By By Dawn Cunningham ’85
In America’s fastest growing industry, job listings increased by 445 percent and consumer spending rose by 31 percent last year, reaching $8.5 billion. Yet few colleges offer curricula to prepare their students for careers in this field. That’s because this industry’s product is marijuana.
Cannabis—the scientific name for the plant—remains illegal under US federal law. It’s still listed under Schedule 1 of the Controlled Substances Act, a category intended for substances with a high potential for abuse and no medical value, such as heroin. Nevertheless, 30 states allow medical marijuana use and nine of these also allow recreational use. In California—the first state to permit medical marijuana—recreational use has been legal since the start of this year.
At colleges like Mills that receive federal funds—including federal financial aid for students—the Drug Free Schools and Communities Act strictly prohibits marijuana use. This campus ban persists even in states where cannabis has become legal.
But you don’t have to inhale to prepare for a career in cannabis. On a number of campuses, students and recent graduates are taking the initiative to educate themselves about the industry. At UC Berkeley, for instance, students organized a course called High Margins: The Business of Legal Cannabis and formed the Berkeley Cannabis Industry Club, which offers the opportunity to network with cannabis companies.
In Mills College’s Public Policy Program, Ryan Reaves, MPP ’19, is completing a policy report on women in cannabis. Meanwhile, to deepen his understanding of regulatory issues, he’s working at NUG, a licensed cannabis manufacturer that produces concentrates, such as those used in vape pens. In the MBA program’s social entrepreneurship course last spring, four students wrote business plans focusing on cannabis.
In March, Naima McQueen, MBA ’18, and Rebecca Robles, MBA/MPP ’19, co-organized the annual conference of the Lorry I. Lokey School of Business and Public Policy at Mills. Partly in response to their peers’ interests, they included a panel discussion on the cannabis industry, which drew a standing-roomonly crowd of students, alumnae, community members, and industry insiders. But rather than sharing tips on how to get rich off the green rush, the conversation focused squarely on social justice. “We wanted to explore the potential in the industry for building wealth for the same populations who have previously been criminalized for selling marijuana,” McQueen explains.
In 2013, the American Civil Liberties Union found that a black person was 3.73 times more likely to be arrested for marijuana possession than a white person, even though both groups used marijuana at similar rates. Yet three years later, only one percent of cannabis dispensaries across the country
were owned by African Americans. McQueen says: “As a business school with commitment to equity, diversity, and inclusion, we should hold space for a conversation about these issues in the cannabis industry.”
As in any field, Mills students look to alumnae to understand the career paths open to them and to gain critical perspectives on the cannabis space. Two of the speakers that McQueen and Robles invited to the Lokey School panel were alumnae: La Wanda Knox, MBA ’10, and Claudia Mercado ’06, MBA ’07. Along with Barbara Lee ’73, Angela Bacca, MBA ’12, and Kirk Miller, MBA ’15, these graduates have been shaping new business models, pushing for legislative reform, and changing public opinion around cannabis at the local, state, and national levels.
Lee plays a central role in the national conversation. As the US Representative for California’s 13th congressional district, which includes Oakland, she has been advocating for changes in federal marijuana law for more than a decade. Last January, Lee introduced two cannabis-related bills in the House, both currently being considered by House committees: the REFER Act would prevent federal government intrusion in state and local marijuana laws; and the Marijuana Justice Act would create a fund for cannabis job training in communities disproportionately affected by marijuana arrests. It would also expunge convictions for marijuana use and possession.
In June, Lee presented a resolution to encourage equity in the cannabis industry. It raised many of the same concerns that the panel discussion organized by McQueen and Robles did. Lee said: “We must learn from the failed War on Drugs and ensure that entrepreneurs of color are included in this expanding industry. Due to unequal criminalization rates and disparities in access to capital, people of color are being locked out of the new and thriving legal cannabis trade. We need to address the systemic exclusion and discrimination at play.”
Lee’s resolution, as well as the Lokey School panel discussion, reflect concerns that run particularly deep in Oakland. The city is recognized as a center of innovation in the cannabis industry, just as Silicon Valley serves as a center of innovation for the tech industry. In 2004, Oakland became the first American city to issue a permit for a medical marijuana dispensary; a few years later, it became the first city to tax marijuana. With the advent of recreational cannabis, the city instituted new regulations for licensing businesses; now it has the greatest number of cannabis licensees of any city in California. It’s also home to Oaksterdam University, which has positioned itself as the world’s premier cannabis college. Miller studied at Oaksterdam after finishing his MBA at Mills. “If you’re in Oakland and you don’t consider the possibilities presented by the cannabis industry, you’re sticking your head in the sand,” he says.
