by Lissa Harris
When cannabis was legalized in Oregon, many people saw business opportunity. But Amy Margolis saw something more specific: She saw business opportunities for women.
Margolis was a criminal defense attorney in Portland and had spent a decade defending cannabis growers who’d been caught by the police. Once the state legalized bud, she turned to corporate lawand helped local entrepreneurs enter the industry. “I just pivoted with my clients,” she says. And as she did, she says, she saw women flood into the marketplace. They were starting dispensaries, creating new products, and, like her, providing needed services to cannabis entrepreneurs. The industry struck her as more equitable than others, where men tend to dominate the upper ranks.
But she wouldn’t say that anymore. Four years after recreational marijuana was legalized in Oregon, Margolis sees an influx of investors swiftly changing the industry’s culture. “I don’t think there’s any doubt that as traditional capital starts to come into this space, starts to overwhelm the space, we are seeing women either pushed out or unable to get funding,” she says. “Men seem to control funding overall, and they would prefer to fund men.”
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The cannabis industry is still young, exciting, and bursting with potential, but Margolis isn’t alone in noticing a shift. Tahira Rehmatullah, one of the most powerful women in the cannabis industry, sees it, too. She’s a managing director of Hypur Ventures, a cannabis-focused investment fund that sits at the intersection of cannabis and big finance. “[The year] 2014 doesn’t seem that long ago. But in cannabis land, that was ages ago,” says Rehmatullah. “You could be a woman or a minority and get into the space and start a company. But as the market has evolved, it has shifted to look like other industries. The barriers are becoming more evident.”
Hard numbers in the industry are difficult to come by, but the available research does back this up. In 2017, Marijuana Business Daily — a female-founded company — reported that the percentage of female executives in the industry has fallen steeply, going from 36 percent in 2015 to 27 percent in 2017, and hovering just above the overall 23 percent average for all U.S. businesses. The numbers were drawn from an anonymous survey of 567 founders and senior executives among the outlet’s readers.
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Talk to women in the cannabis industry, and you’ll often hear frustration over this. Female entrepreneurs say they want to see each other thrive and had hoped that the emerging industry could be shaped in a more equitable way.
But they’re not just throwing their hands up in frustration. Instead, they’re actively building the infrastructure to support each other, in ways large and small.
That’s what drove Margolis to evolve her business yet again: In 2018, she launched The Initiative, a business accelerator program for female cannabis entrepreneurs. The program recently took in its first class of eight new women-helmed businesses, all hungry for a chance to prove themselves. A second cohort will go through the program in Portland later this year, and another class is planned in California.
Founders in each Initiative class spend three months working with industry experts on every aspect of business development, from marketing to finance. They hone their pitch decks and practice their presentation skills. At the end, they can pitch directly to potential investors connected with the program. And from there, Margolis hopes, a few of them will soar.
“That’s at least 24 businesses. In a nascent space, that’s a lot of impact,” she says. “If half of those businesses are successful, and five of those businesses are vastly successful, then we’ve made a meaningful impact.”
There are still plenty of women creating and running cannabis companies, of course. Women-led startups pop up almost immediately after any new state legalizes cannabis, and continue to be formed afterward. Some make names for themselves in the industry, like Nancy Whiteman and her Wana Brands line of edibles in Colorado. Some shift over from notable jobs in other industries, like former advertising vet Hema Patel of the vape brand Roam Escapes, who once worked with the NFL. And as CBD, social dosing, and cannabis-based wellness brands find an increasingly large female consumer base, women are increasingly building new companies to serve them.
But at the upper reaches of the industry, where the most money is pooling, things are looking a little different — and a lot more male. How did it happen? Experts say it’s a matter of following the money.
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“Cannabis companies also are increasingly plucking executives from corporate America as they mature and the industry becomes more attractive,” reports Eli McVey of Marijuana Business Daily.“Consequently, the executive structure of businesses in the traditional economy — where males occupy more than 75 percent of senior roles — has begun to seep into the marijuana industry.”
That’s something Krysti Rede sees all the time. She’s VP of product management for Flowhub, a “cannatech” company that provides point-of-sale software systems to dispensaries, and previously worked on digital commerce at Chipotle. “I’ve met with a few of our larger enterprise customers, and they have C-suites that have just come in from outside verticals. They’re all male,” she says. “I have yet to meet with a woman.”
Two states — New York and California — serve as good case studies for how this shift took place.
First, take California. It was the first to legalize medical marijuana in 1996 and is still by far the largest state market in the cannabis industry. It built a regulatory regime that was especially friendly toward small businesses and nonprofits, which opened the industry up to almost anyone. “The initial medical marijuana laws really favored people who were doing care-based nonprofit businesses,” says Jazmin Hupp, cofounder of the female cannabis leadership organization Women Grow. “That obviously led to a lot of female business ownership, because the majority of care-based businesses are owned by women.”
But many of those early medical marijuana pioneers have shut down recently, Hupp says. That’s in part due to market forces: As the cost of cannabis drops, many small businesses can’t survive on their shrinking margins. At the same time, regulations are tilting the playing field toward larger, more well-funded operations — even though the laws were intended to do the opposite.
