO of simply pure Trenton. I was born and raised here in Trenton. I am a Howard University alumnus. I’ve spent most of the past few years of my life in the DC Maryland area. I came home to apply for the licenses and thankfully won them. I am one of the first 11 dispensary licenses to be issued last year. I licensed the brand from my good friend, Wanda James, who is the founder of the original Simply Pure back in Denver, Colorado. She started the very first black-owned dispensary in the country. I am excited to be carrying this legacy.
Before cannabis, I spent most of my career working in finance. I came into the industry in 2019 and started out as a budtender after quitting my job in finance, starting to work at a dispensary. I began working in advocacy, joining the NCIA in 2019 then went on to the Marijuana Policy Project and the US Cannabis council in 2021, where I was up until I started this dispensary. It’s been amazing being back home and close to the family after being away for 22 years. I am just really excited that I am on track to open the first black-owned social equity dispensary in the state of New Jersey.
CIJ: Tell us about Simply Pure. How did you start this dispensary and how did you meet Wanda?
Tahir: So, I met Wanda back in 2019, back when I was with NCIA. Initially, it was never about opening a dispensary or anything back then. I was just building a network and finding like-minded minority folks in the business for possible future collaboration. You know, Wanda, I think of her as an OG. She’s been a friend and mentor from Day 1. So, when I initially wanted to apply for a license in New Jersey, I knew that Wanda wanted to grow and take her business outside of Denver. I went to her and asked possibly about partnering, seeing if she wanted to do this with me. She thankfully agreed to it and the rest is history.
Tahir Johnson (left), Wanda James (center) and John Dockery (right)
CIJ: Could you give us a timeline of how Simply Pure Trenton got started? Where are y’all at right now and what sort of roadblocks have you had to overcome?
Tahir: Sure, So I got the conditional license in May of last year, then I got the annual license in April of this year. Early on, hurdles were definitely access to capital. Thankfully, me being one of the first licensees and I think my background and network helped me get access to the money. The biggest barrier, when you look at getting a license, there are so many moving parts. Getting the license is just one small piece of it. Then getting local approval is another obstacle. But man, getting the building permits has been one of the biggest roadblocks I’ve ever faced. If somebody asks me what my biggest roadblock was, it’s building permits. Because in New Jersey, you have to get approval from multiple different outside agencies that really have nothing to do with building or cannabis ore anything. The latest approval we’re waiting on is from the Raritan and Delaware Canal Commission and I’m wondering what the hell does that have to do with building out the interior of my space? You know what I mean, it’s just a lot of red tape and diplomacy that I have to go through. A lot of it is very unexpected!
CIJ: Alright switching gears a little bit here. How would you define social equity in the cannabis industry’s current climate and where we’re at today? What does economic empowerment mean to you?
Tahir: I would say first that social equity in cannabis specifically is the idea that people who have been the most impacted by the war on drugs should have the opportunity be a part of the industry. And that’s super important because we’re building a completely new industry and one that’s doing billions of dollars in sales. In my opinion, when we say people who have been most impacted by the war on drugs, those are by and large the black, indigenous and Latino populations. So, it’s been black and brown folks that have been largely affected by the war on drugs. If we’re going to have a new legal system, those same people who were 4x more likely to be arrested for cannabis should at least get the opportunity in ownership of this new industry.
A rendering of the Simply Pure dispensary storefront
Economic empowerment is one of the biggest parts of social equity. It’s actually what drew me to cannabis in the first place. When you look at the opportunities in cannabis, it’s a business that’s hard to get into, but It’s a lot harder to do if you have a lack of access to capital. Drawing from my career in finance, when you look at black communities, we have 1/10 of the wealth of our white counterparts. Looking at such a cash-oriented business where you can’t just get a normal business loan from a bank, you have to have personal wealth and access to venture capital or private equity. Well, our communities have less access to that because of our background, our networks and upbringings. So social equity is the idea that there should be some support systems in place, some help in bringing opportunities of the cannabis industry to us.
One part of that is licensing and giving us access to the licensing process. Another part of this issue that is being administered more recently is actually making sure that wealth is distributed through programs and policies. Not everyone may want to start a dispensary like me, but they were still severely impacted by the war on drugs. Seeing money from the tax dollars generated by the cannabis industry now going back to the communities to fund rebuilding and revitalizing projects is great. It really comes down to leveling the playing field to create those opportunities for people that should have them.Tahir Johnson will be presenting at the upcoming Cannabis Quality Conference in Parsippany, New Jersey, October 16-18. Click here to learn more.
CIJ: What does community mean to you? How does your business fit into and support the Trenton and larger NJ cannabis community?
Tahir: For me, one of the biggest things I’m proud of growing up in Trenton is that sign on the bridge, “Trenton Makes, The World Takes.” Growing up, this area was an industrial town. Both of my grandparents had good factory jobs and were able to support a family, but a lot of that has left the city over the years, leaving it economically depressed. I’ve been pulled over, arrested, we’ve had family members locked up all just because of cannabis. So the idea that now, through cannabis, to be able to have an opportunity to build something positive in our community, to create jobs and wealth in our community, giving back in this same place is wonderful. I think of this as the economy and opportunity of the future. In New Jersey specifically, the state has one of the biggest racial disparities on arrests. A lot of that is due to cannabis. I remember growing up, every time we get pulled over, you know we’re getting searched. There’s been real life situations, where there was a seed or a roach in the car and we’d have to decide who’s going to jail today just because of a roach. You know, how many people’s lives have been impacted and changed just because of a cannabis arrest? Now, looking at New Jersey and this ability to right those wrongs, it’s really a beautiful opportunity.
