“I’ve always been around the business of cannabis. My family grew weed in the basement and sold it on the street,” said Tre Hobbs, the 28-year-old founder of Neighborhood Essentials. “I saw it from seed to sale at a young age, but I also witnessed the violence and poverty that came with that.”
A promising wide receiver derailed by an injury on his way to the National Football League, Detroit native Hobbs applied for a retail, cultivation, and processing license through San Francisco’s social equity program, opening the door for him to capitalize on opportunities earmarked for communities impacted by the war on drugs. “I see cannabis as a way to flip the script,” he said. “I could take something that was used against my community and use it to rebuild my community.”
Hobbs, a recent graduate of delivery platform Eaze’s second Momentum accelerator class for social equity businesses, opted to launch his brand in the Bay Area instead of at home because a thriving network of Black- and Brown-owned cannabis businesses has developed there in recent years. Through this community, Hobbs found support for Neighborhood Essentials. His flower is sourced by Morris Kelly, founder of the iconic SF Roots; the brand is distributed by Locals Equity, founded and led by Ron Kingston; and his packaging bears the new Equity Trade Certification mark, a federally recognized trade certification co-created by Oakland cannabis activist and entrepreneur Ramon Garcia.
Equity brands unite
Garcia, Kingston, and Kelly are part of a tight-knit group of complementary social equity businesses that formalized under the newly minted banner Original Equity Group. The purpose-driven, nonprofit organization pools licenses, resources, connections, and knowledge from across the supply chain to create a grassroots, vertically integrated network that helps businesses owned by equity applicants become successful.
For Garcia, having a federally recognized trade certification mark is the natural next step for a movement he started with Nina Parks (founder of Gift of Doja), Amber Senter (founder of Supernova Women and Conga Room), and more equity business owners in the Bay Area.
“I’ve been thinking about this for almost ten years,” said Garcia, whose efforts to carve out opportunities for those impacted by the war on drugs in Oakland have been replicated in states and municipalities across the country. As he sees it, the past year has created the shift in consciousness needed to move forward in a big way. “In the midst of this national conversation we’ve been having about systemic racism, we’ve seen a sea change with people wanting to know what they are spending their money on and who it’s going to,” he said. “The equity trade certification is the way we identify businesses that are part of that movement.”
Original Equity Group welcomes equity license applicants from any locality that has adopted an equity program and asks members to integrate the trade stamp onto cannabis packaging and other consumer-facing materials. The organization hopes the visibility generated by the certification mark and subsequent publicity will do for social equity what logos and campaigns did for Fair Trade and Certified Organic, thus stimulating meaningful demand at the consumer level.
“A lot of customers still don’t know what social equity is,” said Garcia. “Once we tell them it’s like Fair Trade and they are investing in businesses that are emerging from systemically oppressive and targeted policies like the war on drugs to build generational wealth in communities of color, people are happy to support it.”
Struggles and successes
Public interest in shopping consciously is backed up by data from Eaze. Since introducing a social equity menu last year, the company has sold more than $7 million in products from businesses owned by people of color.
“The success of our social equity menu and the supporting blog posts and social media show the interest is translating into sales,” said Ishaq Ali, Eaze’s senior social impact manager. “This puts real money in the pockets of social equity entrepreneurs, and it gets reinvested in communities of color.”
The successful experiment with digital shelf space should send signals to brick-and-mortar retailers, particularly given some of the promises retailers made to equity brands when they applied for adult-use licenses.
For Locals Equity Chief Executive Officer Kingston, locking in dedicated shelf space is paramount to success for the brands his company distributes. He recalls a popular pledge made by retail applicants during the first wave of legalization to dedicate 25 percent of shelf space to equity businesses. Demonstrable adherence to the vow largely has failed to materialize, he lamented. “A major goal of Locals Equity distro is to take advantage of that shelf space offer,” he said. “The problem is the high turnover of staff in dispensaries has meant so few people know about the commitment that was made in 2018.”
