Legacy Cannabis Operators Shunned From Billion Dollar Industry

Legacy cannabis operators are the ones who bore the brunt of prohibition and paved the way for a new, legal market to flourish; one worth billions and one that has been unwelcoming, at best, to these industry OGs. Cannabis activists and many longtime business owners are pushing for the inclusion of legacy brands in the world of legalized pot. Otherwise, states are missing out on billions of dollars annually as illicit sales continue to thrive, even in recreational markets.  

The cannabis industry has changed a lot over the last few years, but fundamentally, we all want the same thing: progress, although that could have varying meanings for different people. For more articles like this one, and for exclusive deals on flowers, vapes, edibles, and other products, remember to subscribe to The THC Weekly Newsletter. Also save big on Delta 8Delta 9 THCDelta-10 THCTHCOTHCVTHCP & HHC products by checking out our “Best-of” lists!


What are legacy cannabis operators?  

Legacy operators are the trailblazers who started their cannabis businesses before it was legal, and are much more in-line with ‘stoner culture’ and history. The term can refer to business owners who run “grey market” dispensaries that have not yet become legally compliant, or street dealers who continue operating the same way they have been for decades. 

While some legacy operators have no intentions of going legit, an overwhelming majority say they would if the process wasn’t so expensive and permeated with red tape. With so many different and constantly changing regulations to adhere to, and startup costs in the hundreds of thousands, it’s no surprise that legality is out of reach for many.  

Take De’Shawn Avery from New York, who has been selling flowers for years and claims he “provided a very in-demand product when there was no product.” Before legalization, savvy entrepreneurs like Avery were a community staple that many of us were very grateful for; after legalization, they began to worry about the future of their businesses and what their roles would be in the new industry.  

Avery, and generations of other legacy dealers, fear they don’t fit the modern-day archetype of a cannabis businessperson. “It’s usually not Black people or people with records who are favored when it comes to money-making opportunities,” he pointed out.

And he’s not far off the mark for thinking that way. A few states have started to keep information on demographics within the cannabis industry and a study conducted by Marijuana Business Daily found that only 4.3 percent of cannabis companies are owned by African Americans, 5.7 percent were Hispanic/Latino owned, and 2.4% were owned by Asian Americans. That leaves 87.6 percent of pot business that are white-owned, most of which are also male-owned companies.  

To make matters worse, in most states people with prior felonies face additional restrictions when applying for cannabis business licensing. So, let’s say a legacy operator gets arrested on felony drug possession charges, then cannabis becomes legal in their state the following year. Despite having experience in the industry, existing clientele, and the perfect opportunity to transition from working in the shadows to being a legitimate business owner; they would have to wait 3 to 10 years before they could legally apply for a license. At that point, all the other businesses in their area would be already established, have possibly stolen some of their customers, and it would be even more difficult to get a foot in the door. 

The cannabis industry is definitely more inclusive than others, but often, still holds on tightly to that ‘old-boys club’ mentality that can make women, minorities, and those longtime legacy operators feel shut out.  

Looking West 

For a perfect example of the struggles faced by cannabis legacy operators, let’s take a quick look at what has been going on in California since the state passed proposition 215 and legalized medical marijuana back in 1996. At that point, the industry was still small and totally fringe. Most residents did not even know that cannabis had been legalized medicinally for so many years, and there were only a small number of dispensaries scattered throughout the state. 

By the time I turned 18 (in 2008) and was able to get a ‘medical card’ (which was shockingly easy and practically every pothead I knew had one), the industry had become very recreational. “Dispensaries”, or retail pot shops, were popping up everywhere. I once bought weed from a guy who was running his “dispensary” out of a detached garage on is property in the middle of Victorville, a small town in the high desert on the way to Vegas.

That “anything-goes” state of the industry led to the eventual passing of Proposition 64 in 2016, which legalized the possession and recreational use of cannabis for anyone 21 years of age or older. A lot of the businesses operating under the original medical regime, or under the table as many were, could not meet all the demands of operating in the new legal market, and thus, were forced to shut down or continue running illegally.  

One of the biggest issues, aside from the exorbitant costs of licensing, were local moratoriums and that zoned only certain areas for cultivation, retail, and other cannabis operations. By July 2021, still just 31 counties and 181 cities (out of 58 and 482, respectively) allow any type of marijuana businesses within their jurisdictions.  

 “We voted for a law, and we are blocked at the local level,” says Andrew DeAngelo, a long-time California cannabis activist, industry consultant, and co-founder of legacy dispensary chain, Harborside Collective. “There are big counties that are known for growing weed where it’s banned,” he adds. 

States are losing billions 

This excessive regulation, greed, lack of consultation or legal help, and over-taxation has resulted in an estimated loss of up to 75% of potential cannabis revenues in some markets. In California, for example, data firms peg the number at around $5.6 billion dollars lost to the illicit market every year, that’s just over one half of the market’s total value in the state.  

