Cannabis businesses make push to showcase Black-owned brands

February 22, 2023 · MJ Biz Daily

Inside Josephine and Billie’s apothecary-styled marijuana store on Martin Luther King Jr. Boulevard in South Los Angeles, several cannabis brands are prominently displayed and labeled as Black-owned.

A tall, glass showcase centered along the back of the store – an homage to Black jazz legends Josephine Baker and Billie Holiday as well as the reefer-friendly, speakeasy “tea pads” of their day – features products from the likes of Queen Mary of L.A., Oakland Abstracts and Black Star Farms of New York.

Whitney Beatty, co-owner of Josephine and Billie’s and a social equity licensee, is trying to pay it forward by providing a platform and shelf space for Black-owned brands.

She’s also catering to price-conscious African American consumers in the neighborhood and others who have been underserved or largely ignored by the marijuana industry in general and cannabis retailers in particular.

A small group of advocates and businesses in states including California, Massachusetts, Michigan and New York are taking a similar approach by promoting brands owned by people of color.

“We put a prioritization on carrying Black, brown, women-led and LGBTQ-led brands,” said Beatty, co-founder of one of the limited number of Black-owned cannabis stores in the country.

“With my equity license, I can be in (the) game for these other brands that are having a really difficult time going on the shelves.”

Showcasing diversity

At The Heritage Club in Boston, the entryway is dedicated to mission-driven and diversity-owned brands.

“I want it to be one of the first things they see when they come in,” said founder and CEO Nike John, the first Black woman to own a cannabis shop in the city.

The social equity licensee has been promoting Black-owned brands such as Jam Master Jays and Black Bhudda Cannabis since opening her doors in September in Boston’s historic Charlestown waterfront neighborhood.

The Heritage Club’s website has a section promoting Black-owned, in-store brands.

Staffers also highlight those businesses and their origin stories to customers.

“I think knowing a little bit more helps people who don’t realize why this legalization is so important to Black and brown communities,” said John, who was inspired to join the industry and make a mark because of the federal government’s war on drugs, which decimated minority neighborhoods and fueled mass incarceration for decades.

“I want to empower other people who are Black looking to get into this space,” she added.

“Giving platforms to the people who need to tell their stories is super powerful.”

For the second consecutive year during Black History Month, Josephine and Billie’s is partnering with other Black-owned retailers in Los Angeles for the Black Box Project.

On Feb. 17, her shop – along with Gorilla Wellness RX, Sixty Four & Hope and Wyllow – plan to release and cross-promote a bundle of products from Black-owned brands, with an accompanying pamphlet on the businesses and the importance of supporting minority-led brands.

The box, which sold out last year in one day and included pre-rolls, flower, concentrate and accessories, costs about $50.

“We want to have something that is accessible to our customer base,” Beatty said.

“The idea of community economics and being able to drive traffic is important.”

Finding a way

In Detroit, Black entrepreneur and cannabis company owner Rebecca Colett has been successful finding shelf space through a mix of leveraging social media and in-store support.

Colett’s company, Calyxeum – a producer and wholesaler of edibles, flower, concentrates and topicals – has kept prices as competitive as possible while pushing on-site retail promotions as well as influencer and viral marketing campaigns to gain consistent reorders and new retailers.

She recommends cultivating existing relationships with retailers and offering new stores optimum sales support to move products off the shelf.

“Brands will only get shelf space and more shelf space if they are actually selling the current inventory,” said Colett, who bootstrapped the company after an unsuccessful capital raise.

But challenges facing her brand will likely persist in Michigan’s hotly competitive market, where wholesale marijuana prices have crashed and consumers can buy ounces for less than $80, giving larger companies and multistate operators a leg up on smaller competitors.

“Bigger brands also have higher marketing budgets, which means they can offer more promo and marketing efforts to increase sales,” Colett said.

“We cannot keep up with the very competitive MSO and large-producer prices.”

Change from the top

At least one MSO is offering a helping hand.

TPCO Holding Corp., better known as The Parent Co., launched a program in January to help social equity brands scale their business, increase brand awareness, build customer loyalty and boost their retail presence and sales.