He believes a collective banner like Equity Trade Certification will help when negotiating with retailers and holding them accountable for the pledges they made in order to acquire licenses. An official certification mark also will help equity brands become more efficient in their outreach.
“By making a list of all of the retailers that have made commitments to promoting equity brands, we can help our brands find supportive people to work with and take advantage of the opportunities,” Garcia said. He believes the current system of auctioning off shelf space to well-capitalized brands with access to vast resources “isn’t promoting a free and fair market.” He also asserts racist policing policies over the past fifty years have played a significant role in hampering communities of color by blocking access to capital, education, and resources. “This dramatically impacted our ability to get the resources to help build our businesses,” Garcia said. “Yet, we’re supposed to compete on the same level as ‘Buddy’ who raised $50 million and has a degree from Stanford. How is that fair?”
But, he added, a groundswell of support is rising among retailers keen to address the issue. “We found a lot of retailers are willing to commit to shelf space,” he said. “All we need to do now is build the foundation that supports the effort.”
Investors and activists
While major investment has started to flow toward funds and brands connected to Black athletes and celebrities, many of the grassroots operators who have been most impacted by the war on drugs have yet to see anything trickle down.
“I don’t think these [venture capitalists] and private equity people work hard enough on these issues,” said Kingston. “They go to former sports stars because that’s what feels comfortable. They don’t want to go to the source and feel what’s really happening.”
Limited resources also create competition between equity businesses. “That’s not a good situation. It’s crabs in a bucket,” he added, opining well-intentioned outside investors would approach things completely differently if they did the work.
“There’s a lot of opportunity here,” he said. “If they came down here they would find the players who are making an impact. But it’s important we establish a structure that looks attractive to the outside investors who are willing to get involved in a way that matters.”
Participating equity brands already are applying the trade certification logo to their packaging, including aforementioned SF Roots, Gift of Doja, and Neighborhood Essentials as well as New Life, Sanctuary Farms, Kingston Royal, Higher Purpose, Cloud 9, James Henry, dreamt, Synch SF, 7th Wave, Potli, Chiefing, MAAT Apothecary, and Traphouse.
The group is working to raise $150,000 to hire two full-time staff members and launch a statewide marketing and publicity campaign, which is set to commence in August. Subsequent capital raises will go toward lobbyists to advocate for issues facing equity businesses specifically, a perspective Garcia feels isn’t being discussed in the national conversation.
“A lot of [these national advocacy groups] don’t have the perspectives of the operators or the grassroots folks who have been building the equity programs locally,” he said. “We want to present a unified voice of operators and actual applicants, because we’re actually seeing the policies, working through the processes, and seeing those impacts. We have a valid perspective on how to tweak those policies and make them better.”
Garcia envisions a future in which a national organization helps “all these equity businesses exist” by creating a thriving, supply-chain-wide network of groups, companies, and individuals that are committed to reinvesting in their respective communities. “That may be access to grants and loans, accountants, lawyers, business professionals, or educational resources to develop the soft and hard skills to run businesses successfully,” he said.
In Hobbs and his brand, the group believes it has a great case study for the nascent national potential of such a network. “I went from not knowing anything about the legal market to being able to release my own products,” said Hobbs. While he’s set to cut his teeth in the hyper-competitive California market, he aims to take the knowledge, experience, and access he has gained back to his hometown of Detroit—a city that is 78-percent Black and has a notorious reputation for drugs, violent crime, and discriminatory policing. While the constitutionality of the city’s specific approach to granting social equity licenses is debated in federal court, Hobbs is doing everything he can to build an impactful business from the ground up. “I’m really focused on vertical integration,” he said. “I want to grow, process, and sell my own product.
“I always wanted to give back to my community and help people rise up out of there,” added Hobbs. “I think the best way for me to do that is by building a stable business, creating job opportunities and generational wealth.”