The Cannabis Entrepreneurs Who Want To Make Legal Weed More Diverse

JP started selling marijuana in middle school, a hustle he got into through a neighbor on the Lower East Side. He didn’t necessarily see it as a passion or a long-term career.

“Back then, the quality of it was what they consider to be reggie, bush or regs,” said JP, now 38 (he declined to share his last name because he still sells weed on the black market). “Dirt weed. I don’t know how many other things they call it. And it was just for making moves. Making money. I didn’t really educate myself too much about it.”

JP is still making money off marijuana 25 years later, but now he talks a lot more about the quality of the product and customer experience. On a recent sunny afternoon in the backyard of a friend’s CBD shop in the East Village, he showed off the elaborately crafted marijuana sticks covered in waxy cannabis concentrate that he sells under the brand Empire State Cannagars.

With New York’s legalization of marijuana in March, JP and his business partner, both Hispanic, are strategizing on how to gain a foothold in the adult-use market—a space that elsewhere in the country has remained overwhelmingly white. One nascent idea centers around becoming rollers for hire, and they’ve started producing pre-rolled joints for various dealers who might pursue cannabis licenses. But their dream is to open their own dispensary or cannabis lounge.

“We have a network of growers who are already doing it illegally that we want to try to bring out of the black market right into the legal market because that’s what they deserve,” JP said.

JP one day hopes to own a licensed dispensary or cannabis lounge.

JP one day hopes to own a licensed dispensary or cannabis lounge. He’s been selling marijuana on the underground market for 25 years. Caroline Lewis

JP, a marijuana dealer who wants to make the transition into the legal industry,

JP, a marijuana dealer who wants to make the transition into the legal industry, poses with some of his products in the backyard of a CBD shop in the East Village. Caroline Lewis

While major companies in the legal cannabis industry in the U.S. and Canada are angling to get into the New York market by investing in one of the state’s medical marijuana firms, independent entrepreneurs are working on plans to get a stake. Some have been laying the groundwork for years—for instance, JP’s friend who owns the CBD shop, Come Back Daily, opened it in 2018 with the goal of one day turning it into a legal dispensary. Others are just getting introduced to the legal industry and figuring out if there’s a place in it for them.

“Education plays a big part in entrepreneurship, especially in entering such a complex industry like cannabis,” said Gia Morón, president for Women Grow, a company that hosts educational and networking events for aspiring cannabis entrepreneurs of all genders. “What we don’t want is for people to lose a lot of money in the preparation [for a license].”

A Legacy of Exclusion

Starting any business can be difficult, but launching a legal marijuana company is a notoriously risky and expensive endeavor. Startup costs can exceed $250,000—-and be easily wasted by someone without extensive knowledge of local regulations and restrictions related to federal prohibition. Morón said she has identified a few banks in New York that allow cannabis businesses to open accounts but aren’t likely to offer loans. That could change with the passage of the SAFE Banking Act, which is currently making its way through Congress. U.S. Senate Majority Leader Chuck Schumer is also pledging to hold a vote on ending federal prohibition.

The early days of marijuana legalization in other states often excluded many people with black market experience and disproportionately left out Black and Hispanic people, who are arrested for marijuana-related offenses at a higher rate than whites. New York’s medical marijuana law, passed in 2014, prohibited licensed companies from employing anyone with a marijuana conviction on their record in the last 10 years. Other states have also kept people out based on criminal convictions.

In 2017, a national survey by Marijuana Business Daily found that 81% of people with an ownership stake in a legal marijuana business were white, and only 4.3% were Black. More recent data from some states shows little has changed. A report published this year on Nevada’s industry found that 65% of licensed owners, managers and board members were white.

Social justice advocates have praised New York’s Marijuana Regulation and Taxation Act (MRTA) because of how thoughtful and extensive its provisions are toward circumventing the roadblocks that hold back diversity.

The law expunges all marijuana convictions and sets aside half of all cannabis licenses for “social and economic equity” applicants—a group that includes people of color, women-and-minority-owned businesses and people from communities disproportionately impacted by prohibition. Licensing fees will be assessed on a sliding scale, and a proposed incubator program will provide startups with low- or no-interest loans and business counseling. People with fewer resources could also apply for a “microbusiness” license or band together to be certified as a cooperative.

The state’s Cannabis Control Board, whose members are yet to be appointed, will establish and oversee these regulations. Social equity programs in other states have yielded mixed results. A February article in MJBizDaily pointed to Los Angeles as an example where a social equity program left some applicants “worse off now financially than when they began the social equity qualification process.” The program required applicants to rent or purchase real estate before filing their paperwork and then wait more than a year, in some cases, to complete the process.

JP is confident he will be able to get startup funds and compete. He said several marijuana “kingpins” are also looking to invest in those applying for licenses. But others will need to hope the loans and equity provisions promised by the MRTA are sufficient.

Meeting People Where They’re At

“We’ve been fighting for this for so long,” said Patricia Wright, cofounder of Women of Color in Cannabis. Her nonprofit holds educational events for cannabis entrepreneurs and people who are simply looking for jobs in the industry, such as at a dispensary. But she said it’s important to do outreach beyond these seminars, which have been held online during the pandemic to reach those who might be interested but are not actively seeking a legal cannabis career.

“In my neighborhood, we have a lot of food pantries, and we have a lot of barbershops and hair salons, so individuals go to those places,” said Wright, who lives in Flatbush. “They go to the churches. So, that’s where we want to go. I don’t have a problem talking to the guys I’m passing outside while they’re smoking.”

Given the MRTA has further decriminalized the sale of marijuana, some dealers might not see the point of going legit. But selling weed underground, “you cannot necessarily build generational wealth,” said Wright. “For us, the whole point of advocating for legalization was so we no longer had to hide.”

Wright is pursuing a way into the industry as well, possibly through the cannabis-infused mocktails she already makes. “I shared that with my friends a couple of weeks ago,” Wright said. “Before, I would not have done that. I would not even be talking to you about it.”

While some launching cannabis businesses only see dollar signs, many of the people of color who are passionate about the plant have painful personal stories related to prohibition and the stigma it created.

Steven Phan shows off a CBD tincture

Steven Phan shows off a CBD tincture he sells at his shop Come Back Daily in the East Village. He is planning to apply for a license to turn it into a marijuana dispensary.

Wright said her son was arrested outside their home 10 years ago, when he was 17, on suspicion of possessing marijuana (she said he wasn’t). “An unmarked car full of guys from South Brooklyn just screeched up to our gate, came into the yard, dragged him out and accused him,” she said. “That shit was traumatizing for him.”

Wright said when she first started advocating for legalization, it was because “I wanted us to be free. It really wasn’t about making money.”

Steven Phan, JP’s friend who owns the CBD shop Come Back Daily, similarly has had a fraught relationship with cannabis. Phan said growing up in California, he was constantly at odds with his conservative Vietnamese and Chinese family because he smoked marijuana. His mother was unwilling to help with startup capital when he wanted to open a CBD shop, although she said she would have helped if it was a restaurant or laundromat.

“With my mother, it created a rift between us because I was raised in a very strict Asian way,” Phan said. “Even with CBD, you can’t just go to the bank and get a loan. You have to ask friends.”

If it weren’t for his passion for the plant, Phan said, he isn’t sure the marijuana business would be worth it. But he is willing to take on the challenges of entering a new industry in order to help break down the stigma.

“I gotta show myself, I gotta show the world, I gotta show my family,” Phan said, “not that you were wrong but that the information presented to you was wrong.”

Editor’s note: This story was updated to correct Gia Morón’s professional title. She is now president of Women Grow, not the executive vice president.