The dialogue you’re about to read is nothing short of a wake up call.
Amidst celebration of cannabis liberation measures exists an authentic threat to equity for women and people of color within the industry. The struggle is real, and Andrea Unsworth’s story couldn’t illustrate the bitter truth more clearly.
A former credit rating analyst for Moody’s Investor Service, she was one of the first to examine the early impact of medical marijuana taxes on general funds within western states. Eventually, Andrea decided to launch a cannabis venture of her own. The City of Oakland only offered 8 business licenses, however. Undaunted by legislative limitations, Andrea raised enough capital ($150,000 to be exact) to found a delivery service – Stash Twist – in 2014. She started it with her dad, a veteran who’d experienced the healing power of cannabis when it freed him of a 15 year dependence on Vicodin.
The father and daughter team ran a solid enterprise for 3 whole years, that is, until they were forced to close its doors on 12/31/17 – courtesy of Prop 64. In California, recreational sales ushered in a whole new ball game: a game many industry veterans and people of color are completely ineligible to play.
What appeared to be a setback has actually helped Andrea Unsworth dig deeper into her true passion for community empowerment. In addition to being a chapter lead for Women Grow and co-founder of Supernova Women, Andrea has established her own cannabis consulting firm. She puts her expertise and keen insight into the perilous landscape of California’s cannabis industry to full use in guiding ganjapreneurial hopefuls through the complex licensing application process.
What was it like closing Stash Twist?
It was really hard. Having to lay off my father isn’t anything I ever thought I’d have to do.
How did you come to the decision to end Stash Twist?
When Prop 64 went into effect, I legally had to apply for a new permit, and get a new space within the green zone where rent is three times more than the average rent in the Bay Area. There’s a 10% tax for adult use, plus a 5% tax for medical, plus a 15% excise tax, plus a 9.25% sales tax, so for me, I had to wonder why someone would buy an 8th that used to be $50, and now I have to charge them $74? I’m going to loose the majority of my patients because there still is a gray market. That’s just a fact here in California.
Wanting to abide by the rules and play the game the right way is expensive. It would’ve been okay if I was just entering the industry with $200,000, but we were already established, already had our patients, and already knew we wanted to be a small business. That was the game we wanted to play. But it became impossible, they basically shut out quite a few small business by creating such an onerous tax system that you couldn’t transition from where you already were. You had to come in from scratch.
It’s really appealing to someone from Colorado to come in and say “California has open doors” but if you’re already here doing okay and abiding by the rules, your life just got a whole lot harder. A lot of friends I’ve met over the years have completely left the industry.
In a nutshell, how does Prop 64 facilitate this inequity?
Recently, Oakland issued 8 new dispensary applications for the entire city. Four go to general applicants and four to equity applicants – those harmed the most by the War on Drugs. On January 31 there was a lottery for the 4 general applicants. This is how it works: unless you’ve partnered with an equity applicant and are incubating them, you have no chance of getting a dispensary. I don’t know who all those 4 owners are but I can pretty much guarantee that they were the ones who were incubating applicants – which is not necessarily a problem. What I’m saying is: What happens if you’re in the middle like me? I’m not an equity applicant, I don’t have that much money, I started Stash Twist with $150,000, yet for me to play this game I would have to incubate other applicants as part of my process.
Why is that?
It’s a one to one system. The city won’t give out a dispensary license to a general applicant unless there’s a corresponding equity applicant applying as well. So if you haven’t been arrested or live in one of the areas affected by the War on Drugs, you won’t qualify as an equity applicant. I’m competing in the same pool with White folks with tons of money from out-of-state.
For me to do the application, I would have to sponsor at least one (and some are sponsoring more than one) equity applicant, which means I’d have to pay their rent for 3 years in addition to my own. Sponsors don’t have to fund anything else, or give marketing advice. They are under no obligation to support the equity applicant beyond the rent. Where’s room for the middle man? For all of us who haven’t been arrested or don’t have tons of money?
These new regulations sound like a double-edged sword for women and people of color in the industry.
Yes, I think the equity programs are well intentioned but without funding, without relief of application fees, without business support, it’s not sustainable. It’s hard for someone who’s been incarcerated for a cannabis felony and hasn’t had the chance to raise capital, to be expected to run a successful business. Are these same people going to be able to reapply the following year to renew that permit? Probably not. Not if you haven’t informed them as to how to operate a business or set them up with a COO, CEO or strategy session or something.
The biggest problem is [the lack of] the start up capital. Any time you want to play that game, you have to come in with 6 figures and up. For people who want to open a dispensary – if you don’t have access to a million dollars, there’s no conversation to be had. It’s become way too competitive.
In some ways it seems like there’s been one step forwards two steps back.
Yes, and I think the steps forward have been for the folks who have never been in the industry before and the steps back have been for the ones who have, unfortunately.
Are you currently working on a means to help the “middle man” thrive within the cannabis space?
Yes. As a consultant, my focus is on the folks who are doing applications for business licenses. It’s totally relationship based. It’s more about building a business rather than filling out an application.
To start, there is a $5000 application fee. In the Bay Area, the going rate for application consultation fees is anywhere from $10,000-$20,000. I charge less than that. I work with “middle men,” those smaller folks who have difficulty competing. I am able to provide short cuts, advice and help people think outside of the box to avoid some of the traps set in place by new regulations. That’s priceless to me, and what I’d prefer to do rather than trying to focus on my own brand or dispensary. Maybe that will come in the future but I feel there are plenty of opportunities to help all these Brown and Black folks that are being overlooked and overrun.
What do you advise people who are interested in going full steam ahead with their ganjapreneurial dreams under these unfortunate circumstances?
Number one, [owning a] dispensary is not the only way to make money. There are many parts of the supply chain. Two, invest locally. A lot of brands exist right now. There are folks who need 40-50k just to get just to get the funds to continue operating as they’ve done for years. They may have a cult following but now, because of the new regulations, they lack funding to operate as they’ve done in the past.
Can you talk about how you’re able to make a difference as a part of Supernova Women?
Yes, Supernova Women has always been about getting education to folks as cheaply and efficiently as possible so they can make informed decisions about navigating the industry and learn how to be strategic.
Do you all have any events in the works?
We have our first podcast coming out on February 5th. We also have a collaborative event on February 25th. We participated in ICBC in San Francisco last weekend and we plan on pushing the equity conversation in other cities as they drop applications.
What is your hope for the future of women and POC in the industry?
I hope that we will continue to build and put more POC and women in positions of power. I would love to see more Black and Brown investors. I would love to see some of the Black celebs funding some of these companies. Where’s Snoop Dog? All of the women I see on his show are caucasian. I would love to see a little more diversity. It would be great to get support from groups like the NAACP, the church, or other aspects of the Black community involved, too. We need all the help we can get.
I hope we can reframe the dialogue. It’s not about selling weed, it’s about creating jobs for people that look like us so we’re not just security guards at the dispensary. So we are actually running the dispensary; so that we are accountants and lawyers. Being a part of that narrative of empowerment for women is important to me.