EXCLUSIVE: Funding An Inclusive Cannabis Future, 'Build Relationships With Intentional People'

At the recent Benzinga Cannabis Capital Conference, panelists discussed the financial challenges faced by minority-owned cannabis businesses and explored non-traditional fundraising options. 

The conversation, moderated by Black CannaBusiness Magazine founder Kristi Price, aimed to identify alternative paths for minority entrepreneurs to access financial support in the industry.

How To Raise Capital If You're A Minority Or Women-led Business

To raise capital as a minority or women-led business, "it is important to find the right investors who understand and appreciate your business vision and can help you connect with others who share your goals. Building an advisory board with the right people can be a valuable asset in raising capital and moving your business forward," said Christine De La Rosa, CEO and co-founder of The People's Ecosystem.

See Also: CEOs Highlight AI, Customer Service As Key Components And Building A Stronger Cannabis Ecosystem

Roz McCarthy, founder and CEO of Minorities for Medical Marijuana and Black Buddha Cannabis, agreed.

"It is also important to be selective with the people you add to your advisory group or seek investment from," McCarthy said.

While "it can be challenging to raise money as a female or person of color, these groups tend to work harder, be more strategic, and ultimately build better companies," said Leah Heise, CEO of Gemini Twin Consulting.

Diversity is profitable: McCarthy highlighted how diversity in the cannabis industry is essential for brands to represent and speak to diverse consumers. Consumers support brands that align with their values, which makes diversity profitable in the industry, she explained.

Additionally, De La Rosa noted the power of diverse teams and the importance of working with BIPOC founders in the cannabis industry. She also emphasized the importance of recognizing the impact of Gen Z and their purchasing power, as they will drive a significant shift in the market.

"If you're not investing in the companies that Gen Z wants to buy, you are going to be losing money,” she said.

Trends In The Industry

Heise discussed mandatory compliance with Environmental, Social, and Governance (ESG) standards by companies, and the need for more funds that support businesses aligned with their community. 

"There is a need for more funds like 'The People's Ecosystem' that support businesses aligned with their community, although crowdfunding may present challenges due to managing cap tables with a large number of investors,” she said.

Furthermore, McCarthy stressed the importance of having a data room available for potential investors.

"It's important to ask potential investors what kind of companies they're looking to invest in (...) You can also negotiate deals where they invest in your company in exchange for exclusive distribution or lower pricing," recommended De La Rosa.

Future Of Cannabis Financing

Despite regulatory concerns, there are still funding options available for businesses in the cannabis industry, including traditional options like loans and grants, as well as innovative models based on revenue and contracts, said McCarthy. "It's important for businesses to explore all their funding options and not hesitate to reach out to banks, investors, and other sources."

The panel recommended that businesses focus on building products and services that cater to the needs of their communities as they have significant buying power and will support those who serve them. Investors should also look for businesses centered around their communities because they will likely have larger profits. "$1.7 trillion is how much Latinos spend in the United States, $1.4 trillion are African-American, $1 trillion are Asian American,” said De La Rosa.

To take advantage of supplier diversity programs, businesses should be contract-ready, McCarthy added.

Lastly, businesses should find their lane, and build relationships with intentional people in the industry.

See Also: TILT Partnership Puts Black Buddha Cannabis Brand On Track For National Expansion

Image By Benzinga Cannabis Capital Conference