LGBTQ Business Owners Compete In Lucrative Cannabis Trade

LGBTQ Business OwnersKeystone Bluff founders Josh McNey, Justin Fortanascio, and Jason Costa; Photo courtesy of Owen Kolasinski
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By: Mike Givens/TRT Assistant Editor—

In part two of the series, The Rainbow Times shares the stories of LGBTQ business owners as they navigate the application process to enter the cannabis retail sector. Part one of the series can be found here.

By July 2019, Jordan Grossman and his two business partners, Connor McTaggart and Robert Harder, had spent a large portion of the $250,000 they’d raised to start their own cannabis grow operation, Nor’Easter Remedies. They’d submitted an application to the Bay State’s Cannabis Control Commission (CCC) in January and were eagerly awaiting approval of it, which would have granted the three businessmen a provisional license.

The three-part application process requires applicants to devote a substantial amount of money towards setting up the business prior to receiving a final license. A host community agreement (HCA) must be negotiated with a city or town willing to allow the business to operate, a venue must be rented or purchased for the operation, and consultants such as architects, lawyers, and engineers must be hired to navigate the intricacies of starting a business.

However, by that July, the three had been paying $10,000 a month in rent for an empty facility for more than a year and funds were drying up. Grossman made phone calls to the CCC checking on the status of the application but said he ran into a wall.

“Since we submitted the application, I made it a point to pester and get on the phone with the CCC and send as many e-mails as I possibly can and they just would respond with very general comments that they copied and pasted from somewhere,” he said of his frustration in trying to check the application’s progress.

He and his partners tried to raise more capital to invest in the business. One potential investor would only do so once the business had a provisional license in hand. A California cannabis company wanted 90 percent of the business, which would leave the three business partners and their four initial investors with 10 percent of the revenue. Grossman and his partners rejected the arrangement.

“They kind of saw that we were, I guess, in a desperate situation,” he said of his feeling that the company was trying to take advantage of Nor’Easter Remedies’ dwindling funds and the owners’ need for more money.

An Oregon-based cannabis firm wanted 85 percent ownership of the business.

“The deal didn’t feel right to us that they were taking so much, especially because, compared to all of the other businesses running here, we’re very small and had modest ambitions,” Grossman said. “Our main thing is we wanted to just have a small craft cultivation grow. We didn’t want to be a huge, vertically integrated company. We just wanted to grow, that was our main thing.”

They walked away from that company, also.

Grossman theorized that the large west coast cannabis firms were looking to sneak into the Massachusetts industry using his company.

“We would be the face of [Nor’Easter Remedies] for the CCC so that they would be qualified to get the license,” he said. “They were kind of just swooping in, using us for a little bit, then discarding us.”

Best friends since childhood, Grossman, McTaggart, and Harder were resolute in their position to not be taken advantage of.

“We did a lot of the legwork and we weren’t ready to sign away our dream like that,” Grossman said.

By September, the CCC got back in touch with Grossman, but not with approval for a provisional license.

According to Grossman, the CCC deemed the application incomplete because of “very little things” in the diversity plan. Apparently, the CCC wanted more specifics about the diversity of the eight-person staff to be hired by Nor’Easter Remedies.

Meanwhile, funds continued to leave the business.

 

LGBTQ Business Owners

Photo: Add Weed/Unsplash

610 Days

While Grossman and his two best friends wrestled with making their diversity plan more specific, the “Crazy Green Lady,” aka Leah Cooke Daniels, was fighting her own uphill battle with the CCC.

She’d been waiting patiently to hear back from the CCC about the status of her application, which she said she submitted in the summer of 2018. By December of 2019, she still had no response. On December 17, she said the CCC informed her that she was under a “presumptive suitability review,” or an assessment as to whether it’s appropriate for her to own a cannabis business in Massachusetts.

“You’ve had my application for 610 days, you don’t know by now whether I’m a suitable candidate to disseminate cannabis in the state of Massachusetts,” Leah exclaimed rhetorically.

The frustration led her to interrupt two CCC public meetings with fiery condemnations of the application process.

