A+ Collective leads the way for minority-owned cannabis businesses
on November 7, 2017
At a Warriors watch party in downtown Oakland at Gallery EVB, people dressed in blue and yellow jerseys were gathered not only to view their hometown team’s season opener, but to enjoy cannabis-infused drinks, food, topicals, dabs—hits of concentrated cannabis—and connect with vendors just entering the cannabis industry.
The event was organized by A+ Collective, a black-owned cannabis delivery service that launched in Oakland in September. At the watch party, Daniel Gardner and Aanya Gamble Hill, co-founders of the collective, were working the room, excitedly sharing their collection of products and introducing the vendors to potential new customers.
“You can try a dab over there!” said Gamble, pointing to a young man named Morris Kelly who had set up a “dab bar” near the venue’s entrance. Kelly explained how it worked to an older woman as he took a small torch and used it to heat up a titanium nail inside the glass pipe. He then applied some cannabis concentrate to the hot nail, and lifted up the pipe to make it easier for her to inhale the vapor.
In addition to introducing people to dabbing, Gamble Hill and Gardner were also helping volunteers serve plates of soul food, pour beers, check in people at the door, and avert small crises, like not being able to access the attendee email list through the event app they were using. As the night progressed, the chatter got louder, the vendor tables became packed, and a hazy smoke started to fill the air. The room grew crowded with a range of young and old people, people of color and white folks, Warriors fans, cannabis entrepreneurs, friends of Gamble Hills’ and Gardner’s and volunteers supporting the event. Gamble Hill began documenting the evening on her phone, excitedly snapping photos and taking videos for social media. She beckoned across the room for Gardner to join her and help her move their product table closer to the entrance, where most people were congregating.
At first glance, Gamble Hill and Gardner—at age 67 and 27, respectively—make an unlikely business partnership. Gamble Hill is energetic and loves meeting new people, while Gardner is quieter and more reserved. “As soon as you meet her, she’s got this light,” said Gardner. “I’m the oldest youngest person you’re ever gonna meet. My nickname is ‘Grandpa,’ so it feels natural to work with someone older.”
A+ Collective is one of several new minority-owned cannabis businesses in the Bay Area, launching just in time for the statewide legalization of cannabis thanks to Proposition 64. The new law, which allows for the sale and taxation of recreational marijuana, will go into effect in January. A+ Collective is currently able to operate legally within Oakland under city law, but will need to apply for a state license come January.
But while the legal cannabis industry is now becoming a business opportunity for minorities, for decades, people of color have been disproportionately penalized and incarcerated for drug-related charges in connection with the “War on Drugs.” “During cannabis prohibition and the War on Drugs, we know that minorities were the ones primarily targeted,” said Shanita Penny, co-chair of the Minority Cannabis Business Association, a national nonprofit membership organization that advocates for equitable cannabis policy.
“They were over-policed and heavily—and in some cases unconstitutionally—sentenced,” she continued. “Arrest rates for marijuana possession were 4:1, comparing black and white populations in some places. It’s something that has affected us as a people in such a negative way that many don’t know it’s a realistic opportunity now. And the same folks who were convicted are not allowed in most states to participate in the industry.”
Now, as cannabis retail sales will soon be legalized in California, people of color are finding ways to enter into the industry legally, with the help of local incubators and advocacy groups such as The Hood Incubator and Supernova Women, both based in Oakland. The Hood Incubator offers a four-month business training program for cannabis entrepreneurs who are people of color, and Supernova Women offers business workshops as well as networking events for women of color in the cannabis industry.
However, many barriers still exist for minorities in the industry, such as lack of startup capital or access to investors. “As cannabis becomes legalized, we are seeing a change in the demographic of people in the industry. You see less people of color getting involved in the business end of it and you see more Caucasians who have big money,” said Gamble Hill. “For people of color—especially those who have been imprisoned for drug-related charges—where do they go to get money to buy a building? We hear about opportunities to be employees in the industry. But it’s a different and harder path to become an owner of a business.”
Gamble Hill formerly worked in real estate investing and said she was inspired to educate other seniors after her own experience with cannabis, which she uses to relieve arthritis and glaucoma. Now, operating her own delivery service, she delivers products directly to other seniors in the Lake Merritt area, and talks to them about their concerns.
“So many seniors are like, ‘I don’t want to get high,’ because that’s all they know,” said Gamble Hill. “They think if there’s any THC at all they can’t have it or if they do they will be a raving lunatic.” THC—tetrahydrocannabinol—is the main chemical compound in cannabis that is responsible for its psychoactive effects.
