As the cannabis sector goes mainstream, a business accelerator aims to level the playing field for women entrepreneurs.
Having spent several years working as a cannabis lawyer in Oregon, Amy Margolis has seen firsthand how the marijuana industry has quickly gone mainstream in North America after several states and Canada legalized the product over the past few years.
Investors have poured capital into the industry, resulting in a spate of recent mergers and acquisitions in the past couple of months. Large deals include investment firm Acreage Holdings’s acquisition of edibles maker Form Factory; Curaleaf Holdings’s acquisition of Cura Cannabis Solutions in a $1 billion buyout; and Vertical’s acquisition of UMBLA, a holding company that owns several marijuana brands, in a $463 million deal.
But as the industry has evolved, Margolis has been disturbed by the unequal access to capital provided by venture capitalists.
When the recreational use of cannabis was first legalized in Oregon in 2014, it was a new industry with equal access to entry. Anybody could apply for a license to open a store or grow marijuana. The brand-new sector held promise for breaking down gender barriers as it was not beset by traditional business biases.
But as investors have rushed into the sector, women are taking a back seat to capital access, says Margolis. “I have been operating as an attorney in cannabis for a long time. I have seen women losing their spot as traditional capital has come in.”
Venture capitalists are well-known for discriminating against women. In 2017 only 2.2% of venture funding went to women business founders, and only a fraction of that went to women of color.
To even out the playing field, Margolis founded The Initiative last year, a Portland accelerator specifically for female entrepreneurs and executives. Thought to be the world’s first, the program provides advice and education to women on how to grow a business, and it connects women to investors. Backers include cannabis dispensary operator Nectar, law firm Miller Nash Graham & Dunn and investor iAnthus Capital Holdings.
The first cohort of eight women entrepreneurs graduated in May this year.
Amy Margolis, the founder of The Initiative cannabis business accelerator
The Initiative focuses on supporting businesses specifically in the cannabis consumer packaged goods sector, such as edibles, topicals and tinctures. This area of the cannabis industry requires the least capital to grow, explains Margolis.
“People are really innovative in the consumer-packaged sector both on medical and recreational use,” she says.
Margolis plays down concerns the cannabis market is saturated with oversupply. A large increase in the cultivation of marijuana over the past couple of years has led to a slump in price for the product. But Margolis says fears of saturation are overblown.
“Saturation is in cultivation. But we are starting to hear from farmers that prices are going up,” she says. “The market has stabilized.”
She sees the consumer-packaged sector for cannabis as a strong growth area because no brand has yet dominated the space.
“Somewhere out there is the next Hershey,” she says.
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