In February, she received her provisional license, which will entitle Leah and her partner, Jaye Cooke Daniels, to an inspection and architectural review of the two locations they’ve secured for their retail business, Alchemy League. However, when asked what receiving the provincial license means to her, Leah was candidly bitter.

“It means I spent 610 days and $375,000 worth of liquid cash to sit here now and start this race,” she said, noting that now she has to pass another part of the process before getting her final license, which will only be for one year. “It means nothing.”

Though Grossman’s business never received a provisional license, he and Leah share the same outlook about the CCC and how it operates.

“Their system, although they say that they want to make it for the little guy, it’s really just if you have enough money,” Grossman said of the need to have lots of capital in place to manage the application process. “It’s really harming the small businesses out there.”

Leah estimates that she’s spent a million dollars in funds, work hours, consultants, and the volunteer hours put in by friends and family to make Alchemy League a success. That estimate is in addition to the 20 pounds she said she lost while waiting to receive word on her application and the stress it put on her personal relationship with Jaye.

“They’ve handed me the rulebook, so now I know the game I’m playing. Now the race has really just begun,” she said.

 

“ … a dispensary experience that people remember.”

“Dear Swampscott,” the public letter begins. “We’re Justin and Tom, a happily married couple trying to start a business in our hometown of Swampscott. We moved here [five] years ago for all the amazing reasons everyone loves it here—we’re active bikers and beach goers (Phillips is our favorite but we love them all!) who appreciate the easy access to the city.”

The letter highlights the landing page of their website, Terpene Journey. Tom Bogacz, 37, and his 33-year-old husband, Justin Eppley, both owners of the business, and chief executive officer and chief operating officer, respectively, hope to start a retail store in the quiet North Shore town.

“Many of the existing dispensaries in Massachusetts have retail environments that feel sterile and they haven’t put a lot of effort into helping consumers understand what products best meet their needs,” both said in an e-mail interview with The Rainbow Times. “There’s a lot of room for a company like Terpene Journey to create a more personalized cannabis experience that brings a little bit of the fun back.

“Starting a business has always been on Tom’s bucket list and it just feels like a once in a lifetime opportunity to be at the forefront of a new industry. Justin also has a background in data science and believes strongly that data will be key to creating the personalized experience we want for Terpene Journey.”

Like other small business owners, Bogacz and Eppley are familiar with just how onerous the process for getting a final license can be.

“The process is long, expensive and uncertain, so you definitely have to stay positive and be resilient to achieve any results,” Bogacz said, noting that procuring an HCA can be stressful. “It takes a tremendous amount of engagement—and luck—to gain the support of elected officials, municipal staff, residents and neighboring businesses.

“Applicants generally are paying a landlord while they try to receive HCAs, so there is a lot to lose if things don’t work out. After the HCA is executed and a state application has been submitted, it can take nine to 18 months until you get to welcome your first customers.”

Both agree that the most nerve-wracking part of building the business is the waiting period, but they use that period to build relationships and good will.

“It can be daunting to think of paying rent for 12 to 18 months before generating income, but we are just being realistic, planning for it, and using the time as an opportunity to get to know our customers better so we can bring to life a dispensary experience that people remember,” Bogacz said.

At the core of their business model, the couple wants to be ethical and support their community.

“Terpene Journey is a retail cannabis dispensary that partners with local growers and product manufacturers to create a distinctive craft experience,” Bogacz said. “We make it easier than ever to find the right product or strain for that next adventure and help customers gain a deeper appreciation for terpenes, the fragrant oils that give cannabis strains their tasty flavors.

“Terpene Journey ethically sources its products from other small businesses and farmers to ensure local people benefit from this newly created legal market. We’ve committed to showcasing products in a highlighted part of our store from state-designated social equity and economic empowerment businesses.”

On December 18, the Swampscott Select Board voted in favor of negotiating an HCA with Terpene Journey. If negotiations are successful, the couple will be able to submit their application to the CCC.

Grossman and Leah and Jaye Cooke Daniels may have a certain level of antipathy for the CCC, but Bogacz and Eppley have no complaints.

“While the process can be challenging, the CCC has done a great job of being inclusive of LGBTQ people,” they said. “Businesses certified by the Massachusetts LGBT Chamber of Commerce receive priority licensing, which helps move them through the process more quickly with other diverse groups, economic empowerment applicants and social equity program participants.