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Under the terms of Prop 64, California’s recreational cannabis law that passed in 2016, large-scale grows are not allowed in the state until 2023. That was designed to give small growers a head start. But there was a loophole, according to a 2018 analysis from Marijuana Business Daily: Companies can hold an unlimited number of small cultivation licenses, and today that’s resulted in just 12 companies, or less than 1 percent of the licensees, holding 20 percent of all licenses. The largest license holder in the state, Santa Barbara–based Organic Green Farms, held 147 licenses as of last June. As a result, many of the small growers simply can’t keep up.
New York, on the other hand, is a study in how heavy regulations can limit who enters the industry in the first place.
Medical marijuana was legalized in New York in 2014, and the state placed strict conditions on who could operate there — effectively mandating that companies provide full vertical integration, from growing the plants all the way through filling prescriptions at dispensaries. The winning licensees also had to be up and running within 180 days. This made the cost of entry exceedingly high. New York medical marijuana companies faced estimated capital and first-year operating costs of between $15 and $30 million, according to a report from MarketWatch.
How much do we need as a company; how much equity do we give up for that? Those are the business tools that a lot of women are not taught.
This meant few companies had the resources to break in. In the first year of the program, 43 businesses applied for one of New York State’s coveted medical marijuana licenses…and only five were awarded a license. Although five more have been added since, only one medical marijuana business in New York is women-owned: Etain, founded by Amy Peckham and her daughters, Hillary and Keeley Peckham.
The Peckhams had an advantage most people don’t. The family owns Peckham Industries, a well-established construction company based in Westchester County, and were able to self-fund their new cannabis business. Still, Hillary Peckham, Etain’s chief operations officer, feels that industry executives treat her differently because she’s a woman. When Etain was looking to hire a CFO, for example, she says she frequently ran into candidates who wanted double-digit percentages of the business as a condition of employment. “They wouldn’t go to other entities that are male-owned, male-run, with men at the forefront, and even try that,” she says.
It’s tough to have to prove yourself over and over again, Peckham says, but she doesn’t want to lose sight of what’s exciting about the cannabis industry. The same dynamics that are putting increased pressure on women, minorities, and smaller-business owners are also radically opening up the world of cannabis to consumers, and that’s thrilling, she says: “Part of what makes this industry so captivating is all the changes that are occurring. There’s just been huge growth and increased acceptance.”
To supporters of female cannabis entrepreneurs, Peckham’s point is paramount. Yes, industry changes are disappointing, but there’s still opportunity here. The challenge now is to seize it with a new generation of powerful female entrepreneurs.
Kendra Freeman is a perfect example of someone primed to succeed. She has a rich background in cannabis; she went from illegally growing among the redwoods of Humboldt County, Calif., to cofounding a farm called Oso Verde Farms in Oregon. (“Now I don’t have to worry about the helicopter,” she half-jokes.) But she and her (male) cofounder failed to raise money for Oso Verde and had to bootstrap it instead. Now she and four cofounders are launching a new company called Mendi that makes a line of CBD products for athletes. This time, she really wants to win over investors.
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That’s why she joined the first class at The Initiative, the women-focused accelerator founded by Margolis, the attorney in Portland. “In The Initiative, you get advice: How much do we need as a company; how much equity do we give up for that?” Freeman says. “Those are the business tools that a lot of women are not taught.”
As the support systems for female cannabis entrepreneurs grow, they seem to take two forms. There are organized efforts like The Initiative and then the behind-the-scenes efforts of individual women.
The organized efforts tend to focus on where they can have the most impact. The Initiative, for example, is currently working with consumer packaged goods companies, because Margolis sees the greatest opportunity for success there. “One,” she says, “because women occupy that space; two, because it’s an economic sweet spot that is not already hyper-occupied; three, because to get them across the country or internationally does not take a huge amount of capitalization. We know how to work with those companies.”
Another prominent organization is Women Grow, which provides women in the industry with educational programs and networking events. It experienced some financial stumbles a few years ago but still hosts regular events in markets around the country.
Then there are the less visible efforts. High-powered women say they’re helping behind the scenes, encouraging companies to put more women into leadership positions. Rehmatullah, of Hypur Ventures, says she always looks for opportunities to do this in her role as adviser or investor. The same is true for Emily Paxhia, cofounder of the cannabis investment fund Poseidon Asset Management. “It’s harder to influence how many women start companies that will get investment in the industry,” says Paxhia (who, like Rehmatullah, also sits on The Initiative’s advisory board). “But what I can help with is to make sure that good women are getting hired into fitting positions in upper-level management, in good companies in the industry. I think there are wins not just in having female founders but in the way we build teams.”
Paxhia recently did this with Flowhub, a company she has worked with. It launched in 2015 with an all-male team but has since added women as chief financial officer and head of product development. Flowhub founder Kyle Sherman says the shift has been good for business. “When you’re building teams of great people to deliver business results, you’ve got to have diversity,” he says.
What kind of impact will all of this ultimately have? The women involved don’t claim to know the answer, but they all believe this strongly: When new female leaders are created today, there’s only an upside for women tomorrow. “I’m less focused on the concept of creating a safe space for women than on making women as powerful as possible,” Margolis says.
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