“In the black community, a lot of that misinformation comes from what people have heard in the past,” said Gamble Hill. “They heard it’s illegal, it makes people act wacky and crazy, it’s a gateway drug to something worse.” Even though medical marijuana has been legal in California since 1996, Gamble Hill said that seniors may have been unsure about how to navigate finding a doctor and going to a dispensary. She also adds that they may have had a fear of legal repercussions. “They feel like there may be ramifications from the federal government—that’s very frightening,” said Gamble Hill.
Educating seniors is something Gardner can also relate to, as he talks about his interactions with his own mom. “I know a lot of older folks who would benefit from cannabis, but because of the negative stereotypes they don’t,” said Gardner, who was formerly a homeless outreach case manager at a nonprofit. “My mom won’t take my word, but she’ll listen to Aanya.”
Gardner adds that while they cater largely to seniors, they also emphasize educating people of color of all ages. “There are a lot of POC [people of color] community people who are very old school. They want their blunts and what they’re used to smoking. There are still people in our community who aren’t educated on the new advances that cannabis has made,” Gardner said, referring to the many different ways cannabis can now be consumed, through devices such as vaporizer pens, dabs and oral sprays.
A+ Collective emphasizes consumption methods like the vaporizer pen, which can be used to inhale cannabis more discreetly than smoking from a joint or pipe, according to Gamble Hill. “It smells better, and it doesn’t have as much of a heavy presence,” she said.
They also carry CBD (Cannabidiol) strains of flower, tinctures and sprays, which can be consumed underneath the tongue for faster pain-relieving effects. Cannabidiol is another major chemical compound in cannabis, and it is non-psychoactive, so it has no “high” associated with it. Gamble Hill said this is preferable for some folks, who want immediate pain relief but not the feeling of being high.
Melodye Montgomery, founder of the East Bay Senior Social Cannabis Club, also sees a need to educate seniors about cannabis for medical and recreational purposes. “We are the generation that has been smoking weed behind curtains for the longest time. We grew up in the era when it was illegal—before it was even medically legalized. When you take that into account, it’s hard to pull that group into the present. I am always telling new members that you don’t have to smoke it, you can put on a topical or use an edible or a tincture,” she said.
A+ Collective also organizes monthly events geared towards people of color, such as the Warriors Watch Party. Their next event, called “Flexin My Complexion: A Celebration of Color in Cannabis” will be held on November 12 and caters towards cannabis vendors and entrepreneurs of color. They describe it as an “intentional healing space” for people of color, where attendees can talk about their hopes and fears related to using cannabis.
“We hope to make space for more dialogue,” said Gamble Hill. “We want people to talk about these issues and questions: ‘Do you feel safe smoking out in the open? Has cannabis affected you negatively in your life?’ I’ve met people who have had their families ripped apart from drug-related arrests and incarceration. It’s important to have a space where you can talk about that, and with other people of color who understand.”
The legalization of cannabis has happened incrementally since the 1990s in different states throughout the country. California was the first state to legalize medical cannabis in 1996. In 2004, Oakland passed Measure Z, which made law enforcement related to adult cannabis use, distribution, sale, cultivation and possession, the city’s lowest law enforcement priority. It also established a system to license, tax and regulate cannabis for adult use as soon as cannabis was legalized in the state.
In 2010, Oakland passed Measure V, which established a higher business tax rate for medical marijuana dispensaries. Most recently, in 2016, California voters passed Proposition 64, which allows for the sale and taxation of recreational marijuana, and goes into effect in January.
However, under federal law, cannabis remains illegal, although medical cannabis is now legal in 29 states, and recreational cannabis is legal in four. The federal Controlled Substances Act of 1970 classifies cannabis as a Schedule I drug, which means it is viewed as having a high potential for addiction and no medical benefits. Because of this incongruency between local, state, and national law, there remains a risk of being apprehended for cannabis possession, sale and cultivation, even in states and cities where it is legal.
“It has been consistently prohibited under federal law,” said Greg Minor, Oakland’s Assistant to the City Administrator for Special Permits and Nuisance Abatement, the office responsible for providing permits to cannabis businesses. “There has been a status quo of non-interference with people who are compliant with state laws, but with the Trump administration that is now in jeopardy.”
The Trump administration temporarily extended the Rohrabacher–Farr amendment that prevents the federal government from interfering with state medical marijuana laws, until December 8, 2017. However, US Attorney General Jeff Sessions does not support the amendment.