When I talk about my community, the way that I’ve been able to inspire people and make our community proud has been the biggest thing for me. For us, we haven’t seen a lot of people make it and get to achieve success. So, to be able to have this opportunity and to be from here actually doing this is one of my biggest motivators, showing people from my community and from across the state that we can be successful in business. We often hear how difficult it can be and how making it in business seems like mission impossible to so many, being able to achieve that mission and give some hope and inspiration to people where I come from is truly special.
CIJ: If you could give yourself advice ten years ago, what would it be? What advice would you offer to other BIPOC entrepreneurs trying to make it in the cannabis industry?
Tahir: Let’s see where I was ten years ago. I would say just always continue to keep the hope and keep the faith. Stuff gets tough, but as long as you keep the vision and the path, it’s going to be okay. What I would say to other cannabis entrepreneurs is largely the same thing. This is hard as fuck. It is very hard. No matter how many times you get knocked down, you have to get back up. Don’t believe the hype. Don’t let anybody make you believe that you can’t do it because you can. It takes believing in yourself, even if people don’t believe.
This would be something that if you are a minority entrepreneur, this is really true. You really do have to be better and stronger. Educate yourself. Take the time to network with people that look like you and don’t. First you want to build a team and a support system. You also want to be able to build. Some of your allies that can help support you, they might not come from your same community or background. I wouldn’t be here if it wasn’t for a lot of very diverse people that believed in me. Work hard, network, believe in yourself because nobody else is going to believe in you. Put in the work and that’ll bring success to anything you want to do.
Tahir Johnson (left) with John Dockery (right)
CIJ: Any final thoughts you want to share with our readers?
Tahir: Yea, so in addition to me winning my licenses, my close childhood friend, John Dockery, will be opening another Simply Pure location in downtown Trenton too, which is really exciting. I am really looking forward to getting to the finish line with all of this and being able to open. I think one of the biggest things I’d like to add is that there are so many people depending on us for this, so many jobs on the line, the community I am waiting to serve, all of these things and we’re encountering delays that are typical of this industry with the long road from getting licensed to opening and operating. A lot of people are expecting us to be open and we’ve encountered some slight delays, but we’re excited to be opening soon and expect that to happen no later than October.
Based in Rochester along the I-5 corridor in western Washington is 5th House Farms, a black-owned cultivation and processing company. Founded in 2016 by a BIPOC family with a tier three producer license, the company has quietly built an impressive brand success story in the state.
Coming from an economically-disadvantaged background, Carlondo Mitchell, owner of 5th House Farms, persevered through adversity to build a successful cannabis business in Washington state. By influencing consumer behavior at the retail level with branding, they are trying to turn the concept of social equity on its head.
As a family owned and operated business since its launch, they have embodied the idea of economic empowerment in the cannabis industry. As of this writing, 5th House Farms has sold over one million vape carts, reaching the top 10 in sales for that product category in Washington and their products are sold in about 35% of dispensaries in the state.
From Section 8 to Venture Capital
Carlondo Mitchell, Owner of 5th House Farms,
After cutting his teeth in the state’s medical cannabis market back in 2012, Carlondo Mitchell later grew in the cannabis space as a farm worker and sales representative. He ultimately took over operations of 5th House Farms in 2019, building on the same entrepreneurial and family-focused legacy that the company started with. “I learned a lot as a trimmer and sales rep,” says Mitchell. “I was the guy who would work 18-hour shifts for you, whatever you needed.”
This month marks five years in the Washington adult use cannabis market for him. “I come from a single parent, low-income household so it was important to have an entrepreneurial mindset,” says Mitchell. Coming from humble beginnings in Section 8 housing, he has grown 5th House Farms into a multimillion-dollar business. “Now I own the company, I own the land, my family is there and we have twenty employees,” says Mitchell.
The business has definitely become a success story, to the point that the state of Washington is working with 5th House Farms as a case study for economic empowerment and social equity. “For some people in this industry with a lot of opportunities, the path to success is pretty short and wide,” says Mitchell. “For me, and a lot of others, it’s been a lot more narrow, long and thorny. Through 5th House Farms, we want to show people what’s possible. We’re trying to show people that it is possible.”
Innovating & Differentiating
Back in 2018, it was tough to compete in a marketplace dominated by flower, so Mitchell went in a different direction and started pouring vape carts by hand. “There wasn’t room for me at the table, so I thought I’d try and do carts and chase that. It was a day-by-day effort. He says you need to know you must work twice as hard to get noticed. “You have to prepare to be disregarded. Getting in the first store was the hardest step; you had to go through ten stores who said no to get one who said yes.” Their success came through partnering with retailers, building strong relationships, understanding consumer trends, identifying their needs and working closely with budtenders.
Some of the product offerings from 5th House Farms
He says they treat people how they want to be treated. They sell products that they themselves would want to buy, by offering good, consistent products that are high quality and for a reasonable price. “Before you knew it, we had a prototype on the market and it took off. I do believe fundamentally that on the ground, consumers make choices with their morality. Some of our biggest retailers didn’t even know we’re a black owned business just a few months ago.”