“As part of its data collection efforts, the CCC also tracks the number of LGBTQ business owners in the industry among other traditionally underrepresented people. Most states don’t have this level of commitment to diversity and transparency.”

The couple wouldn’t share how much it has cost thus far to start their business, but admitted that the enterprise is mostly financed through their own savings.

“We’re truly a family-owned company and are self-funded by cashing out our retirement accounts and getting loans from family,” Bogacz said. “Our fundraising strategy was to scrape together every dollar we have ever made and secure loans from people we trust to cover the balance. Maintaining ownership of the company was important to us because it allows us to put our customers’ needs before investor demands.”

The couple admitted that getting funds was difficult, as banks won’t provide loans or lines of credit for a cannabis business. Also, when cashing out their retirement fund, they were hit with a 10 percent tax, a fee the federal government assesses as a penalty for making a withdrawal before retirement.

Bogacz stated that they’ve spent about $75,000 thus far on the process for procuring the HCA with Swampscott, but don’t expect they’ll need to raise much more.

It’s been more than three months since the town’s board of selectmen voted in favor of negotiating an HCA, however, as of the end of March, negotiations have been stalled. The coronavirus pandemic, also known as COVID-19, has been a top priority for town officials.

“As you might expect, in recent weeks, town staff have been focused exclusively on COVID-19 so we really aren’t sure when a vote will happen,” Bogacz said. “In the meantime, we are unable to apply at the state level without the executed HCA and we continue to pay rent on an empty space.”

They hope to open their store in the next year.

 

“We’re leaning on our people in the LGBTQ+ community to help us … ” 

In January, Ture Turnbull was looking for a cannabis-based topical ointment for his mother, who suffers from arthritis. While perusing different cannabis retailers, he noticed that there was a lack of diversity in product offerings and a dearth of information about the healing properties of the plant.

That search affirmed Turnbull’s decision more than a year ago to open a cannabis retail business in Massachusetts. He and his business partner, Wes Ritchie, friends for 12 years, have spent the last year exclusively devoted to opening New England Craft Cultivators. If successful, they will open three stores, one each in the towns of Pepperell and Dracut. The two are currently exploring prospects of a third store in the Boston area.

While the CCC allows a business to have three retail licenses, the owners can also hold licenses in manufacturing, cultivation, and testing. Turnbull and Ritchie are currently exploring the possibility of applying for a cultivation license, which would help supply the three stores they hope to open.

“There’s going to be an educational shift in the market, and that’s really exciting,” Turnbull said.

According to the 38-year-old, as cannabis use becomes more socially acceptable, he wants to play a key role in educating people who are new to the experience about its therapeutic benefits.

People like Turnbull’s mother—specifically, people over the age of 60—have an opportunity to learn about how cannabis can augment pain management practices. Turnbull wants to, “expand an understanding of the market and what kinds of products are out there” for those who may have previously been hesitant to learn about or try cannabis.

“A lot of the consumers weren’t participating in the industry at all because it was involved in the black market, so now there’s a new market of consumers because of the legality issues that are being addressed,” he said, noting his projection that the consumer base for cannabis will only expand in the coming years.

Ritchie said that he is hoping that the larger community will embrace his and Turnbull’s self-professed “gay weed” operation.

“We’re leaning on our people in the LGBTQ community to help us enter the market and we’re hoping that our progress so far will help us be a resource to other nontraditional people trying to enter this industry,” he said.

Likewise, Turnbull wants to be supportive of the “little guys,” other small business owners who are trying to make it in the industry. He sees their business as an opportunity to network, build relationships, and promote small businesses across the state. Ultimately, he wants to impact how the cannabis industry fares across the commonwealth.

“Both Wes and I have come out of government and a social justice background, we are not only excited about getting into this economic opportunity, but also take advantage of the public policy discussion to ensure that the most good comes from this industry,” he said.

The duo said they submitted their full applications for licenses in Pepperell and Dracut at the end of March.

 

“The One Straw Revolution” 

Jason Costa grew up with cannabis and has a life-long affinity for the plant.