The downside of recreational licensing is what some in Oakland’s marijuana community have called the “Wal-Marting of weed.” Reaves, the public policy student, explains that older medical marijuana regulations encouraged the formation of collectives of patients and caregivers who pooled resources to cultivate and share cannabis. “Businesses could be run out of homes and costs kept low, creating opportunities for women and people of color,” he says. But the new recreational laws require most growers to apply for commercial licenses and comply with strict regulations— which aren’t barriers for large companies, but can put small entrepreneurs out of business. In addition, as successful cannabis businesses grow, they tend to import executives from mainstream corporations. Marijuana Business Daily reports that this trend contributed to a 9 percentage point fall in the proportion of executive positions held by women in the industry between 2015 and 2017.
“The social justice movement in Oakland made marijuana happen, but now the industry is being eaten alive by Wall Street,” says Angela Bacca, MBA ’12, who is writing a book of investigative journalism on the industry and how it evolved in Oakland between 2009 and 2012. “The same thing is happening in the cannabis industry that has happened in other industries: mergers and acquisitions. The people most affected by the drug war—women, people of color, poor people, gay and transgender people—usually aren’t the ones making the money in this industry.”
Bacca witnessed the evolution of cannabis in Oakland firsthand. As an undergraduate at San Francisco State University, she found marijuana to be more effective for treating her Crohn’s disease, an inflammatory bowel disorder, than prescription pharmaceuticals. She began writing about medical marijuana for the student paper. In 2008, after graduating with a BA in journalism, she landed a job as an editorial assistant to Ed Rosenthal, a pioneering, Oakland-based cannabis advocate and a prolific writer on the subject.
“The cannabis scene in the Bay Area was not as professional and mature then as it is now,” Bacca recalls. “But then Obama became president, and his administration issued the Ogden memo,” which deprioritized federal prosecution of medical marijuana use. “This opened the door to the green rush, and I saw cannabis turn into a big business overnight. I thought an MBA might be useful for me, so I started at Mills in 2010.”
Her first semester coincided with a 2010 California ballot initiative to legalize recreational marijuana, known as Proposition 19. Rosenthal was teaching courses at Oaksterdam University, and Bacca served as his teaching assistant. “I was spending days at Oaksterdam, where they were running the initiative, and my nights at Mills. It was interesting studying business while watching a business take shape out of thin air.” Although Prop 19 was defeated, the City of Oakland soon began laying the regulatory groundwork for industrial cannabis cultivation.
Meanwhile, Bacca kept a hand in journalism, writing for Skunk, a cannabis growers’ magazine, and later cofounding Ladybud.com, a women’s magazine with a focus on marijuana activism. In 2012, she says, “I starting covering a story missing from the mainstream press: children being taken away from their homes and put into foster care because their parents used cannabis, even if it was legal under California law.” These investigations helped launch her into a broader activist role. She moved to Utah and, as co-founder and director of media relations for the Drug Policy Project of Utah, promoted a medical marijuana bill in 2015 that won strong support in opinion polls, although it failed in the Utah Senate by one vote.
Today Bacca lives in Portland, Oregon, but continues to work on the campaign to legalize medical marijuana in Utah—this time through a measure on the November 6 ballot. Meanwhile, she serves on the board of Oregon NORML, the state branch of the National Organization for the Reform of Marijuana Laws. “Cannabis is still not fully legal,” she says. “People still go to jail because of it and lose their kids. We’re still preventing sick people from having it and giving them more dangerous pharmaceutical
drugs. That’s why I’m so passionate about it.”
Oakland has been seeking to resist domination of the cannabis industry by big business: it was the first city in California to initiate an “equity program,” which minimizes barriers to cannabis licensing for people who have been the most victimized by the war on drugs. This group is defined as residents who earn 80 percent of the average income in the city and who either have had cannabis convictions since 1996 or live in certain East Oakland neighborhoods with a history of high cannabis-related arrest rates.
In addition to reserving half of its cannabis licenses for applicants who qualify for the equity program, the City of Oakland is setting up an interest-free loan program for equity applicants. It also provides them with the opportunity to be incubated in rent-free space by a better-financed cannabis business (NUG, the cannabis manufacturer Reaves works for, is one such incubator) and with technical assistance to help them navigate the complex licensing process.
(Photo credit: Morgan Shidler)
This technical assistance is provided by Make Green Go, a local consulting firm established by La Wanda Knox. “Everybody is watching Oakland,” Knox says. “There’s a lot of pressure on us to get it right. We want to be an example of how to help communities that have been disadvantaged by the war on drugs, and how to help businesses thrive.” Three other cities—San Francisco, Los Angeles, and Sacramento—launched equity programs after Oakland did. On September 26, California Governor Jerry Brown approved a bill to establish a statewide equity program.
Although the design of Oakland’s equity program has come under criticism—some say it should be open to a broader group of people of color, while others say there isn’t enough financial support for equity applicants—the program has had some undeniable success. “Before we started our work,” Knox says, “there were more general applicants than equity applicants. Now it’s reversed: we have more equity than general applicants.”