The San Jose, California-based company selected four minority-owned brands in the state for its first cohort, including:

Cronja, an L.A.-based Black- and veteran-owned cannabis lifestyle company specializing in premium leather rolling trays and handmade cases for rolling kits and cannabis products.
Substance and Skewville, which are subsidiaries of Plaid America. The Venice-based brand donates a portion of every sale to help end mass incarceration and foster art programs in prisons.
Peakz, a social equity distribution license winner in Oakland aiming to bring authentic connections to cannabis culture.
Disco Jays by Makr House, founded by Oakland entrepreneur Amber Senter, who helped craft the California Cannabis Social Equity Act of 2018.
The 12-week Social Equity Ventures Brand Success Program will provide the brands with shelf space at all 12 of The Parent Co.’s stores across California as well as data analytics and mentorship from its sales, marketing, retail and operations teams.

“Because of that, we can really help these brands figure out their success model, so then they can apply it to other opportunities in the market,” said Troy Datcher, TPCO’s chief executive.

“And, of course, there’s an opportunity for us to invest in them if we see fit.”

TPCO’s social equity investment fund, led by rapper and entrepreneur Shawn “Jay-Z” Carter and Desiree Perez, was seeded with $10 million plus 2% of all future net income.

Initial investments include Josephine & Billie’s and Peakz.

Datcher, believed to be the first Black CEO of a notable publicly traded cannabis company, told MJBizDaily he took the job in 2021 in part to help diversify the industry, “recruit talent and bring people to the table that reflect the communities in which we live and serve.”

The industry has a lot of work to do, according to recent statistics.

The percentage of leadership positions held by women and racial minorities has remained stagnant or declined over the past five years.

Non-white ownership of cannabis businesses shrank from 20.7% in 2021 to 15.4% last year, according to MJBizDaily’s 2022 report, “Diversity, Equity & Inclusion in the Cannabis Industry,”

The gap in the retail space is even more dramatic.

According to MJBizDaily research, cross-referenced with industry sources and databases, it’s believed that fewer than 20 of the nation’s 10,000 or so medical marijuana dispensaries and adult-use stores are Black-owned – a major underrepresentation in an industry with social equity touted as a tenant.

Shifting priorities

Mary Pryor, a Black entrepreneur in New York, is well aware of the shortfalls.

She launched Cannaclusive in 2017 to help mainstream cannabis brands connect with minority consumers and chart their inclusivity.

The business found some early success launching retail partnerships and social equity inclusion programs, but corporate buy-in waned over the past few years as industry turmoil mounted amid retail price compression, a glut of product, little regulatory relief and competition from the underground market.

“The long-standing commitment just hasn’t been there,” Pryor said, referring to cannabis market leaders and larger, influential companies in the space.

Government policies aimed at promoting social equity ownership and brand inclusion have also largely failed applicants and license holders.

These programs also have been criticized for providing little to no access to capital, technical and legal experts or general expertise in a developing industry with high startup costs and varying regulations and laws in nearly every jurisdiction.

“The failures of equity or the lack of actual support from government and corporate industries is its own unique story that I feel like a lot of people don’t want to be honest about,” Pryor said.

“The data is there. The numbers are there.”

Meanwhile, several of the startups she sought to help haven’t survived.

“A lot of the brands that launched have disappeared because they weren’t able to get on shelves,” said Pryor, who also serves as chief marketing officer at Tricolla Farms and Tonic, a CBD cultivator and product manufacturer in Berkshire, New York.

Now she’s launching a brand herself, Sheba Baby, and helping others do the same on the East Coast, particularly in New York, a potential billion-dollar marijuana market when fully operational, according to MJBizDaily estimates.

The state’s adult-use market, built with an equity-driven approach, has stumbled out of the gate since its Dec. 29 launch, with only four licensed retailers open for business as well as lingering questions related to license expansion, massive funding shortfalls for a touted $200 million social equity fund and city-backed property leasing for retailers, among others.

“My hope is really in New York state,” Pryor said, “but we need people that actually are not trying to scam the disenfranchised and hurt Black and brown founders.” (Full Story)

In category:Dispensaries
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