“I first learned to cultivate cannabis from my dad, who grew it in our backyard when I was growing up,” said Costa, 38, who moved to Massachusetts in 2017. “We saw the advantage to growing your own and getting to know exactly what is going into the flower we’re smoking.

“Over time, we started researching natural farming ideas we learned from ‘The One Straw Revolution’ by Masanobu Fukuoka, mixing our own soils, and getting into the science of cultivation.”

Jason and his two business partners, Josh McNey, 44, and Justin Fortanascio, 32, are the proprietors of Keystone Bluff, a cultivation business the three hope to open in Chester, a small town of about 1,300 residents in the western part of the Bay State.

“We wanted to enter this industry together with a shared love of growing naturally and to ensure there was a high-quality product in the market that met those standards, some of the same standards we have for the food we eat,” Costa said.

On Thursday, March 5, the CCC approved the trio’s application for a cultivation site and awarded Keystone Bluff a provisional license. Their next step will be an architectural review.

“All of our interactions with the CCC have been very pleasant and professional,” Costa admitted. “They have a tough and thankless job, and we are waiting patiently while they complete their reviews and inspections. In the meantime, we are fundraising, talking to potential customers, and networking with other small businesses across the state.”

Costa said that he, McNey, and Fortanascio, all openly gay, will continue to fundraise and look for investors for their business.

 

“Did we know we were lying about the drugs? Of course we did.”

On June 18, 1971, former President Richard Nixon held a press conference on an epidemic that he defined as “public enemy number one.” That enemy, according to Nixon and his administration, was drug abuse, and the media quickly popularized the term “war on drugs” to encapsulate a new national campaign to battle addiction and the proliferation of drug use.

Two years later, the Drug Enforcement Agency (DEA) was created. For the rest of the seventies, arrests for drug offenses increased marginally. Several states actually decriminalized cannabis possession, but Nixon remained a stalwart opponent of the drug, going so far as to label it a Schedule One substance—the most restrictive category for any drug. He also rejected a unanimous recommendation—from a commission he formed to evaluate drug policy—that personal cannabis use be decriminalized.

A turning point happened in 1980, when the nation saw the beginning of a dramatic increase in public concern around drug abuse. The term “Just say no”—a slogan created by Nancy Reagan, the wife of former President Ronald Reagan—would spawn massive anti-drug campaigns across the nation. Both state legislatures and Congress would go on to codify drug laws that would see a spike in arrests. Programs like D.A.R.E (Drug Abuse Resistance and Education) were implemented in schools from California to Maine to educate young people about the dangers of narcotics abuse.

According to the New York-based Drug Policy Alliance, in 1980 the number of people across the country incarcerated for drug offenses was roughly 50,000. However, by 1997, that number had jumped to 400,000—an increase of 700 percent.

In April 2016, Dan Baum, a journalist for Harper’s Magazine, wrote an article concerning a 1994 interview with a former Nixon aide, John Ehrlichman, who ultimately spent time in prison for his role in the Watergate scandal that ended Nixon’s presidency. Based on his notes, Baum made a revelation about the war on drugs. According to Ehrlichman, the entire campaign was orchestrated to discredit and incarcerate anti-war activists and black people.

“The Nixon campaign in 1968, and the Nixon White House after that, had two enemies: the antiwar left and black people,” Ehrlichman allegedly told Baum in that 1994 interview. “You understand what I’m saying? We knew we couldn’t make it illegal to be either against the war or black, but by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs? Of course we did.”

In January, the Pew Research Center (PRC) published the results of a study it conducted on drug-related arrests. According to Pew, roughly 40 percent of the drug arrests made in the nation in 2018 were related to the possession, selling, or manufacturing of cannabis—the largest category of drug-related arrests. Pew did emphasize that the share of drug arrests related to cannabis is on a downward trajectory.

The possession, use, manufacturing, or selling of cannabis is still a federal offense in the United States.

 

***

In April of 2019, the CCC published a report—A Baseline Review and Assessment of Cannabis Use and Public Safety—highlighting a stark reality for black men and women in Massachusetts.