Knox’s preparation for this work goes back to when she began using medical marijuana for a thyroid disorder. She recalls: “I would go to a dispensary to get my medicine. It was a dark, closet-like room with shelves of product in the back of a café, and you had to know the secret passageways to get back there. But I saw right away that this was a retail opportunity.”
A Bay Area native, Knox had been a business consultant for many years with 7-Eleven. She wanted to expand her skills in entrepreneurship to open her own business, so she enrolled in the Mills MBA program. There, she met Bacca and Mercado. “Mills helped me understand the importance of building and maintaining a network of like-minded people who can help each other achieve their goals.”
Knox started several businesses after completing her MBA. About four years ago, she launched a mobile cannabis testing laboratory, Pure Bud Testing, along with her husband and his family. Her husband is a cannabis attorney; his mother, a retired anesthesiologist, founded American Cannabinoid Clinics in Portland. “We wanted to test products for potency,” Knox explains. “We knew quality control would make or break the industry. But we were too far ahead of the curve to be profitable. Testing wasn’t required in California until July of this year, and back then not enough businesses understood how testing protected them.”
After Pure Bud closed, Knox began offering workshops on regulatory compliance for medical marijuana businesses through Make Green Go. But her biggest project wasn’t cannabis related: she taught minority entrepreneurs at the Oakland African American Chamber of Commerce how to develop business plans.
By the time the city set up its equity program in 2016, these experiences positioned Make Green Go to win the program’s technical assistance contract. Since then, Knox’s firm has worked with hundreds of equity applicants, offering them an online bootcamp, workshops and conferences, and referrals to attorneys, accountants, insurers, and other business services. Make Green Go is currently expanding its services to help applicants apply for the California state license, an additional requirement beyond the city license.
“I’m working in the industry I’ve always wanted to work in, with the people I’ve always wanted to help,” Knox says. “I’m doing exactly what I’m meant to do. It doesn’t get any more perfect than this.”
(Photo credit: Paul Chinn/San Francisco Chronicle/Polaris)
One of the first businesses that Knox assisted through Oakland’s equity program was Calibueno, a cannabis distributor co-founded and co-owned by Claudia Mercado. Knox helped Mercado bring Calibueno into compliance with various requirements for the state license.
In the decade after graduating from Mills, Mercado had gained experience with sales and marketing in variety of corporations, including the wine retailer JJ Buckley. “The wine and the weed industry have a lot of parallels,” Mercado observes. “Much of what I’m trying to do now is based on what I learned there.”
Despite her corporate resume, Mercado felt pulled in a different direction. “I’ve always been an entrepreneur,” she says. “I was selling chile-flavored popsicles during recess in elementary school.” She learned to value entrepreneurship from her family. Until she was eight years old, Mercado lived in Zacatecas, Mexico, with her grandparents, who owned a farm; her father also owned a business there. Mercado had her first taste of running her own business in 2016, when she and her partner, a chef, opened Aztecali, a Mexican restaurant in Oakland.
Mercado began to explore medical marijuana when her mother was afflicted with a persistent pain in her left arm. Doctors prescribed ibuprofen, which didn’t help much. So Mercado researched alternative treatments, learned about a topical cannabis cream, and convinced her mother to try it. The cream worked. Mercado recognized the importance of high-quality, affordable pain medication. Since 2012, she’d been serving on the Osteopathic Medical Board of California as a public board member, appointed by the Senate Rules Committee. “The board was hearing a lot about the issue of opiate addiction,” she says. “With cannabis, I saw an opportunity to bring quality medicine to people.” In fact, states where medical marijuana has been legalized have seen significant reductions in opiate prescriptions.
Calibueno, Mercado’s company, prepares cannabis for wholesaling to retailers, operating out of a cavernous warehouse space in Jingletown, a post-industrial neighborhood in East Oakland where Mercado lived for more than 15 years of her early adulthood. Calibueno procures flowers from farmers and then hires a certified laboratory to test the product for pesticides and other contaminants as well as levels of THC, the psychoactive component of cannabis, and terpene, essential oils that enhance the high from THC and are believed to have health benefits. If the flowers pass inspection, Calibueno packages them in containers of various sizes—most commonly a jar that holds an “eighth” (3.5 grams)—for resale to retailers.
Only licensed distributors like Calibueno can handle the testing and packaging required by California law. “We are the gatekeepers of public safety. We take care of the product like a food or pharmaceutical medicine,” Mercado says. Nearly 20 percent of marijuana products in California have failed the tests since they became a requirement on July 1, creating bottlenecks in the supply chain.