Being out of step with federal law can be a real risk for local cannabis businesses. In 2012, the Drug Enforcement Administration raided Oaksterdam, a college in Oakland that provides classes and training for the cannabis industry. No charges were filed in association with the raid, but Oaksterdam lost its property and plants, faced a decrease in enrollment and had to downsize their staff.
Penny of the Minority Cannabis Business Association said that some people may find this risk too great to take. “Many minorities are not willing to be experimental guinea pigs in this gray area until the state regulations come in. We are not going to take the risk to be the martyr if someone has to go—especially when you have Jeff Sessions in office,” she said.
According to Gamble Hill and Gardner, people of color have historically been disproportionately penalized for using and selling cannabis. A report from 2013 by the American Civil Liberties Union called The War On Marijuana in Black and White stated that while black and white people consume cannabis at a similar rate, nationally, black people were almost four times more likely to get arrested for it. Research from the Yale Law Journal also shows that prosecutors are twice as likely to pursue a mandatory minimum sentence for black people as for white people charged with the same offense, according to a study of federal criminal cases from 2007 to 2009.
In Oakland alone, from 1998 to 2015, African-Americans comprised 90 percent of cannabis-related arrests according to the city’s equity analysis report published in 2017. At the same time, the report states, “what is unique to Oakland is that there was a parallel, illegal but tolerated business environment for other people involved in the cannabis trade,” referring to the predominantly white medical cannabis advocacy community. The report details that this “permissive business environment” in the white community and the “aggressive enforcement of drug laws” in black communities “has widened the opportunity gap between people of color and White residents in the City of Oakland.”
“It has been well documented that in Oakland there are disparities from the ‘War On Drugs,’ and more recently within the legalization of cannabis,” said Minor. “There’s a clear need to address the harm indirectly and directly inflicted on marginalized populations.”
The legal cannabis industry is the fastest growing industry in the U.S., according to a 2017 report by Arcview, a cannabis investment and research firm based in Oakland. The report states that North American consumers spent $6.7 billion on legal cannabis products in 2016, and the market is estimated to grow to $22.6 billion by 2021. Consumers in California account for 27 percent of that market.
“Remarkably I consider that a fairly conservative projection,” said Tom Adams, editor-in-chief at Arcview. “If you go on a state-by-state basis, it assumes very little revenue from newly legal programs.”
Adams also commented on the almost-unprecedented projected annual growth rate of 27 percent for the market. “Cannabis is unique in that it is an existing consumer demand phenomenon that is moving into legal channels. For most new products you have to tell the consumer what it is and how you use it. On the other hand people have been consuming cannabis for at least 10,000 years and probably much longer. There’s less of a learning curve associated with the consumer,” said Adams.
In California, people are in a hurry to launch their cannabis start-ups before January, when cannabis becomes available for retail purchase. However, it has been reported by Amanda Lewis in Buzzfeed that amongst the 3,200 to 3,600 storefront dispensaries in the country, only one percent are black-owned. In Oakland, out of the eight currently licensed and operating dispensaries, one is owned by an African American and “the rest are essentially white,” according to Minor.
With the cannabis “boom” on the horizon, minority-focused incubator and advocacy groups such as The Hood Incubator and Supernova Women are hoping to bridge the gap between people of color and white folks in the industry by providing support, resources and training to these communities. The Hood Incubator’s business accelerator program is free for participants, and provides them with the chance to create their “business model canvas,” or their business plan, and learn basics such as making a profit and loss statement, understanding overhead costs and cash flow. The program culminates in a pitch day, when participants formally present their business ideas to community members including Oakland residents, cannabis industry professionals and potential investors.
“The analogy I use is the tech industry,” said Juell Stewart, an organizer with Hood Incubator. “People who were able to create platforms and become millionaires in Silicon Valley were able to do that because they had the connections, the cultural currency and all of these things to solicit funds and seed money. We see the same barriers in that industry replicated here.”
In addition to the business accelerator, The Hood Incubator has a membership-based program, which people can join to access events like wellness clinics, legal clinics, and social gatherings.
Stewart emphasizes that in addition to cultivating business owners and entrepreneurs, The Hood Incubator seeks to connect new startups with potential investors, especially investors who are also people of color. “We are at a place where some of us have been able to accumulate financial resources, access elite education etc. and are now able to create opportunities for people who look like us,” said Stewart. “Though there are still barriers, we are better positioned now than ever to take on this endeavor.”