Economic Empowerment from the Bottom Up
Typically, when people in this industry think of social equity, they think of this top-down policy approach that tends to rely on lawmakers and regulators to develop things like social equity funds, a minimum number of licenses reserved for minority owners, license fees for equity programs and other policy approaches. Through 5th House Farms, Mitchell and his team are working on a different approach starting with the consumer. “We’re not only fighting for social equity, but also fighting to use cannabis to create equity,” says Mitchell. “Now that people are identifying us as a black farm, it’s a cool opportunity to show people what is possible. The equity is starting to come from people caring about how they spend their money.”
Social equity, while a relatively new concept to the cannabis industry, has garnered attention in state legislatures, legalization initiatives, conferences and talking points, proving to people that they’re an ally of BIPOC stakeholders and those harmed by the War on Drugs. “To me, social equity is really about giving everyone a seat at the table. Not just trying to make things fair, but reversing this cycle of extracting from communities and instead, uplifting them.” He wants to eliminate the idea that social equity is about taking from one side of the fence and giving to the other side, rather it is about removing that fence altogether.
5th House Farms is currently working with BIPOCANN on a product badge to be displayed on product packaging, identifying it as sold by a black-owned business. “We need a tactful way to show people where their investment is going,” says Mitchell. By influencing purchasing behavior at the retail level with branding and packaging, they are essentially trying to turn the concept of social equity on its head.
Looking Back & Forward
In the chaos of chasing a dream and building a business, people tend to move quickly. “I would tell the version of me that’s ten years younger to slow down and trust the process,” says Mitchell. “As a young man, I was always looking for the cheat code.” He says his success came from losses, but they were also valuable lessons. When states began legalizing cannabis, it created real opportunity and real hope for a lot of people, but Mitchell says you need to stay vigilant and be mindful. “Try not to be so excited for the opportunity that you forget that you need to put in the work. I would tell others in this industry the same thing: to take your time in your process.”
Looking ahead, Mitchell says the plan for 5th House Farms was always sustained growth, to go national and then international. They’re in discussions with companies in other states about moving beyond Washington and they’re building a lifestyle brand. “The dream is to sell 100 million carts.” In talking about his future plans for the company, Mitchell spoke of Tyler Perry’s success story, going from sleeping in his car in the 90s to owning the largest production studio in the country today. “He didn’t have a seat at the table so he created his own table. We are intent on creating tables everywhere we can.”
Like other states now embracing adult use, Connecticut has enacted a strong social equity program, with mixed results so far. Also, perhaps more than any other state, Connecticut has committed to protecting its existing medical cannabis patients and has put in place various mechanisms to guard their access to cannabis.
Slow Roll-Out of Retail Cannabis Licenses
Like other recently-legal states, Connecticut’s rollout of its retail licenses has not been rapid. The state’s initial goal has been to issue twelve retail licenses by lottery, with six reserved for social equity applicants. Also, the eighteen already-operating medical licensees were given the option to upgrade to a hybrid medical-adult use license, a process separate from the lottery.
Governor Lamont at a press conference on January 9, discussing the social equity focus
As of the end of February 2023, there appear to be only twelve current (approved to do business) retail licenses, with eleven of those twelve belonging to medical-adult use hybrids. The majority of the 39 retail licenses listed on the state website are still in the provisional phase, which allows them to “work toward securing a final license.”
Connecticut Social Equity
Connecticut has committed to a robust social equity program and provided an early application opportunity for social equity applicants ahead of non-social equity applicants. In addition, the Nutmeg State has reduced fees for adult-use licenses by 50% for Equity Joint Venture applications, which is where investors agree to partner with a social equity applicant. Further, the state has eliminated 43,754 low-level cannabis convictions.
Connecticut’s social equity requirements are less rigorous than those of neighboring New York and New Jersey, which may provide additional entry opportunities for both in-state and out-of-state entrepreneurs. Connecticut defines a social equity applicant as requiring that at least 65% of a business be owned by an individual with less than 300% of the state median household income in the past three tax years. Since the median household income was $79,855, that individual would need to have earned less than $239,565 annually.
Subversion of the Lottery Process
The lottery for the six initial social equity licenses was held in May 2022 followed by the lottery for the initial six general licenses, which took place in September 2022. Both were administered by a professor and department head at the UConn School of Pharmacy (the state law stipulated the lottery operator must be part “of the state system of higher education”).
15,605 applications were received for both lotteries. Unfortunately, many of the winning applicants flooded the lottery system with hundreds of applications, spending hundreds of thousands of dollars to do so. One example, SLAP ASH LLC, accounted for 850 of the 8,360 applications submitted to the social equity lottery, winning 2 provisional retail licenses. Another company, Jananii LLC, spent over $200,000 to submit 807 entries, receiving one provisional retail license. “There were individuals applying for licenses who submitted 50 applications or more to enter the lottery,” said House Majority Leader Jason Rojas, D-East Hartford. “That wasn’t our intent.” Rojas and others are looking at other options for the next lottery to try and combat the problem.
Protecting Medical Cannabis Patients
Perhaps what makes Connecticut’s adult use cannabis program most unique is its outsized commitment to protecting medical patients’ continued access to cannabis. Concerned that adult use sales wouldn’t leave enough supply for patients, the state mandated a cap of ¼ ounce of cannabis for all adult use purchases. Lieutenant Governor Susan Bysiewicz commented that this action emphasized the importance of “not losing sight of a very robust medical program.”
Lt. Gov. Bysiewicz speaks to an audience on the day adult sales became legal, outside of the ZenLeaf Meriden dispensary.
