Marijuana Business Magazine September 2019

Marijuana Business Magazine | September 2019 20 and studies have found the best way to address that is to include people of color on staff in key decision-making roles at these investment firms. It’s not changing fast enough. Since you started NuLeaf Project, can you name one thing that has changed in terms of investment trends (i.e., a particular sector attracting more or less investment or different types of investors coming on board)? Let’s look at this question specifically in the context of policies and programs like NuLeaf Project, meaning tax-funded initiatives that invest in cannabis businesses owned by people of color. I’ve been pleased to see more states, like Illinois under Gov. (J.B.) Pritzker, launch initiatives to give direct grants and low-interest loans to social equity applicants. The concern I have is how cities and states have been defining the groups who are eligible for social equity initiatives. For obscure reasons—and I’ve heard government attorneys cite all kinds of legalese as to why—legislation doesn’t name African Americans, the group documented as most targeted by the war on drugs, as the target recipients of these financial programs. We also see a trend of these financial initiatives naming women as target recipients. The Marijuana Freedom and Opportunity Act introduced by U.S. Sen. (Charles) Schumer and U.S. Rep. (Hakeem) Jeffries is one such example. Women do face capital barriers across all industries. Women were not targeted by the war on drugs. This expansion and lack of clarity in language makes it harder to ensure these initiatives benefit African Americans. What has been the biggest learning curve for you since you started NuLeaf Project? We can do much more than we think with “micro- loans” to minority-owned cannabis businesses. I was surprised myself at our high rate of return in these small investments. Kevin Sabet, CEO of the antilegalization group Smart Approaches to Marijuana, is wrong. He said recently, “The (cannabis) industry requires major institutional capital, and unless a state is handing out seven-figure checks to certain populations, license- preference programs won’t make a dent.”We don’t need seven-figure checks, which is a figure so large as to make this capital problem seem insurmountable. We can make a big difference in minority entrepreneurial success with checks under $100,000, but we need to distribute 10 times the number we are distributing today. If you could start all over again, what you would avoid this time around? I would have focused on capital sooner. I started cannabis equity work in 2015 as a founding board member of the Minority Cannabis Businesses Association (MCBA). I built a lot of member educational content, and it’s still a core focus of MCBA to address one of the barriers people of color face. While education is important, capital is more important. Two studies—one published by MIT and another by the Center for Global Policy Solutions— both determined that the No. 1 driving factor behind lower success rates for African American- owned businesses (across all industries) is lack of access to startup capital. African Americans have less than 10% of the household wealth of whites, putting them at the lowest end of all minority groups. Cannabis entrepreneurs know the reality of bootstrapping. Bootstrapping is much more difficult when your wealth and that of your personal network is, at worst, nonexistent and, at best, pales in comparison to the capital access of your white competitors. If we can close this capital gap for just some entrepreneurs of color in cannabis, we can accelerate their rate of growth while we still have time to make an impact. We have a game-changing opportunity to create intergenerational wealth through entrepreneurship for the communities most devastated economically by the war on drugs. CA$4,000 The Bank of Montreal, one of Canada’s top lenders, is charging prospective cannabis entrepreneurs about $3,028 in U.S. dollars for a routine initial review of financial documents, plus ongoing “monitoring and maintenance.”The fees (CA$3,000 initially, plus CA$1,000 maintenance) come as an added cost for those seeking to enter Ontario’s upcoming lottery for the right to open a marijuana retail store. Tax is not included, and no service is guaranteed. Nick Thomas reports on finance for Marijuana Business Daily. You can reach him at nickt@mjbizdaily.com . Get access to more in-depth market analysis, premium features on cannabis investing trends and monthly executive webcasts with Investor Intelligence. Money Matters | Nick Thomas