“In the gray literature, cannabis arrests for possession and sale show disproportionately higher rates for Black cohorts compared to White cohorts in Massachusetts,” a section titled “Social Equity Literature Review” states. “An analysis of Federal Bureau of Investigation (FBI) Crime Data by the American Civil Liberties Union (ACLU) found that Blacks were 3.9 times more likely to be arrested than Whites for cannabis possession in Massachusetts in 2010. From 2001 to 2010, the racial disparity between Black and White arrests increased by 75.4%.”

Four years later, the data was just as somber.

“A 2014 update found that Black people in Massachusetts had a 3.3 times higher cannabis possession arrest rate and 7.1 times higher cannabis sales arrest rate compared to Whites in 2014,” the analysis continued. “Blacks make up approximately 8% of the Massachusetts population; However [sic], this cohort made up 24% of cannabis possession arrests and 41% of cannabis sales arrests in 2014.”

Currently, Massachusetts Representative Chynah Tyler of the 7th Suffolk District is advocating for legislation to expunge the records of men and women who have been incarcerated for a cannabis-related offense.

An investigative team for the Boston affiliate of CBS reported in February that, according to an investigation it conducted, of 735 people who attempted to have their cannabis-related offense expunged from their records, only 135—or roughly 18 percent—were able see the expungement through successfully.

 

“Something that people are making millions of dollars off of, you’re still locked up for.” 

Leah and Jaye Cooke Daniels have a theory. Both women think that education and proper preparation will help black aspiring business owners in the cannabis field be successful.

Leah said that she once went to a CCC meeting and a fellow applicant, who she said had a reading disability, was unable to understand the application process because it was convoluted.

“They literally could not get through the application itself,” she said of many fellow applicants who she observed, people that she believes are struggling to make sense of how to navigate the process. “We have a privilege that other people don’t have, and that’s education.”

The irony isn’t lost on the couple. People of color, disproportionately impacted by the war on drugs and the fallout from that seventies-era campaign—a group of people that many acknowledge should have a right to thrive in an industry that once sent them to jail in droves—are unable to break into the sector.

Jaye said she heard many talk about their need for funding, other applicants asked about how to best find investors.

“If we don’t do something to help, to assist, then no one will,” Leah said. “We’re probably the newest people to this industry who care.”

The need to help other aspiring cannabis business owners birthed an idea for a new campaign.

The Cooke Daniels are partnering with a local company that makes clothing and apparel out of hemp, a strong fiber in the stem of a cannabis plant often used to make rope, fabrics, and paper.

Their goal is simple: Sell one million hemp t-shirts.

The profits will be invested in a number of initiatives aimed at helping people of color, either those who have been impacted by the war on drugs or those who want to break into the cannabis business.

For example, the couple has an in-kind arrangement with a group of attorneys. With the funds raised from the campaign, for every one hour of billable attorney hours the couple purchases, each attorney will donate two hours of their time in providing legal services for formerly incarcerated people looking to get their records expunged. So, if the couple purchases 100 hours of attorney time, they will receive 200 hours in kind, for a total of 300 hours of legal services to help with records expungement.

“Now there are 300 hours there for people to get their records expunged,” Leah said, noting that there are still people in prison serving time on a cannabis-related charge. “Something that is legal now, something that people are making millions of dollars off of, you’re still locked up for.”

Those legal hours can also be used to help applicants figure out the complexities of the application process.

Another benefit of the funds raised would be to help low-income medical marijuana card holders who can’t afford medicinal cannabis receive money to cover the cost of their purchases. Leah emphasized veterans, who may suffer from post-traumatic stress disorder or other injuries related to their service, who need, but can’t afford, medicinal cannabis to address mental and physical ailments.

What lies at the core of their passion to help others is a desire to bring along other aspiring entrepreneurs with them into the industry.

“I feel like I have to bring something, do something, to make sure that I’m not sitting on this island alone,” Leah said contemplatively. “It’s imperative that now that I understand the process and I am witnessing what other people are going through who don’t have the business savvy, don’t have the vernacular … that I drag [them] along with me.”

The #1MillionTees campaign began in February.

 

Looking forward

Though Nor’Easter Remedies wasn’t a success, Jordan Grossman hasn’t given up on his dream to work in the cannabis industry.

“This has been an extraordinarily enlightening experience,” he said. “I have no regrets.”