With the recent strong sales of adult use cannabis, however, patients have expressed concern about access, and now the Nutmeg State is considering further action. A bill is being considered in the state legislature which would create a state cannabis ombudsman. This individual would act as a liaison between patients and the state and would, in effect, be there to put pressure on the four licensed growers. These cultivators are required to submit a medical cannabis preservation plan to “ensure against supply shortages of medical marijuana products” and are in many ways responsible for continued patient access to cannabis.
Licensing Fees
Connecticut lottery winners’ license fees will vary from $1,000 for a micro, to $25,000 for a retail, to $75,000 for a cultivator, subject to a 50% reduction if the applicant is deemed social equity. However, once the field is open to regular applicants, the fees will become sizeable.
Retail license fees will be $1 million and cultivation license fees will be $3 million, and even with a 50% reduction for an Equity Joint Venture application, the investment will be significant. The $1 million fee also applies to any existing medical dispensary that wishes to convert to a hybrid license without going through the lottery process. The four existing cultivation companies that wish to service the adult use market and avoid a lottery process will have to pay the $3 million as well.
Tax Issues
Connecticut cannabis-businesses are obligated to pay a sales tax of 6.35%, a gross receipts tax of 3% and a privilege tax of $0.00625-$0.0275 per mg of THC, depending on the item. Other than New York, Connecticut is the only state to have a tax based on the potency of the cannabis product.
Federal Tax Subject to Section 280E
On the federal level, cannabis businesses are subject to Internal Revenue Code Section 280E, which disallows deductions and credits for expenditures connected with trafficking in controlled substances under the Controlled Substances Act, schedule 1 or 2. As cannabis is a schedule 1 drug, cannabis companies are only permitted to reduce their sales by cost of goods sold when determining their taxable income. By example, a cannabis dispensary would only be allowed to deduct the cost of the product purchased and the cost to transport the product to the dispensary, while disallowing such significant expenses as rent and payroll. All cannabis businesses must forgo expense deductions related to selling, general and administrative expenses, as they are disallowed under the tax code.
While some states like California have not conformed to 280E and allow their cannabis businesses the same deductions as other businesses, Connecticut is not one of those states. Personal income tax starts with Federal Adjusted Gross Income while corporate income tax starts with Federal taxable income as reported on line 28. There are no provisions that say Section 280E does not apply. This will mean a significantly heavier state tax burden for cannabis businesses.
Labor and Employment Issues
Connecticut state flag
Cannabis is expected to fuel significant employment growth in Connecticut, and experts project more than 11,000 cannabis jobs will be added once the market reaches full capacity. These jobs are expected to include full time and temporary positions in all cannabis verticals: cultivation, manufacturing, distribution, retail, marketing, testing, finance, accounting, legal, compliance and C-suite.
As part of its social equity program, the state has made it clear it would like to see cannabis businesses employ individuals from those communities that have been disadvantaged by the war on cannabis. Connecticut has also made it a requirement that every approved licensee enter into a “labor peace agreement” with a labor union, and that such an agreement shall be an “ongoing material condition of licensure.”
The state is focused on maintaining quality control on all aspects of its adult use cannabis businesses, including the people involved. Licenses are needed for all cannabis employees along with a special license for key employees in managerial positions. Additionally, financiers must be licensed, with a Backer license required for individuals with direct or indirect financial interests in a cannabis establishment totaling 5% or more.
Connecticut cannabis employees must be pre-trained through the state’s Social Equity Council. The state also requires that each license recipient have a workforce development plan approved by the Council “to reinvest or provide employment and training opportunities for individuals in disproportionately impacted areas.”
In Summary
No adult cannabis state has come close to having a smooth opening for it adult use sales program, and Connecticut is no exception. With well-funded groups gaming the license lotteries and medical patients concerned about their continued access to cannabis, the Nutmeg State has its work cut out for it. But with its strong commitment to social equity and its outsized commitment to protecting its medical cannabis patients, Connecticut can serve as a role model for compassionate cannabis capitalism. 2023 will reveal how the state rises to its challenges and matures its cannabis marketplace.
By Abraham Finberg, Simon Menkes, Rachel Wright No Comments
Click here to read Part One where we examined the state of the market, licensing, approvals and sales. Part Two delves into all things taxes.
A “Raft” of Taxes
Like New York, New Jersey cannabis companies will be dealing with a raft of taxes:
Federal Section 280E: Will It Apply in New Jersey? Well … Sometimes
Section 280E disallows deductions on federal returns for expenditures connected with the illegal sale of drugs, requiring retail cannabis businesses to add back such significant expenses as rent and wages for sales staff.
Much like New York, cannabis companies in New Jersey can expect a lot of taxes
Unlike New York, New Jersey’s recent cannabis legislation did not state that cannabis businesses were exempt from 280E. However, the state’s individual tax laws do not conform to the internal revenue code, and accountants are inferring that 280E won’t apply to sole proprietorships. Conversely, the state’s corporations must start their tax calculations using Federal taxable income, meaning 280E would apply.
Sales Tax
Retail sales of adult use cannabis are subject to a 7% sales tax. Beginning July 1, 2022, medical cannabis sales are exempt from sales tax.
Purchases by cultivators of farming equipment and related property, such as plants, fertilizer and drip irrigation, are exempt from sales tax. Purchases by all cannabis businesses of materials used to contain, protect, wrap and deliver adult use cannabis are exempt from sales tax.
Excise Tax
The CRC has been empowered to collect a “Social Equity Excise Fee”, to be adjusted annually. The fee is currently $1.10 per ounce, but the CRC is able, but not mandated, to amend the fees to between $10 and $60 an ounce after nine months of adult use sales. At least 70 percent of all cannabis tax revenue is earmarked for investing into impact zones.
