When the legal cannabis movement started to sweep the nation, equity for women seemed within reach.
A widely cited 2015 Marijuana Business Daily report proved promising for female professionals (and consumers) in or interested in the industry. The survey found that women held 36% of c-suite positions at cannabis companies—far above the national average of all U.S. businesses, where women hold just 23% of such roles.
In 2017, a follow-up report found that the number of females in senior level positions in the industry fell substantially from 36% to 27%. Today, that figure has dropped to less than 20%, according to a 2019 Women in Cannabis Report conducted by Vangst—the largest staffing firm in the industry.
The report—which collected data from 166 companies in 17 states—found “17.6% of all female-identifying cannabis employees hold a director or executive role.”
The research also found:
— more than 38% of employees identify as female.
— 12% of companies surveyed had no women in leadership roles at all.
—- 41% had just one female director or executive.
According to Vangst, the amount of female employees in the cannabis space (38.5%) ranks above tech (20%) and below education (68%).
When it comes to people of color in leadership roles, research shows that 17% of executive roles in the industry are held by minorities. Female minorities hold just 5% of executive roles—just above the national average at 4.5%.
Many believe the quickly consolidating industry, and its transition into the mainstream marketplace are to blame for declining rates of female leadership. Simply put, the industry is starting to look like all others; white, and male dominated.
“[…] The executive structure of businesses in the traditional economy–where males occupy more than 75% of senior roles–has begun to seep into the marijuana industry,” finds the 2017 MJ Biz Daily report cited above, written by Ely McVey.
McVey goes on to explain, “the costs to start a cannabis business as well as the barriers to entry have risen dramatically in the past few years. Marijuana companies also are facing increased competition, forcing many to seek additional funding to scale their businesses.”
The cost to open a dispensary, for example, is $150,000-$2 million on average, according to Cova Software, a data storage and security company for cannabis companies. Access to funding is becoming an increasingly important ingredient toward building successful cannabis companies. But, not only do conventional, corporate leadership models tend to favor men—public and private investments models do too.
“The investment sector of the cannabis industry also is heavily dominated by men, as females hold just 10% of executive roles in this area,” writes McVey.
Overall, female founded companies receive less than 10% of venture capital funds in the U.S., according to financial data company, Pitchbook. Women of color—which make up the largest growing group of entrepreneurs in the nation—receive less than 1%.
In an interview with The Story Exchange, David Abernathy, vice president of cannabis investment and research firm, the Arcview Group, said the lack of investment in female-founded companies is “especially frustrating since women-run ventures make about three times as much as male-led businesses, among companies that successfully raise capital.”
Indeed the data shows that venture capital backed, female-led businesses outperform those led by males, reports Inc Magazine’s Sheila Herrling.
Companies with diverse staff are also more likely to financially outperform their peers. According to McKinsey and Company research group:
— “Companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians.”
— “Companies in the top quartile for gender diversity are 15% more likely to have financial returns above their respective national industry medians.”
— “Companies in the bottom quartile [for] gender [and] ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).”
— “In the U.S., there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10% increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8%.”
Despite this, reports MarketWatch, females and minorities are overlooked by investors.
This is exactly why the International Monetary Fund (IMF) launched its Fearless Girl campaign (symbolized by the Fearless Girl statue in New York City) in 2017. The campaign aims to increase the amount of females in corporate leadership roles, and in finance.
On a positive note, the 2017 MJ Biz Daily report found that advocates for diversity in the industry “have made meaningful progress in a number of states to influence policy and provide minorities with more opportunities to occupy decision-making roles in cannabis companies.”
Community-led social equity programs and accelerators, such as The Hood Incubator and The Initiative, are working to ensure a “statistically significant shift” in the number of minority and female founders and leaders in the industry by providing access to funding, and business development services.
Women and minorities are looking toward the ancillary market for further opportunities. Ancillary, or non-plant touching businesses (including security, equipment and marketing services) are also shown to have comparatively higher rates of female, and minority business ownership.
“Ancillary services firms and ancillary tech and products companies are ahead of the pack when it comes to the percentage of female owners and founders,” reports the 2017 MJBD study, “These companies can get off the ground with relatively little capital and without the need to obtain a license because they don’t actually touch the plant.”
What the data shows is that there is momentum, and opportunity for females and minorities in the industry. Though more diversity is desperately needed in the emerging marketplace, the cannabis industry has shown to have higher rates of female and minority leadership compared to the national average for all businesses.