These challenges provided opportunities for entrepreneurs like Mercado. She explains: “The hardest part of starting out in this business has been getting the right information in order to predict the way the market would evolve. But we’ve been able to jump the regulatory hurdles quicker than some of our competitors.” Mercado has a vision of ways her company and the industry could grow. “We want to help farmers stay in business. We’re focused on building relationships with farmers and retailers who share our values, including being environmentally conscious, caring for each other as a community, and giving back to society.”
Cannabis companies can’t be managed quite like normal businesses—even in California—because of the plant’s federal illegality. Few banks will open accounts for businesses who “touch the plant,” so many operate on a cash-only basis. Insurance policies typically exclude “criminal acts.” To address
the latter, California’s insurance commissioner has been working with insurers to develop policies for the state’s licensed businesses.
Kirk Miller is vice president of risk management cannabis services for Emergent, a San Francisco-based insurance brokerage specializing in the cannabis industry. Originally from Indiana, Miller worked in the insurance field before deciding to pursue an MBA. He wanted a program with a focus on social responsibility, so chose the Lokey School. “Many of my courses at Mills involved collaboration and solving problems, both of which are important for navigating the cannabis industry,” he says.
After graduating, Miller and a classmate, Scott Watkins, MBA/MPP ’16, took an executive course at Oaksterdam University and began consulting with cannabis businesses who were coming to grips with legalization and the attendant regulations. Miller helped a well-known grower in Oakland bring its nursery facilities into compliance with the city requirements.
(Photo credit: Allisun Novak)
Miller’s LinkedIn profile, straddling the cannabis and insurance industries, came to the attention of a recruiter for Emergent soon after the company launched last year. “My background in risk management and my personal involvement in the early efforts of the cannabis industry has enabled me to act as a bridge,” he says. “A lot of early adopters in the cannabis space don’t understand how insurance can protect them. On the other hand, many insurance professionals aren’t in touch with the needs of the cannabis industry. I bridge that gap.”
At Emergent, Miller’s clients represent the spectrum of cannabis businesses. “We cover everything from cultivation to manufacturing to distribution to dispensaries to investment funds,” he says. One client, a grower, was licensed through Oakland’s equity program.
Miller’s role is to help clients find insurance that covers their business and doesn’t exclude the cannabis trade as a criminal act. But even with the best insurance currently available, cannabis entrepreneurs face greater risks than other companies do. In addition to conducting transactions with cash—which raises the risk of theft—growers can’t get insurance to protect outdoor crops against fires. So Miller also helps his clients mitigate risks. He explains: “We first assess what a business’s risk exposures are. Depending on the risk profile, it could be managed by putting worker-safety measures in place, managing cash effectively, protecting patents and intellectual property, practicing good corporate governance, or addressing cybersecurity.”
Like others in the cannabis industry, Miller’s work includes advocacy. “We’re not just working with clients and other cannabis business,” he says. “We’re lobbying nationally and regionally to create a more robust cannabis insurance market.”
Analysts expect strong growth to continue in the legalized cannabis industry. In four more years, consumer spending on cannabis is projected to double in value, reaching $23 billion by 2022. But many uncertainties remain. At the start of the year, Attorney General Jeff Sessions rescinded an Obama-era directive that deprioritized federal action against recreational marijuana users and businesses.
Knox and Miller think it’s unlikely that businesses operating in compliance with state law will face prosecution in the future. But Bacca is concerned about the status of gray-market growers: “Not all producers have the means to enter the new legal market, and law enforcement is already cracking down on those who are unlicensed.”
She also believes medical marijuana patients could lose out. She sees a trend developing to define “botanical” marijuana (the flower or other parts of the plant) as a recreational product, while patients are pushed toward FDA-approved tinctures and other standardized, pharmaceutical extracts, which she says are less effective for many patients than a genetically diverse range of botanicals. Bacca, however, is working on a project that could raise awareness of cannabis’s genetic diversity: a technology that would engage cannabis users in helping to decode and understand cannabis DNA.
Miller points to two factors that he hopes will sustain diversity—of people and plants—in the industry. One is the spread of equity programs. “Each local jurisdiction needs to make equity a priority,” he says. “We were locking up people for years because of this plant, and now we need to make reparations through equity programs.” The other is California’s love of artisanal goods. “Look at the beer brewing industry,” Miller remarks. “There’s been lots of consolidation, but there are constantly new entrants creating original microbrews. In the cannabis industry there’s still an opportunity for small entrepreneurs to offer unique products.”
Knox says, “There are plenty of people who are in the industry just to make money. But I’m seeing more people like Claudia—people who care about cannabis as a medicine. They are driven because they know it can help people.”
“This business is not for everybody,” cautions Mercado. “You can’t come in and be an overnight success.” Still, she says: “It’s important for Mills students to understand there’s a new industry with career opportunities. If you can carve your niche at the beginning of the industry, you’ll be around for the long term. It’s a good time for women and people of color who want to be bold and can hold on through the ups and downs over the next few years.” ◆