The fee is imposed on any sale or transfer of cannabis from a cultivator (or alternative treatment center that also cultivates) to any other cannabis business. The fee is not imposed on transfers from one cultivator to another, or from a cultivator to an alternative treatment center. The facility that purchases the cannabis is responsible for collecting the fee and remitting it to the NJ Division of Taxation.
Local Cannabis Transfer and User Taxes
Each municipality is authorized to impose a Local Cannabis Transfer Tax on sales from one cannabis establishment to another (including from one cultivator to another), and on the sale of cannabis to retail consumers. The allowed rate is capped at 2% of receipts, with the exception of cannabis wholesaler sales, which are capped at 1%.
Atlantic City, which considers itself friendly toward cannabis, passed an ordinance in September 2021 authorizing the collection of a 2% tax on retail adult use cannabis sales and a 1% tax on wholesale sales. Many cities with alternative treatment centers already have a 2% tax on medical cannabis. It is assumed they’ll be enacting the 2% transfer tax on adult use sales if approved to operate.
Other Unique Points About New Jersey Cannabis
Adult use sales are limited: adults may possess up to one ounce total of cannabis products and can only purchase one ounce at a time.
New Jersey is the only state that has legalized cannabis, but kept it illegal for a cannabis consumer to grow their own weed. Growing even one cannabis plant can land the offender in prison for up to five years and incur a $25,000 fine.
About 400 municipalities have opted not to have retail cannabis shops; 98 have said yes. The new law has caused battles between mayors and their city councils, including the city of Paramus. 60% of Paramus residents voted in favor of adult use sales, and the mayor has stressed the benefit of the 2% transfer tax. Paramus city council unanimously rejected adult use cannabis, however. Some council members are against any sales, while others want to wait and see how other towns fare. Says Council Member Maria Elena Bellinger, “Ultimately … I feel that getting more data will only help us come to the right solution.”
Time Will Tell
New Jersey believes its careful approach will create the best adult use cannabis environment for its citizens. Only time will tell if the Garden State ends up avoiding some or all of the problems faced by states like California and New York.
Entrance into the cannabis industry is not equally accessible; it’s no secret it tends to be easier for those who are male and white. As a business leader, why should you take on the problem of equal market entrance opportunities? This just may become your company’s competitive advantage.
As a female entrepreneur with a first name associated with being male (and white, maybe a rancher in Wyoming), I have been accidentally invited to and witnessed the consequential shock of more than one exclusive, male-centric event, where any ladies were intended to be accessories and not present for business-talk with the boys. After enjoying their discomfort (and getting over my own), I see these moments as opportunities to advocate for inviting diversity into their discussion, seeking to make small changes to open doors for exponential progress. After all, it wasn’t so bad to have invited the woman, albeit accidentally; it was actually better because it happened.
In a dynamic and challenging industry, increasing diversity access is how to become future-ready. As will be discussed, companies see measurable financial performance and adaptability improvements with relatively small changes in leadership makeup. Here are three overarching tactics for you to increase cannabis market accessibility and champion diversity.
Facilitate Access to Capital for Cannabusinesses with Diverse Perspectives
The past two years of pandemic hardship have posed unique challenges for women, especially Black, Latina, and Indigenous women, who have had to put careers on pause to pick up additional heavy burdens of caregiving. Women’s unemployment is four times higher than men’s, and according to Forbes, the situation is worse for women of color.
Overall deal activity for female-founded companies is discouraging and downright dismal for Black female founders, who receive less than 1% of all venture capital investment. This is particularly vexing when considering that women-led or co-founded start-ups generated 78 cents of revenue compared to 31 cents for male-only-led startups over five years. EBIT margins were nine percentage points higher than companies with below-average diversity on their management teams. Relatively small changes exponentially improve operating earnings over operating sales.
Relatively small changes exponentially improve operating earnings over operating sales.
It’s always been difficult for women to access capital. Women have historically been cordoned into home-keeping and caregiving roles and are often still expected to balance those capacities alongside a full-time career. Accordingly, female entrepreneurs receive fewer invitations to extra-work events and business relationship-building opportunities, such as pursuing financing, mergers, or joint ventures.
Companies with diverse leadership teams have reported nearly twenty percent higher revenue from innovation. Investors would do well to recognize these are the businesses better able to respond and adapt to changes in customer demand quickly.
Increase Diversity Awareness and Facilitate Equal Opportunity
While financial investments are imperative, consider the following non-pecuniary methods of support as part of a full-picture, equitable accessibility solution.
Invite Activity, Provide Mentorship
Businesspeople can play a critical role in accelerating inclusion by actively seeking out people they do not already know. Employers can do this through the non-financial investment of time and resources to grow the pipeline of underrepresented people with skills to serve on investment teams. When under-invested groups bolster one another, the likelihood that investment pans out increases.
Mentoring must be a part of this process, as it provides essential guidance and support for individuals looking to enter or advance within these fields. By creating opportunities for mentorship and collaboration, you can play an active role in breaking down barriers and building a more inclusive economy for everyone.
Open the Door to Accessing Opportunities
Businesses can increase diversity awareness and facilitate equal entry into the cannabis industry by opening the door to events that help connect underrepresented candidates to professional development and capital.
Hosting free webinars is a great way to facilitate learning, conversation, and the exchange of empowering ideas. Webinars allow attendees to ask personalized questions and present your business with a stage from which you can speak about the importance of equity and inclusion.
