As the cannabis industry continues to evolve, the number of people entering is steadily increasing.
In fact, according to The Motley Fool, from 2018 to 2021 there was a 21% employment growth rate in the cannabis industry.
As cannabis transforms into a billion-dollar industry, many new entrepreneurs are eager to take part in this expanding market. However, social inequality affects new cannabis business owners and employees; specifically minorities and women.
Since 2017, the team at MJBizDaily publish annual reports on women and minorities in the cannabis industry. In 2021, MJBizDaily released a free report with information on the percentages of women and minority-owned businesses; the status of social equity provisions by state and market; and other information related to gender and racial adversity.
Jenel Stelton-Holtmeier, the author of the Women and Minorities in the Cannabis Industry Report writes in the report that, “racial and gender diversity in the marijuana industry is still lacking—especially in ownership and executive positions.”
Businesses Lack Diversity
In the study, a chart displays just how much of a disparity there is between white-owned and minority-owned businesses. For example, white individuals make up the highest percentage of business ownership rates in three states: Colorado, Michigan, and Nevada. Asian Americans fall the shortest in this study, ranging from only 4-6% of ownership.
In many circumstances, minorities face difficulties when trying to take out a business loan. This discrimination affects participation rates. In fact, a survey conducted on business owners in the 2017 MJBizDaily Women and Minorities report showed that only 19% of the respondents identified as persons of color. Only 4.1% identified as African American.
In 2017, The Pew Charitable Trusts covered a story on Ryan Brown; an aspiring cannabis owner from California. Brown discusses his frustrations while going against wealthy applicants and individuals of high status during the licensing process.
Brown’s challenges show the lack of control minority business owners have in the cannabis business process.
When it comes to employees, Holtmeier further discusses how minorities hold less decision making roles but dominate consumption events and wholesale cultivation. She says, “the percentage of minorities who hold executive positions at cannabis businesses stands at 13.1%, slightly higher than the average across all U.S. businesses as a whole but down from previous years.”
Challenges for Women in the United States
As challenging as it can be for minorities working for or running a cannabis business; there is also a lack of support for women-run businesses.
For example, women only own 25% of businesses in states like Nevada — which has the highest such rates. Massachusetts had the lowest rates at just 5%, according to the report.
These rates are so low because, as Holtmeier writes, “the lack of access to capital remains a key challenge for women looking to start a plant-touching business, regardless of the market.”
According to Forbes, white males have the highest share of capital. For example, “58% of the people who work in the venture capital industry are white men, the more important statistic is that white men control 93% of the venture capital dollars.”
Many new entrepreneurs seek investors to help start their businesses, which can easily cost six figures. Often, men are less likely to invest in a women-driven business and rather their male counterparts. Furthermore, studies show that men have clear advantages in business such as stronger network connections.
In 2019, the rate at which women executives entered the cannabis industry raised to nearly 37%. However, in 2021 the rates of women executives went down to just 22.1%. That’s a 14.7% drop in just two years. Consequently, this number fell below the national average of 29.8% across the rest of the U.S. business landscape.
Holtmeier says, “this shift isn’t driven solely by the decline in women cannabis executives; the latest data from the U.S. The Bureau of Labor Statistics indicates that women hold a higher percentage of these roles in the broader economy—up to nearly 30% from only 21% in 2018.”
Comments from Women in the Cannabis Industry
Chirali Patel, an executive board member for the New Jersey State Bar Association Cannabis Committee and co-chair of the Social Justice and Equity Subcommittee tells Emerald, “women have been fighting for equal rights way before the historical women’s suffrage movement even began, and this report is a clear reminder that victory remains at a distance.”
Patel, who is also the founder of Blaze Responsibly, says “we need different, even conflicting views and ways of thinking at the table to lead to robust and mature solutions for this industry.”
She tells Emerald, “the declining rate of executive positions held by women only shows us just how much they are needed in this industry. But, change is coming in cannabis, and the women who are still in are leading it. With some time, I am confident that the percentage will rise once again.”
To improve the cannabis industry, it remains important to increase access to funding for women and minority-owned businesses, and support social equity programs created to raise participation, Holtmeir explains.
In a rapidly growing industry like cannabis, the future is promising for new business owners as support grows for a more inclusive market.