Gamble Hill and Gardner first met through the accelerator program. “The best thing we got out of The Hood Incubator was each other and the networking,” said Gardner. “It gave us a presence in a community where we didn’t really have a presence.” Gardner said that through networking events they were able to connect with vendors, get advice on legal questions, and access mentorship from cannabis experts, lawyers and other business owners. He also said that The Hood Incubator gave their business some name recognition in the industry.
Neither Gardner nor Gamble Hill had business experience coming into the workshop. “What I learned was invaluable—the financial piece gave me more of a look at reality and what it would actually take to open delivery service,” said Gamble Hill.
The Hood Incubator launched in 2016. The first graduating class had 10 participants, ranging from people who were brand new to the industry to those who were already operating underground businesses and wanted to operate legally.
Leo Orleans of Hella Latina Catering and Infused Foods was a participant in the first group, which graduated in May, 2017. At the Warriors watch party, Orleans, who prefers the pronoun “they,” was behind the counter serving both medicated and non-medicated salsa, burritos, watermelon flavored drinks, and carrot cake.
Hella Latina is based in Oakland and serves a variety of vegetarian food and drinks, inspired by Orleans’ heritage. The business started with salsa, which was so popular amongst Orleans’ friends that Orleans realized they were onto something. Orleans created a full-fledged catering service, and recently launched their business through a series of pop-ups held at Oakland SOL in East Oakland. “It was helpful to build networks, resources, and have people in the community who I can call,” said Orleans. “I knew I could make the food, but now I know I can also sell it and market it.”
The Hood Incubator isn’t the only group working towards more equity in the cannabis industry. Supernova Women supports women of color in becoming entrepreneurs in the cannabis industry through education, advocacy and networking. They offer year-round cannabis business workshops to help entrepreneurs understand permit and licensing issues, tax and accounting considerations and other aspects of launching their business.
Supernova was founded in 2015, and in addition to offering workshops, they organize panel discussions and networking events, such as the “Shades of Green” seminar series they presented in 2016, which provided a legal overview of the cannabis economy and brought together local entrepreneurs to share their industry experiences.
According to co-founder Amber Senter, access to capital is the biggest problem facing people of color in the industry. Senter said that people of color often do not come from generational wealth, find it harder to access small business loans, and are marginalized by a venture capital industry that is predominantly white and male.
“It’s still a good old white boy’s network,” said Senter, of the fundraising process for a cannabis start-up. “People definitely don’t want to give black people money, especially not black women, especially not for cannabis. I experienced that firsthand, as a black woman looking for money for our dispensary.”
Senter ran Magnolia Dispensary in Oakland with Debby Goldsberry before moving on to launch her own cannabis start-up, LeisureLife, which sells infused products, pre-rolled joints, edibles and personal care items.
Senter says that another barrier for people of color in the industry is real estate, which is closely tied to access to capital. “Cannabis activity is zoned in certain areas. We are seeing rents in those areas that are four or five times the market rate, which is insane. How can anybody afford this, let alone an equity permit applicant?” According to the city’s business permitting procedures, a dispensary must be located in a commercial or industrial zone, and must not be within 600 feet of a public or private school, another dispensary or a youth center.
To alleviate some of the barriers for people of color, Oakland officials launched an equity permit program in March, 2017. The program reserves 50 percent of new dispensary permits for equity applicants, who must be low-income Oakland residents and either have a past marijuana-related conviction in Oakland or have lived in police beats that have had a disproportionately higher amount of marijuana-related arrests.
But with the legalization of retail sales coming in January, Senter emphasizes that there is a need to focus on support beyond just helping people get permits. “We don’t want these people just to get licensed and be done. We want them to succeed,” she said. “There needs to be a support program to make sure their businesses keep running. With all the new regulation and overhead costs with taxes, it’s going to be especially challenging.”
As the industry is getting more saturated with other delivery services, Gamble Hill and Gardner don’t seem to be too concerned about competitors. “Of course there’s a lot of competition, but I can’t worry about that. I focus on helping people I meet,” said Gamble Hill.
Gardner chimes in: “I’m more worried about new regulations, and the legality of things.”
In January, they will have to comply with state regulations and apply for a temporary state license until they can complete the lengthy process of submitting a full application for a state permit. That means raising money for new costs, such as the licensing process and the state and city taxes they will have to pay. They must also complete their ongoing search for a property to house their growing collection of products.
While the ever-changing regulations are a concern for Gamble Hill and Gardner, they remain optimistic about the future of their business. Gardner recently gave his two weeks notice at his job so he could work full time with A+ Collective. “It’s terrifying, but I believe in what we are doing,” he said.
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