Consider attending, sponsoring, or running a job fair with a focus on diversity hiring. Diversity hiring practices help businesses identify qualified candidates from different backgrounds, leading to a less homogenous workforce.
Make Continued Education Central
As the President of Oaksterdam University, I see firsthand the importance and empowering quality of ongoing education. I also recognize that not everyone can afford or receives equal access to continued education and accordingly offer this advice to help bolster equitable educational opportunities.
Make partnerships with educational institutions to offer your workforce chances to learn, and ensure they have paid working time to do so. If you can reduce the burden of learning for candidates with extra-work responsibilities, they have a greater chance of absorbing and putting that information into practice. If you have an employee with an incredible entrepreneurial idea, boost them up by offering to pay for a capital-raising class or a fundamental business course they may not be able to afford otherwise.
No one solution will “fix” equal access to education. Every step from open-source databases and free webinars to full college degrees is an incremental movement toward increased cannabis industry participation for traditionally disadvantaged populations.
Realize Social Equity Programs Are Not a Catch-All
Rather than focusing on any one aspect of diversity, the goal should be to invest in and build diverse teams across many dimensions.
Even the best-intentioned social equity program cannot accommodate every disadvantage a potential candidate will encounter. Take women as an example: There are many accommodations to consider for female-identifying participants, as they are at a more significant disadvantage in the licensing/permitting and job preparedness process. Some call for women participants qualifying for cannabis equity program services to receive additional funds and services (e.g., funding for childcare) to ensure equal access to opportunity.
The cannabis industry cannot atone for all the damages of the drug war, nor can a nascent industry that is not federally legal pay to uplift all of society. With that said, cannabis industry investors, executives, and workers might be the tipping point back toward baking justice, equity, and access to the laws we operate under. Better yet, we can raise expectations of one another as we do business and ask, “What do you do to increase fair play, diversify your leadership team, and address the imbalance?”
A Person is Not Diverse, But the Cannabis Industry Can Be
Addressing social equity and the concept of diversity can feel amorphous and confusing. Above all, it’s imperative to remember that a single person is not diverse; rather, a group of people is. A team can be diverse, and within your team is a great place to begin shaping the industry you wish to see. Rather than focusing on any one aspect of diversity, the goal should be to invest in and build diverse teams across many dimensions. Value comes from a range of differences, such as the national origin of executives, the variety of industry backgrounds, education levels, ages, and finding gender balance. The goal is that these different people feel they belong.
Equal market accessibility is not a problem you can solve passively — it must constantly be spoken of, worked toward, and embodied within each business decision and entrepreneurial move. An industry full of entrepreneurs making such decisions will undoubtedly result in a more equitable market than the one we’ve built so far. You will find yourself in a room of folks just like this. Lean into the awkward and invite the unfamiliar in – you will find you and your company are better for it.
Christopher Lacy and The TGC Group recently won a Tier 3 conditional license under New Jersey’s social equity licensing program. Their story is one of misfortune, persistence, family and the dreadful effects that cannabis prohibition and the War on Drugs has had on impoverished BIPOC communities.
Chris’s father was a sharecropper in Mississippi before he moved to Illinois and started a family. Growing up in a poor neighborhood of Chicago, Chris was surrounded by gangs and crime. He started selling drugs when he was 12 and went to prison for cannabis before he was old enough to drink. When he got out, he saw firsthand the effects that incarceration has on a person, their family and their community.
When it was first announced, Illinois’s social equity program seemed revolutionary and one that other states soon followed, setting the stage for markets all over the country to establish social equity licensing programs. However, legal hurdles, red tape and intense litigation have bogged down the system, causing severe delays. Chris and Taneeshia are still waiting to hear back about approval of their license application, years later.
Good news came recently when they were notified that they were awarded a conditional license in New Jersey. With the help of his family, business partners and The Garden State, The TGC Group is moving forward with launching their business. We caught up with Chris, to check in on his business’s progress, hear his story and see if it might inspire others to take a similar path.
Cannabis Industry Journal: Tell me a little bit about yourself and your story with cannabis
Christopher Lacy, Founder of The TGC Group
Christopher Lacy: I grew up on a dead-end block in a little town in Illinois on the far south side of Chicago called Robbins. It has a very high crime rate and a very impoverished community so as you could imagine we grew up pretty poor. I personally didn’t feel the effects of poverty until just before I turned 13. I guess that became more obvious as I started hanging out and seeing that most of my friends had more than 2 pairs of pants. I starting selling drugs when I was 12 years old. When I was about 16-17 years old, I had started trying to grow cannabis. Like any task, it takes time to develop the skills produce a good product. Cannabis definitely has it challenges when it comes to cultivating a product that could be considered good.
It’s not like there was an abundance of information out there specific to cannabis cultivation to aid in the task so besides the basic book knowledge of horticulture, you had to grind it out. It took me a couple years to really get it figured out. Once I did get it going, I started expanding. At first it was basements in the suburbs. We’d grab really nice houses and fill the basements with plants. When that wasn’t enough, we started doing warehouses. There was no real limit, outside of capital and the desire to not draw attention via odor or traffic from workers, if you could produce it, the demand was there. I did go to prison for a short stint when I was 20 years old for delivery of a controlled substance. 0.8 grams. After I got out of prison, I had a very successful illegal operation growing and selling cannabis. Life was pretty good for a few years. I wasn’t rich or anything like that but I was able to be around my family and provide the things that I was denied when I grew up. I don’t blame my parents for what I went through growing up. Because of my father’s age, I’m generation 1 out of the sharecropping era. My parents believed in one thing and that was learning. I tried to instill that into my kids as well. Being a father feels really good to me. Unfortunately, that dream was ended when I was arrested in one of our warehouses in Illinois. I did 3.5 years, locked down 21 hours a day for growing weed.
