Cannabis Entrepreneurs Of Color Say The Industry Is Importing Tech’s Exclusionary Funding Practices
One of them is Sunshine Lencho, cofounder of Supernova Women, an Oakland, California–based advocacy group for people of color in cannabis.
The prevalence of big venture capital money in the cannabis space is a sign that “we’re basically replicating a model from tech–and there’s no secret there as to who operates tech businesses,” Lencho told Mohan.
Back women see just 0.2 percent of venture capital funding overall despite being the fastest-growing group of entrepreneurs in the U.S.
The problem is rooted in the demographics of venture capital itself: Less than 3 percent of VC firms’ investment teams consist of people who identify as black or Latinx, and that small cohort reports greater difficulty getting investors to back the minority-led startups they’re excited about, Mohan reported.
From Fast Company. Story by Pavithra Mohan, an assistant editor for Fast Company Digital.
Recreational cannabis is now legal in eight states and Washington, D.C., with legal sales of recreational marijuana kicking off in California come Jan. 1. Yet black and Latinx people are disproportionately being locked out of the industry partly due to criminal-justice issues.
Black people are almost four times as likely to be arrested for marijuana possession, despite use rates on par with white people. Between 2014 and 2016, 86 percent of people arrested for marijuana possession in New York City were black or Latinx. And even in Colorado, where recreational marijuana has been legal since 2012 for anyone 21 and older, arrest rates for underage possession rose by 50 percent and 20 percent for black and Latinx people in the state, respectively, from 2012–2014.
Research suggests that the VC world is rife with biases—some unconscious, others simply unexpressed—that have disproportionately channeled tech funding in the hands of white and Asian men. There’s no guarantee that an investor will smile on founders with cannabis-related criminal records, even if state or local regulators do. And so far, there are few signs that the cannabis sector is on the verge of solving these issues.
Khari Stallworth points to an issue founders of color beyond cannabis know all too well: “Where are the people that look like me . . . (who) can invest in my idea?” he asks. “You have no idea how hard it’s been for me to take a look on LinkedIn and find just 10 people, (when) I filter down with the word ‘cannabis’ and ‘investor,’ that are black.”
Stallworth hopes more people like Snoop Dogg — wealthy black musicians or athletes who want to invest in cannabis — will enter the space, leapfrogging over hesitant VC firms dominated by white men. But until that happens, the clearest fix is simply to diversify the investor ranks.
Read more at Fast Company.