If you told me four years ago that I’d be launching a cannabis brand from Mexico City into the U.S. market during the deadliest pandemic of the 21st century, I would have told you that you’ve been smoking too much weed.
Yet here we are, citizens of the world grieving from the loss of 2.86 million people and counting while still reckoning with the other, oldest pandemic of our time: racism. In this tragic storm of events, against the backdrop of the November 2020 elections, my business partner, Karina Primelles, and I gave birth to our baby hemp brand, Xula. We are a Latina- and Black-owned hemp brand based in Mexico City, grown organically in the USA. Our herbal formulas focus on anxiety, menstrual cramps, sleep, menopause, and hormonal toning. We center our work on helping women and femmes feel good in their bodies through the transformative power of hemp and herbs.
You don’t need a degree from Oaksterdam or Oxford to know that starting a cannabis business is difficult. I’ve spent the past 16 years working in various areas of the industry, and it’s saddening to see that women executives still only make up 26.8% of a majority-white and male-dominated arena. According to the last comprehensive survey on women and other marginalized groups in weed, only 4.3% of executives are Black, 5.7% are Latinx, and 2.4% are Asian. As of now there isn’t enough data to show how many Indigenous executives exist—a gut-wrenching fact when you consider that most of the ganja grown in the U.S. is on land stolen from them.
Even for wealthy white tech bros, entering the cannabis space, particularly hemp, is challenging. Coupled with a pandemic, it’s almost a miracle that Xula exists. For those of you courageous and curious enough to want to embark on launching a hemp or cannabis company: Instead of using this space to hype up my brand, I’d much rather try to illuminate some of the hurdles you may come up against so that you can be more informed with the tools to thrive.
CBD Is Still Weed
By the time I part my lips to say that I “work in cannabis,” I’m almost immediately met with an eye roll or a chuckle. Even with the 2018 Farm Bill, which legalized CBD in 50 states, plus legislation in 48 states that allows for some type of medical or recreational cannabis, many people still have their old prejudices about weed. Undeterred by sweeping adult-use laws, a thick residue of social stigma associated with marijuana remains. And that translates into business.
Conflicting Laws
Federal law still classifies marijuana as a Schedule I substance, meaning that, in the eyes of the U.S. government, cannabis has no accepted medical use and has the highest potential for abuse. Some examples of other Schedule I drugs are: heroin, methylenedioxymethamphetamine (ecstasy), and peyote. Just a class below is Schedule II, which is considered slightly less dangerous than Schedule I, with potential for medical use. Some classified Schedule II drugs are Vicodin, cocaine, oxycodone (OxyContin), and fentanyl.
Although hemp—the plant matter found in Xula products—does come from the same species as marijuana or Cannabis sativa, it does not share the same chemical composition when it comes to cannabinoid makeup. Unlike marijuana, hemp has been genetically grown for its extremely low concentration of THC, the compound that gives you the high. Although different in their effects, hemp still looks like, smells like, and tastes like weed. If you get pulled over with it, good luck explaining to the cops what the difference is.
Rigid Regulations
When the Farm Bill was finally signed, hemp and its production and sales were formally legalized and removed from the controlled-substance list mentioned previously. This bill also allowed that hemp products and businesses could be insured. Despite that, when legalization came into play, business owners were still faced with severe and expensive challenges. One is that the U.S. government may still at any time be able to stop hemp and CBD production for whatever reason, in the face of it being federally legal. The FDA has also made it particularly confusing to market to consumers, with specific types of language and words—such as menopause, cramps, and even relief—deemed high-risk for usage on packaging, websites, and other informative content, as using any medical term is considered a medical claim. For the past two years, they have been unable to decide whether hemp and CBD are classified herbal supplements or pharmaceutical drugs. So we operate in a gray area where a hemp business could be flagged, reported, and punished if claims are made that do not abide by the pharmaceutical or supplement guidelines.
Payment-Processing Drama
Though a legal herbal substance, CBD and hemp are still considered high-risk entities. This makes most credit-card companies reluctant to allow these types of businesses to transact through their platforms. As such, the majority of cannabis businesses cannot accept Apple payments, PayPal, Stripe, or many other widely known, safe forms of payment processing. This makes some customers feel uneasy about the security of paying for products and means a lot of hemp businesses have to utilize companies that offer payment processing at exorbitant rates. Xula currently pays anywhere from 4.5 to 6.5% versus the normal 2.7 to 3% to process each transaction. If it weren’t legal it would be what some in the underground weed market call extortion.
Shipping Stress
Hemp has been made legal in almost every state, so much so that you find it sold everywhere from gas stations to grocery stores and cute boutique pet shops. But some customers, clients, and vendors feel anxious and confused about whether or not the shipping of CBD and hemp products is legal across state lines. Some states like Idaho and Mississippi have successfully banned hemp production within state borders, making it pandemonium for cultivators and suppliers to send products to buyers. One cannabis business owner and veteran was facing up to 18 years in Oklahoma when he was stopped with a load of state-certified hemp from Kentucky. Another truckload with 7,000 pounds of weed was confiscated by Idaho State Police, only for tests to show that it was industrial hemp containing less than 0.3% of THC.
The Green Tax
You need deep pockets to apply for an expensive and valid license to operate a CBD business or any other marijuana business. There is no concrete way to know that your license application will be approved by the state in which you filed. Marijuana-specific companies face higher federal tax rates of 40 to 80% versus 21% corporate. These numbers add up and make the cost of making tinctures, balms, lubes, and suppositories much higher than herbal supplements made without them. The consumers also end up having to pay this green tax, making weed less accessible for people who possibly need it the most.
That Said…
In the face of my laundry list of hurdles, Karina and I still made it out alive. We are only five months into launch and more than anything grateful to exist to enable folks to support their own bodies naturally with herbs. We are here because of the activists, policymakers, and everyday potheads. Whether we’re using CBD, CBG, THC, bath bombs, gummies, dog tinctures, or a fat blunt to elevate, we have the right to full autonomy of our bodies to heal, smoke, and use cannabis products so long as we are not hurting others or putting lives at risk.
Alongside the challenges of this industry, what rings true is that people want and need their weed—to help them find calm, sleep, and grieve, especially during the added stressors of the pandemic. That includes grief over the loss of a job, a home, a social life, a partner, or a family member, or their children’s ability to go to in-person school. Weed, mota, ganja, herb, hemp, and cannabis alike have been proven time and time again to help us to heal, both anecdotally and scientifically. California did, after all, deem dispensaries as essential businesses during the height of the pandemic.
For those still ready to go forth: Take it slow, as slow as you would with an edible. Take the time to do proper research and development. Educate yourself on the so-called war on drugs and the communities of color that it has harmed and continues to harm. Create a solid and authentic plan for equity efforts in your business. Some suggestions: monthly mutual aid, fundraising, or being a part of an organization like the Floret Coalition, an anti-racist collective of cannabis businesses funding organizations that prioritize the needs of BIPOC communities.
Be patient, be resilient, and be ready for a lot of setbacks. Much like any start-up or new business, there will be moments of complete chaos when everyone will be wearing all the hats and learning as they go. There will be many days when calamity feels like an accurate response when people ask how your day is going. Remember that cannabis is still a new industry with plenty of legal barriers and gray areas to flesh out. Be ready and willing to leap into the unknown. The rules will be fuzzy and frustrating, but if this is your goal—your life’s work—do it. Starting a business during COVID, much like life itself in this past year, has exposed the fact that nothing is guaranteed while also teaching me that anything is possible.
Recent Comments