EON Co-Founder and Ardent CEO Shanel Lindsay discussed the urgent need for equity in the cannabis industry during a business roundtable covered by Janet Burns in Forbes…
Shanel Lindsay, owner and CEO of ARDENT and a member of the Massachusetts Cannabis Advisory Board, said that cannabis reform advocates also “shouldn’t be afraid to push for exclusivity” for equity applicants in markets’ first few years, given that resources and training only help if you’ve got a seat at the table, and enough time to use it.
She remarked during Morón’s panel, “What good is training if applicants are up against a huge company that’s able to come into a municipality [with new adult-use laws] and say, ‘We’ve already been here operating [in medical cannabis], we have experience in your state, and we’ll give you money’?”
In a phone interview, Lindsay said that states have struggled to both define and enforce qualifications for equity license applicants, who generally include people of color and members of historically criminalized communities, veterans, medical patients, and others who can offer cannabis experience rather than venture capital.
Regulators may be hesitant to qualify equity applicants based partly on race, for example, fearing that such rules could be called discriminatory or unconstitutional — though historical data make clear that Black and Brown communities have paid the most under prohibition.
But there are other methods for qualifying equity applicants that “can have a ripple effect” to include those communities, Lindsay said, such as whether applicants lived in certain areas during certain years, or have a particular need for, or history of, economic empowerment. In Massachusetts today, she said, “That includes many white groups.”
Regardless of the reason for equity applicants’ status, regulators must also be ready to carefully vet those kinds of license applications, which — thanks to shell companies, ‘front men,’ and seemingly underhanded investors — have already faced criticism over their authenticity (in letter or spirit) in multiple state markets.
Doing so requires time, funding, and specialized, nuanced knowledge that many regulators don’t yet have — even as they increasingly turn to technology to help track and manage whatever happens, which may or may not promote equity.
Another big problem for equity license applicants is finding property for their businesses, Lindsay said. It’s one of the factors she credits for the current demographic breakdown of Massachusetts cannabis businesses, more than 63% of which are white-owned (likely at least 65%), and many of which are run by large operators.
To that end, Lindsay said, regulators should ensure that zoning “isn’t too strict” for cannabis businesses, and will allow for reasonable growth in the future. “When people with money realize that [cannabis business] is going on in a state, they move in on the real estate, and once all the properties are gobbled up, equity businesses are really dead in the water.”
At the end of the day, Lindsay said, “You’ll find you’re really swimming against the stream if you try to push forward an agenda that’s at odds with regulatory structures.”
If regulators want this industry to succeed, they also need to make a serious effort to help secure and provide funding for people of color, women, and other minority groups who want to enter it, she said. “Those groups make up small business and medium-sized business in cannabis, and if they’re not included, we’ll end up with Big Cannabis, and the kind of sub-quality products we’re seeing in Massachusetts now,” Lindsay added.
“The two are inextricably linked: when you have a variety of types of folks in the industry, that’s when you start to see real competition, and the cream of the crop rising to the top. You won’t have that in monopolistic scenarios.”
Regarding the fact that out-of-state and large operators have moved into states and municipalities where others spent years fighting for change, or simply being over-criminalized, Lindsay recalled a suitably American expression: “Pioneers get slaughtered, settlers get fat.”