It’s the only state so far that has seen recreational sales shrink following legalization. And the massive busts of illegal businesses rage on as high taxes and insane operating costs drive up prices, which are then passed on to the consumer. Instead of paying more money for crappier product, many people just stick to buying it from their dealers or illegal dispensaries that charge less and don’t pay taxes.  

Not to mention the convenience of buying from dealers, who have traditionally operated on a text-and-delivery or text-and-pickup basis. Even with a growing number of drive-throughs and delivery services, it’s still so much easier to buy from your local plug sometimes.  

A ‘less-than-welcoming’ industry  

The B2B side of the cannabis world is just like any other industry, and to be successful, you’ll need to be familiar with all the legislative and business jargon that comes with a billion-dollar industry. In cannabis, things can be much more complicated as far as regulations and business dealings are concerned; so the list of topics you’ll need to know, at least at a base level, can get quite expansive.  

“I’ve had to educate myself tremendously just to make sure I can speak the language that these people are speaking,” says Marie Montmarquet, co-founder of MD Numbers, a family of weed brands from cultivation to retail that previously operated a delivery business prior to legalization. “So, if I’m in a meeting and they’re talking about 1031 Real Estate transfers, I know what 1031 Real Estate transfers are.” 

The ultra-capitalistic environment coupled with constant oversight and regular contact with law enforcement and state/local governments, fosters an environment that feels stuffy, tense, and inhospitable – especially for anyone who has faced their own legal turmoil over cannabis, and still cannot fully trust those powers that be.  

Nomenclature: Legacy market vs black market  

Much like the politicized issue of the words “marijuana” vs “cannabis”, there is an ongoing debate about replacing the term “black market” with different phrases, one of which is “legacy market”. Black market doesn’t apply solely to cannabis, it refers to any economic activity that happens illegally.  

The selling of illegal products, of course, is a black market activity. But selling legal products in ways that are not prohibited also classifies. Like buying cigarettes in one state and selling them in another, for example. Cigarettes are legal in every US state, but because tobacco tax codes vary so much, you cannot legally buy cigarettes in Arizona and go sell them in California for a profit.  

The idea has been floating around that using the phrase “black market” is outdated and culturally insensitive. Danielle Jackson (Miz D), a Vancouver-born artist, advocate and entrepreneur, was one of the first to say publicly that “legacy market” should be used over “black market” when describing pre-legalization cannabis businesses. Her comment got overwhelming support from the audience.  

Many are tweeting in agreeance, such as Jennifer Caldwell , partner and technical lead at Cannabis License Experts, who added that, “To me, the term ‘black market’ implies a negative connotation of illegality and illegitimacy. Whether people are growing illegally or not is a complex topic at the moment.” 

Moving forward

Seeing how much money is on the line, legal states are beginning to offer incentives to make the transition more seamless for legacy cannabis operators. In California, in addition to the $100 million bailout, Governor Newsom has suggested expungement of cannabis-related convictions as well as an extension to allow licensees that have missed the deadlines to transition; albeit at high costs and great inconvenience, still. Other states are taking similar steps to ensure these business owners – the true backbone of the industry – are less excluded.

With legacy dealers, the experience can be a very mom-and-pop, tight-knit atmosphere, so word of out is key to the growth of these businesses. When big businesses come and take over all the available retail locations, cultivation spaces, and advertising channels, there’s little room left for any small businesses to make a name for themselves.  

“We’ve seen in lots of other states that big pharma, big tobacco, alcohol and large companies are all prepared to move in and just take over right away,” says New York State Senator Liz Krueger. “We don’t want that to be the story in New York. We want the story to be small mom-and-pop community-based businesses starting and growing and expanding…[and] we want people who are selling in the communities that they live in, in the illegal market and out of the illegal market.” 

“We don’t need anybody that’s coming in here just for the financial aspect,” added Edgar Cruz, CEO of cannabis brand Ekstrepe, based out of Long Beach, California. “We all understand that this is a cash cow now. What we need is support for our communities to make sure that we are included in this kind of cultural-based industry.” 

Final thoughts  

This is a lesson that every state or country considering legalization needs to take note of. Despite the financial success of the legal cannabis industry, we need more education and resources, and less taxes and regulatory red tape to harness the untapped knowledge, connections, experience, and economic wealth that exists in the legacy market. Otherwise, consumers will continue shopping in illicit markets, states will lose millions, and legalization will have done little more than prevent people from getting arrested for pot possession in certain areas.

Hello all! Welcome to CBDtesters.co, your ultimate online destination for the most relevant and thought-provoking cannabis and psychedelics-related news globally. Check back regularly to stay on top of the constantly-moving world of legal drugs and industrial hemp, and sign up for The THC Weekly Newsletterso you never miss a thing.

