Legal cannabis is one of the fastest-growing industries in the United States. As of January 2021, there were 321,000 full-time-equivalent jobs — 32% growth since 2020 and 161% growth since 2017. The BDSA estimates total sales in 2021 were around $25 billion and expects the market to reach $30 billion in 2022.
Despite the incredible growth, there’s one area the industry continues to lag behind: diversity. Let’s take a look.
The Importance of Diversity in the Cannabis Industry
Increasing diversity in the cannabis industry can have a substantial positive impact. A more diverse group of business owners and employees can increase trust. New minority consumers may feel more comfortable coming into a dispensary and trying cannabis. People with different experiences can offer unique perspectives to make products more accessible to more consumers.
With more diversity, the industry can continue to grow. It can enable entrepreneurs to establish small businesses in their local communities, expanding cannabis’ reach. At the same time, those businesses can create jobs for residents, which can help the communities thrive, too.
Cannabusiness and Diversity Statistics
According to a 2021 report from MJBiz Daily, the percentage of minorities holding executive-level positions stands at only 13.1%. More notably, that figure is down from 28% in 2019. Diversity seems to be falling behind despite industry growth and increased efforts to improve it.
On the other hand, the overall employment rate of minorities in the industry offers a more positive outlook. Many cannabis businesses have reported significantly higher percentages of minority employees (32% on average) than other industries throughout the United States (22% on average).
Dispensary Owner Demographics
Robust data detailing minority ownership is difficult to find. So, how many Black-owned dispensaries are there? What about Latino or Asian-owned shops?
The report from MJBiz Daily looked at three states to provide a “snapshot” of the industry as a whole:
Black-owned businesses: 3.9%
Indigenous-owned businesses: 1.2%
Asian/Pacific Islander-owned businesses: 4.7%
Latino-owned businesses: 7.3%
White/Caucasian-owned businesses: 75.2%
Challenges to Diversity and Equity in Cannabusiness
One of the most significant challenges to improving diversity in the cannabis industry is the entry barrier. Breaking into the industry is cost-prohibitive. Between necessary startup costs and the price of an application and licensing, it can cost tens of thousands (if not more) to start a business. And, since cannabis is still illegal on the federal level, accessing financing solutions through banks is nearly impossible.
There’s also the issue of disproportionately higher arrests and convictions among minorities (Black and African Americans, in particular). Many states that have legalized cannabis also included provisions limiting access for individuals with felony convictions on their records, presenting another roadblock.
How Can We Increase Diversity?
We still have a long way to go to increase diversity in the cannabis industry. Decriminalizing and legalizing cannabis on a federal level could make a substantial difference. That could create a path for banks to extend loans, including SBA loans, to aspiring entrepreneurs. Expunging cannabis-related convictions from an individual’s criminal record would also help.
On a smaller scale, businesses can also promote more diversity within their companies. Some approaches to take include:
- Cultivating a more inclusive culture
- Establishing a sense of belonging for all employees
- Creating mentorship opportunities and paths for advancement
Building a More Diverse Industry
Improving diversity in the cannabis industry is vital. It can increase access, help communities thrive, and allow the industry to keep growing. While the federal government has yet to legalize cannabis, advocacy, education, and access to alternative solutions (including financial ones) can help.
At Bespoke Financial, we empower cannabis businesses to navigate industry challenges and achieve their full potential with fast, non-dilutive, flexible financing solutions. Contact us to learn more or start your application today.