While serving my time I was able to really take a look at myself and develop a new me. I established some new core principles that I would hold close to my heart. One of them being not going back to jail for the sake of a dollar. I was not going back to prison. I had kids when I was young so I missed out on a big part of their childhoods. I had three daughters and two sons at the time that were of an age where having a stable home plays a huge role on how the child will turn out in the future compared to a typical American lifestyle. When I got out of jail, my kids came and lived with me during and after high school but some serious damage had already been inflicted. I worked a job as a truck driver and did the best that I could to support my family, but I never really gave up on cannabis in the back of my mind. My older brother used to always tell me that I didn’t learn what I knew about weed for nothing and that one day it would all make sense.
Christopher with his wife, Taneeshia
For the next few years, we just grinded it out as a family. It wasn’t the ideal situation but we made it work. And when we couldn’t make it work, we lived with it! I just was glad to be there doing Chemistry homework with the kids. That shows what happens when a father is at home with his family. We get college grads.
When the message came out that Illinois was going to do craft grow licenses, I got really excited. I figured this was my chance to do what I love and to make a living doing it. I had no idea how I was going to get to where I wanted to be but I figured if I could just put one foot in front of the other, sooner or later I would get there. I caught a break when my nephew, Edward Lacy, introduced me to someone who understood the application process. She introduced me to some of the most wonderful/helpful people in the world. People who literally wanted to help true social equity applicants like myself. With the help of these new friends, we were able to drop our first application in Illinois. After we submitted that application, that is when the first story came out about us in Cannabis Industry Journal. This story helped me get into a conversation with Cresco labs and I was able to get into a situation that really changed how I saw cannabis production. I got to work around some of the smartest people in the industry for just under a year. I can’t thank Charlie, Barrington and the rest of the guys at Cresco enough for the opportunity. From there, I knew it had to be my destiny to grow cannabis for a living. I just kept beating up the phones and emails. Something was gone give.
CIJ: When we last spoke, you were trying to get a social equity license in Illinois, can you tell me about that? How did it go?
Chris: Ultimately, after 2 years of waiting, we were denied a license in Illinois. When I first got this news. it took me about a week to get out the bed. Lol. It took my wife to pull me through. I can only imagine the pain that all the other disappointed groups are feeling, Ultimately, we all couldn’t win in Illinois so it is what it is. But definitely a big shout out to all the successful applicants that did win. You all have a torch to carry that should ignite the black and brown communities.
From the political standpoint in Illinois, it’s just not conducive for social equity applicants to succeed due to all of the legal hurdles, courts, lawsuits, etc. Not to say that the Illinois process is truly different from other states going through similar processes, New Jersey and other states went through a similar process when social equity licenses were announced. The laws that helped me qualify are what came out of the legal battles in New Jersey. The issue is the resources available for legal fees, holding property, and the time required to see these things through; this all equals dollars and that’s just something lacking in most social equity groups.
CIJ: So, what made you look at New Jersey?
Chris: After I had submitted my application in Illinois, I began looking for financial support. I knew this would be my limiting factor because access to the type of capital required to get a grow facility off the ground is quite substantial. For the most part no one returned calls but I called one financial institution in particular, VenCanna Ventures, and for some miraculous reason, they returned my call. I’m not sure what made them; but we kept an open line of communication going all while we were dealing with Illinois. I knew these guys were good because they were behind an impressive project in Ohio that actually won LEED certification. When I look back on it, it felt like a one-year interview. Then one day this past winter David McGorman, the CEO, asked me to partner up with him in New Jersey. It was exactly what we both needed. He has the expertise in finance and I bring the operations side.
Christopher with his daughter, Janeace Lacy
Once we had that team together, we put together a strategy to try and apply in New Jersey. We built the application and New Jersey actually had some very unique laws. If you had a cannabis conviction, you could qualify. Also, my oldest daughter, Janeace, whom I think my prison time hurt the most, actually lives in New Jersey with my granddaughter. So, she’s our resident in the state that helped us win the application and now a part owner, which led us to where we are now. I just couldn’t be more excited about all of this. It just feels right
We won a tier 3 conditional license and now we’re working on finding a good facility and building the operation.
CIJ: How did you set up your social equity license application for NJ?
Chris: It was a process very similar to Illinois except that the process was split into two phases. A conditional license and an annual license. Phase one was winning the conditional license. This is a more condensed application compared to what I was used to. After filling out the application, we had to submit a bunch of documents and proof of incarceration. That was for the conditional license. We still have to convert the conditional to the annual. The conditional basically tells us that we qualify and we can move forward with the rest of the business plan, find some property and spend some money on a lease. We’re still in that process for converting to annual, but we have won the conditional.
CIJ: What is your plan now that you’ve received conditional approval?
Chris: Right now, we’re working on property and securing a space for our facility. We are pretty close to nailing down a couple good locations. One of the locations that I am really excited about is in Somerset County. If we can lock down the property, submit everything to the state as far as our SOPs, security plans, cultivation plan, design, etc. we can try get approval to convert to the annual license and then we can start the build out. The good thing about the two-step process is that it really helps when it comes to spending money. Basically, if you don’t win a conditional, don’t go out spending tons of cash trying to hold onto property.