Disclaimer: Hi, I’m a researcher and writer. I’m not a doctor, lawyer, or businessperson. All information in my articles is sourced and referenced, and all opinions stated are mine. I am not giving anyone advice, and though I am more than happy to discuss topics, should someone have a further question or concern, they should seek guidance from a relevant professional.

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Grassroots vs Industry: Cannabis Culture Clashing with Big Business

For many people, smoking weed is not just a thing you do, it’s a lifestyle; and one that we take great pride in. I, for one, am always eager to share my knowledge and passion for all things cannabis. This attitude is rooted in a longstanding ‘stoner’ culture that is very intimate to the cannabis community and has been created and finetuned over the last few decades. But almost as soon as legalization started sweeping through the US, we started to see a shift.

Old pot culture gave way to a trendy, standardized, multi-billion-dollar industry. Today we see sleek, modern dispensaries that resemble apple stores, farm-to-table cannabis restaurants and caterers, some of the most potent weed products your heart could desire, and an overall change in how the world views all these products, and the plant itself.

It’s exciting to see how far we have come. But at what point does our homegrown, laid-back stoner culture that felt so down-to-earth and made this plant as popular as it is in the first place, become completely unrecognizable? Will it turn into just another ‘big business’ industry like alcohol, tobacco, wellness, pharma, and so many others. We’re already beginning to see a clash between business interests and grassroots activists, but the industry has room for both sides, and actually NEEDS as much diversity as possible.

The cannabis industry has changed a lot over the last few years, but fundamentally, we all want the same thing: progress, although that could have varying meanings for different people. For more articles like this one, and for exclusive deals on flowers, vapes, edibles, and other products, remember to subscribe to The THC Weekly Newsletter. Also save big on Delta 8Delta 9 THCDelta-10 THCTHCOTHCVTHCP & HHC products by checking out our “Best-of” lists!


What is stoner culture?

It’s hard to narrow it down to just a few attributes or social behaviors, but there are some are pretty characteristic of “stoners”, and we’ve seen it time and time again portrayed in the media. From Animal House or Cheech and Chong in the 1970s – an iconic time that many describe as the “golden era” of cannabis, psychedelics, and activism – to the 1990s which I personally remember as comedic haze of stoner movies and music that spilled over well into the next decade.

Although the image was tweaked a bit over time, a few constants remained – the portrayal of a “stoner” was upbeat yet unmotivated, quirky, below average intelligence, friendly, aaaaand usually sweet and personable in their own goofy type of way (think Travis from Clueless).

Over time, that harmless, loveable image (be it a huge misconception anyway) morphed in a few different types of personalities. For example, the lady-next-door ‘momtrepreneur’ that’s making a quick buck off a growing industry and broken system, like Nancy from Weeds. Or the casual modern-day smokers that do what they do and just mix pot use into their day-to-day lives, like Abbi and Ilana from Broad City.

It’s uncommon now to see that oblivious and totally unaware stoner from years prior. One of the few shows I can think of that plays into those tired old clichés is Disjointed on Netflix, which was met with overwhelming criticism from people are just no longer interested in seeing potheads depicted as idiots anymore. Today’s cannabis users encompass many different personalities, from the 30-year-old underachiever smoking weed and playing video games in their parent’s basement, to the 20-something-year-old researcher and CEO who just developed a state-of-the-art form of nano emulsion technology to bring cannabis medicine to thousands of patients… and literally everything in between.

State of the industry today    

Despite federal prohibition and regulatory uncertainties, bottlenecked supply chains, an ongoing fight against the still-thriving black market, and let’s not forget, a global pandemic that has impacted so many different industries throughout the world – cannabis is still flourishing, in the United States and globally.

According to data collected by Marijuana Business Daily and shared at this year’s MJBizCon in Las Vegas, legal cannabis sales in America hit $20 billion in 2020 and are expected to surpass $26 billion by the end of this year. Their projections for the future are that the US industry will explode to about $46 billion by 2025. Just a few years ago, multimillion-dollar deals were few and far in between but now they’re a regular occurrence.

“The nearly $46 billion in sales would make the cannabis industry larger than the craft beer industry, said Chris Walsh, chief executive officer and president of MJBizDaily. “And these are potentially conservative numbers with what we see playing out. Sales continued to accelerate at a record pace in markets across the US — notably in established states, such as Colorado, Washington and Oregon. You’re seeing the next phase of a maturing industry take hold here.”

It’s not at all shocking to hear, considering most Americans now live in a state where cannabis is legal in some capacity, be it medical, recreational, or both. In total, 36 states have legalized medical marijuana – 18 of which, plus Washington D.C., have also approved recreational adult-use programs. So, based on this rapid growth, not only do more citizens have access, but the cannabis is also creating tens of thousands of new jobs annually. By the start of 2021, roughly 321,000 Americans held employment in the cannabis industry either directly or through some ancillary company, and that number is growing steadily.

