Minority Entrepreneurs Face Uphill Battle To Enter Legal Marijuana Market

by Kevin Michael Briscoe

Mario B. Williams has never been one to shy away from a fight. As head of NDH Law, the Atlanta-based attorney has worked on behalf of jail inmates, immigrants, the mentally disabled and minorities who have won settlements against police agencies,. 

Now, tapping his entrepreneurial instincts, Williams will soon open 9 Leaves, an upscale medical marijuana and CBDretail store in Atlanta. In doing so, he and his partners are up against a discriminatory financial system, the politics of legalizing marijuana and scant minority representation and ownership in that business.

“The sad and unfortunate reality for African Americans is that black-owned businesses are still two to three times more likely to be rejected for a loan than white business owners,” Williams said. “I think, in particular, this form of discrimination, along with the stigma that still follows the cannabis and smoking industry, makes entrepreneurial ownership within the industry particularly difficult for people of color who simply cannot afford to put up a substantial portion of their own money.”

Still, the legal marijuana industry represents a major opportunity for black entrepreneurs that “have the upfront money, understand the licensing requirements and can navigate the political and legal landscape,” Williams said. 

By many accounts, the use of marijuana is growing by staggering numbers, as it becomes increasingly legal. Thirty-five states have legalized marijuana use for medicinal purposes, with 15 of those also allowing for recreational use. New Frontier Data, which specializes in analyzing the legal marijuana sales, estimated the market at $13.6 billion in 2019. The global market is expected to reach $73.6 billion by 2027, estimates Grand View Research Inc.

This market growth aligns with public sentiment favoring using cannabis for both medical and recreational purposes. A new Pew Research survey found two out of three Americans believe marijuana use should be legalized, with use among adults aged 50 to 64 doubling over the last 10 years.

Despite that overwhelming support for the recreational use of marijuana, the industry’s future remains murky. Possessing, using, distributing and/or selling marijuana or marijuana-based products is still illegal under federal law. 

Increasing Black Business Participation 

A 2017 survey conducted by Marijuana Business Daily revealed that only 19 percent of the respondents identified as persons of color. Only 4.1 percent identified as African American.

“Ironic, to say the least, is the fact that people of color, especially African Americans, have an extraordinarily difficult time establishing a business within the cannabis industry, despite the fact that the possession of cannabis has disproportionately and negatively affected people of color via mass incarceration,” Williams said. “[But] despite the discriminatory obstacles, I’m proud that our black-owned business falls in line with a long and rich history of black entrepreneurship that has occurred after the abolition of slavery.”

Williams offered encouraging words to minorities who want to start a similar business. 

“It’s like anything else: do your research, try to create a unique experience, connect with people and never assume that you cannot get financial backing,” he said. “Get a business plan, seek investors, apply for loans and take all necessary risks to give yourself a legitimate shot at success.”

Those with capital can support black businesses and engage in meaningful inclusion efforts, Williams said.

“The next time a person of color approaches you with a plan to make money in the cannabis industry, take that person seriously by talking to them and teaming with them if his or her plan provides for a real opportunity for success,” he said. “I personally believe that backing minorities in the cannabis business speaks volumes in terms of acknowledging the perverse affects that cannabis has had on people of color, like mass incarceration.”

Hope From Pro-legalization Advocates 

Pro-legalization forces have expressed hope in bipartisan support for some form of marijuana legalization, although questions remain how many Democrats will oppose it and how many Republicans will support it.

During a recent media briefing, White House Press Secretary Jen Psaki outlined President Joe Biden’s position.

“The president supports leaving decisions regarding legalization for recreational use up to the states, rescheduling cannabis as a Schedule II drug, so researchers can study its positive and negative impacts and, at the federal level, he supports decriminalizing marijuana use and automatically expunging any prior criminal records,” she said, adding Biden supports legalizing medical marijuana. 

But, Psaki stopped short of saying Biden would sign legislation in its current form, saying Biden’s position isn’t the same as what the House and Senate have proposed. 

Senate Majority Leader Chuck Schumer (D-NY) is working with Sens. Cory Booker (D-NJ) on a pro-legalization bill, and there is discussion Sen. Rand Paul (R-KY) and other Republicans may come along.

Advocates say the more acceptance of marijuana the less stigma will be attached to it, paving the way for more businesses to open.

Providing a Community Experience

Williams’ 9 Leaves is expected to open in May, and aims to be an industry-changer.

While the company waits for the Georgia Access to Medical Cannabis Commission to call for medical marijuana dispensary license applications, it will offer its diverse customer base a wide array of CBD, hemp and vaping products in an upscale environment.

“This will be a high-end smoke shop, not just catering to the 21-40 age group,” said Gretchen Steed, 9 Leaves partner and former manager of Smoke 911 in Atlanta.

“I want anyone of age to come in and feel like we have the best customer service, along with the best products, and that it’s not taboo to be in a smoke shop. The store will have clean lines and have a modern look that will make it stand out compared to other smoke shops in Georgia,” she said.

Steed brings more than 17 years of smoke shop experience to the 9 Lives project, raking in nearly $100,000 per month while running Smoke 911.

With Williams as the lead investor and brainchild behind 9 Leaves and Steed as store manager, the team is rounded out by Williams’ brother, Damon, who Williams said has been an integral component of the project, bringing both product knowledge and interior design ideas to the table.

“In 2018, I started my own CBD company, Botanix. Now, being given an opportunity to work with my brother and open up a modernized smoke shop, I have the experience to help our company, 9 Leaves, flourish in the industry,” said Damon Williams.

The notion of building a civic salon is in keeping with an emerging trend in the business world, where companies are tying their brands to societal concerns.

The 2018 Edelman Earned Brand study, showed that 64 percent of global consumers will buy or boycott a brand based on its position on a social or political issue.

“We’re not just a retail store, but an outlet for the community if they need help,” Steed said.