CIJ: You’ve come a long way from being put in prison for cannabis, to now being close to establishing a business in New Jersey. What made you decide to stick with the business of cannabis?
Chris: You know, I can’t really describe it very well. It was just one of those feelings, you know it felt good to me. It drew me in when I was a young kid, although, I actually didn’t try using cannabis until I was 21. That’s when I first used it and it really jelled with me. Also, I’ve always loved gardening.
Chris Lacy
My father was a sharecropper in Mississippi, when our family moved to the suburbs of Chicago the first thing he did was plant a huge garden. I grew up in the garden and around plants. He used to spend so much time in that garden and I loved being there with him. We grew everything out there year after year until he was too old to keep it up. I can’t imagine a more peaceful environment then out in the fields with the plants.
It was also therapeutic, not just the obvious therapeutic aspects of cannabis, but also how therapeutic gardening is. Working with cannabis plants can be a challenge. To try to achieve unique terpene and cannabinoid profiles has always been a lot of fun for me. I love the challenge. Pushing genetics as far as I can to really experience what different cultivars have to offer. It is just one of those things that has always stuck with me and I really enjoy it. Once it became legal, a world of opportunity opened up for me.
You know, people say if you do something you love, you’ll never have to work a day in your life. I was a truck driver after I got out of prison, and I really didn’t like it. I had to have neck surgery from the pounding my spine took. I had to work long hours, man I hated doing it. On the flip side, cannabis is something I love to do. And this is about me trying to control my own destiny, control my own life. I don’t have to struggle mentally and physically just to provide for my family. That’s what keeps me going – the drive to do what I love to do to provide for my family. I see cannabis cultivation as more of an art than I do anything else. The guy behind the growing at any facility in the country could share with people what he believes to be fire. I just love to provide an experience and there’s nothing more satisfying than a satisfied customer. Everything about this process seems to fit perfectly with my life.
CIJ: It’s a pretty inspiring story. How do you hope your story might inspire others to follow in your footsteps?
Chris: I don’t want someone to follow in my steps as far as breaking the law and going to prison. I had to learn this the hard way, you know I didn’t agree with the law, but it doesn’t matter. Whether you agree or disagree with the law, I don’t advise anyone to be a criminal.
On the other hand, I do believe that black and brown people have been impacted by the war on drugs the most. In whatever capacity they can, they should chase the opportunity in this country as the cannabis market evolves. It’s a new industry, it’s a way for people to build wealth, to maybe raise their families out of poverty. So in that sense, yes, I do hope people see my story and see that they could do this too. And if you still out there getting it the best way you know how, God Bless you! Lord knows it breaks my heart every time I see someone get arrested for cannabis. Hopefully that shit stops soon and we can get these mothers and fathers who are basically prisoners of a bogus war, reunited with their families and hopefully they get a chance to rebuild.
This a chance to build generational wealth if it’s done right. I would hope that anyone looking for an opportunity, look into the cannabis space. I know its evolving fast and the window might seem like its closing but that isn’t the case. This is more like the 2nd inning of a baseball game. There plenty of time to get going.
I don’t think I’m the best role model. I just keeping fighting. And my advice for black and brown folks that might have gone to prison or might be put in a similar situation is this: Its never over. It’s never too late, no matter what somebody does. It’s not the end of the road. It’s just a bump at that moment. Just keep fighting. One step at a time. I do hope that people reach out to me.
I would love to work with anyone as long as they on a positive path, especially convicted felons. God Bless the felons! That’s my number one priority on my list. The guys that have been to prison, the non-violent drug offenders. Our society has a way of shunning those people. Some of the smartest people I’ve met in my life were in prison. It doesn’t speak to the character of an individual because they went to jail. If the system is supposed to work then why is it so hard for a convicted felon to get another chance? Of course, a few people have traversed this path successfully but there are so many more.
CIJ: I know your business is called The TGC Group. Out of curiosity, what does that acronym stand for?
Chris: We’re called TGC New Jersey under our license there and we applied in Illinois under the name, The TGC Group. TGC stands for a lot of things. It has a lot of meanings. I came up with it when I was in prison. I called it The Gathering Company. It was an idea I had because I was reading The Wall Street Journal every day in prison. I wanted to gather people under one umbrella.
But also, my name is Chris, my wife’s name is Taneeshia, (whom I am forever grateful for helping me pull my life together) and we have a son we named Grant. So, the first letter of each of our names also make TGC. It also stands for The Good Choice, because it is a good choice. The Ganja Connoisseur is another good one. I just hope that it grows to be known as a quality brand of cannabis that one can count on for consistent high-quality cannabis. Consistency and quality are what we’re striving for relentlessly.
I hope people read this article and feel inspired. We have a responsibility to give back to the community. We have a responsibility to rebuild what’s been destroyed in our communities. I am just trying to do my part. I was not a nice guy growing up, you know I was a gangbanger. But now, I want to rebuild and give back to my community the best way I can in Chicago. Not just my community, I want to give back to New Jersey communities, because we’re in their house now. I want to give back to Mississippi communities, where my family comes from. I’m not in this to get rich, I am in this to build communities. God willing, we will
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others came together to trade insights and discuss what it really takes to succeed and get a leg up. Kicking off the session was Cash Color Cannabis founder Mehka King, who urged the room to keep the “spark of social equity” alive by staying vocal and showing up for the work.