Grossman said that he’d continue to look for job opportunities and build a career in the field. He said if he could change one thing about his experience, he would have networked more.

“I wish right off the bat that I started making phone calls and started befriending fellow cannabis entrepreneurs,” he said, noting that the support, encouragement, and perspectives offered by other business owners could have helped him navigate the process successfully.

When Alchemy League gets off the ground, Leah Cooke Daniels has high hopes.

“Alchemy League is going to be the premier industry leader in the state of Massachusetts that will show people what community looks like and why it’s imperative,” she said of her aspirations. “Alchemy League is a place of inclusion for all: Deaf, dumb, blind, crippled, and crazy are welcomed into this arena.

“We plan on growing and cultivating a certain line of cannabis that will be remarkable for years to come and will help people with all kinds of illnesses. And trying to figure out a way where we don’t have to charge this astronomical dollar amount for this beautiful, lovely plant that can grow naturally in your backyard if you threw a seed out there.”

Her partner, Jaye, who is looking to start her own cannabis culinary and hygiene products line, has similar goals.

“There are so many other ways to enjoy the plant,” she said, noting that she doesn’t smoke cannabis. “We have our own cannabidiol (CBD) line of shampoo, conditioner, lip balm, [and] we have a skin-care line.”

Jaye said she would offer other products such as African black soap, liquid shea butter, lotion, and pain-relieving oils.

The Alchemy League subsidiary, Weed a La Carte, has also developed several CBD-enhanced food products including BBQ sauce, salad dressing, and cotton candy.

Jaye said she would love to travel around the state and show others the benefits of CBD-enhanced food and personal products.

“I love food, it brings people together,” she said, noting she wants to break the stigma associated with cannabis and educate others on its healing benefits.

Wes Ritchie and Ture Turnbull of New England Craft Cultivators want to ensure that their business is partnering with, and giving back to, the LGBTQ community.

“Our vision has been to open the first loud and proud LGBTQ-owned cannabis dispensaries in Massachusetts and to make sure we’re engaged with and giving back to nonprofits that support the community,” Ritchie said. “We think that the cannabis market is going to change in two big ways: First, the underground market of illegal cannabis sales is going to come into the light over time. Right now, it’s estimated that 75 percent of sales of cannabis in Massachusetts are still in the underground market. I think that shift will happen over the next five to 10 years.”

Ritchie’s second contention is that a wide range of people, from non-cannabis users to those who use it regularly, will experience a major shift in understanding about the benefits of the product.

“I think customers will become more discerning about the quality of products over time and care about the origins of the products they consume or otherwise use,” he continued. “The stigma will go away over time and we hope to lead that education—THC and CBD topicals, stuff that doesn’t get the user high, can be used to help with joint and muscle pain for seniors. We want to play a role in that education. As more dispensaries come online and consumers have more choice, we think that our dispensaries will stand out as a resource and one that is always looking around the corner to stand out in this space.”

Still waiting for the Swampscott Board of Selectmen to make a decision about an HCA agreement with Terpene Journey, Tom Bogacz and Justin Eppley, are taking advantage of the downtime to network and build connections with other business owners.

“The most rewarding part of launching a business has been getting to know other cannabis entrepreneurs,” Bogacz said. “There is a lot of creativity in this industry and people are eager to share their stories to help you learn from their experience.”

Jason Costa and his two best friends are hoping to live into a certain set of values as Keystone Bluff takes off as a cultivation site. In addition to being environmentally friendly through composting, installing solar panels, and establishing a system for rainwater collection, the trio also wants to acknowledge the historic harm and injustice caused by the war on drugs. Costa said that they would do their best to ensure that their business is diverse and promotes equity.

“Another big part of Keystone will be our plan to positively impact areas of disproportionate impact,” Costa said, referencing communities of color that have been harmed by harsh drug policies. “[This] involves empowering individuals to achieve success in the cannabis industry and supporting restorative and reparative justice to the areas and communities disproportionately impacted by the war on drugs.

“We also have a detailed diversity and inclusion plan that aims to hire diverse individuals, create a welcoming and open workplace, and connect our values to our community by partnering with like-minded organizations.”

 

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