“Take a look around,” said Karson Humiston, CEO and founder of Vangst, which runs a cannabis industry-centric job recruiting site, gesturing to bustling crowds in the exposition hall. “People want to get out of their old-school, dying industry, and they want to move into cannabis. This is it. Now is the moment to get involved, because it’s never going to be this small again.”

Cannabis industry gentrification?

All this is not to say that I’m against legalization. I’m 100 percent pro-progress and vehemently against the War on Drugs that has torn communities apart with racist enforcement, widespread arrests, and mass incarcerations of citizens simply for possession personal amounts of pot. I think everyone can agree that we’re in a much better place now than we were 50 years ago.

The main problem people are having, as I see it, is the rush to corporatization and industrialism that’s slowly chipping away at the casual, unique, and authentic vibe that cannabis culture has always been synonymous with. I mean, even Tommy Chong is having trouble placing his strains in dispensaries because he’s “too stoner” for the modern cannabis connoisseur, or more aptly, cannasseur. “We represent the stoner image of Mexicans,” Chong said. “They don’t want that anymore. They can’t market that to millennials.”

Things certainly are different now from what I, and many of the people I grew up with, are used to seeing. “Someone who has always been in the mindset that (cannabis) is their alternative to a highball at the end of the night might not appreciate how cannabis is being used now on the medical side,” said Danny Mann, general manager at Modern Cannabis, a Logan Square dispensary. “Worrying about the counterculture being replaced by new cannabis culture is on people’s minds now. But it can also reek of nostalgia.”

He’s not wrong. The industry is in an amazing position right now, poised only to succeed even more. The main reason we resist many of these changes is simply because it’s sad to see the classic trends go. To think that the rasta-hippy-grunge-total stoner persona may one day be a thing of the past, is just a tad bit disappointing.

Think back to when our parents were growing up, the rallies they had, and the type of people who were truly advocating for cannabis legalization, promoting the therapeutic potential, pushing for safe access, arguing for the industrial benefits of hemp, and denouncing existing regulations and striving for reform – it was the potheads! Not businesspeople, influencers, celebrities, and so forth; it was your diehard, weed-smoking activists that were the heart and soul of cannabis advancement in the US; and eventually they became a sort of lifestyle-brand in their own rights, a symbol of indepence and rebellion, paving the way for changes in marijuana and psychedelics laws. In my opinion, everything about these past eras will be dearly missed but I welcome positive changes with an open heart and mind.

“Clash of the Titans”

According to five marijuana industry insiders, including CEOs and farms, discussed these issues during a panel at MJBizCon called “Clash of the Titans.” They noted that despite tensions between these two often opposing heads of the industry, when you look at the bigger picture, both sides play their own very important role for the “wider legalization movement”.

“Big business cannot survive without what cannabis culture has brought to the table,” said Wanda James, owner of Denver-based Simply Pure, a vertically integrated cannabis company. James lambasted much of the industry, arguing that women and minorities have had too hard a time getting a toehold in the business. She decried that as a disservice to the legacy of the marijuana plant and its cultural roots.

“Setting up this dichotomy of ‘Big Business versus cannabis culture’ is a false dichotomy,” mentioned another panalist, Ayr Wellness co-Chief Operating Officer Jennifer Drake. “There’s going to be plenty of room for everyone to succeed.”

Overall, the general tone of the discussion was that more direct effort needs to made to encourage alliance and collaboration between entrepreneurs who are focused on various financial interests like tax structures, banking access, business licensing; and advocates who are striving to improve policies regarding home cultivation, medical cannabis patient and caregiver rights, support for female and minority entrepreneurs, and so on.

Final thoughts

If there’s one thing I’ve learned in going to different cannabis industry trade shows and talking to people from all over the world, it’s that the cannabis industry absolutely has room for everyone. New points of view keep everything fresh and exciting, and that’s one of the wonderful things about the industry that has stayed relatively unchanged over time, cannabis represents inclusivity and that needs to be reflected in business dealings as well as cultural traditions.

Hello all! Welcome to CBDtesters.co, your ultimate online destination for the most relevant and thought-provoking cannabis and psychedelics-related news globally. Read-thru the site regularly to stay on top of the constantly-moving world of legal drugs and industrial hemp, and sign up for The THC Weekly Newsletterso you never miss a thing.

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From legacy to legal, the cannabis market belongs to who?

Three years ago, Canada legalized cannabis, but the market did not come with products familiar to most Canadian customers. Beloved small growers and their brands could not make Health Canada‘s initial cut, including a shortlist of former licensed producers. A shift from legacy to legal industry occurred, but license holders don’t own the industry because […]

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