Despite calls from activists and policymakers to ensure social equity within the legal cannabis market, the reality is that the industry has become predictably corporate, with large companies dominating. At the same time, smaller and minority-owned businesses struggle to gain a foothold. Bucking this trend is unlikely to be easy. However, cannabis cooperatives may offer a potential solution, as they represent an alternative business model that allows for fairer sharing of power and profits and is designed to meet the needs of communities rather than company executives.
What Is A Cannabis Cooperative?
Cooperatives – often referred to as co-ops – are community-owned institutions in which all members have an equal say and an equal right to benefit from the income generated. The model has been successfully deployed within various sectors, including agriculture, retail and even medicine, which means the framework is already in place for establishing cannabis cooperatives.
There are several different types of cooperative, each of which is structured slightly differently, yet all are designed to ensure that benefits, costs and responsibilities are shared democratically. Given that the start-up and operating costs associated with cannabis businesses currently represent a major barrier for smaller entrepreneurs and those from minority backgrounds, cannabis cooperatives may allow larger numbers of people to participate in an otherwise exclusive marketplace.
Consumer Cannabis Cooperatives
Consumer cooperatives are those that are owned entirely by their customers, who buy into the organisation to become members. Generally, consumer cooperatives only sell their product to members, who can either purchase items for a reduced price or receive them for free in exchange for their membership fee. Neighbourhood grocery store co-ops are a good example, with all produce shared fairly among members, who typically receive their ration in the form of a weekly veg box.
This model has also allowed for the emergence of so-called ‘buyers’ clubs’, which provide medication at cost to those in need. Such a framework has, in fact, been applied to cannabis cooperatives for decades, with the earliest example being the Wo/Men’s Alliance for Medical Marijuana (WAMM).
Established in Santa Cruz, California, back in 1993, WAMM was the first medical cannabis cooperative to receive non-profit status from the US government and provides high-quality, organic medical cannabis to all members. Doing so allows those in need to access their medicine in exchange for an affordable membership fee, rather than having to buy it from expensive dispensaries.
Another famous example of cannabis consumer cooperatives can be found in Spain, where cannabis social clubs have been in operation for several decades. Like WAMM, these clubs cultivate their own weed and distribute it equally among their members rather than selling it. While the legality of these institutions has always been a little hazy, they are largely credited with providing safe and affordable access to quality cannabis. They are invaluable to medical and recreational users alike.
With medical cannabis now legal in many locations, cooperatives may well represent the best possible means for many patients to obtain their supply, especially if they cannot grow their own weed. After all, medical cannabis patients often require large quantities of medication, which can be very expensive if bought from a dispensary. By joining a cooperative, though, individuals can ensure their needs are met without breaking the bank.
To accommodate this, some governments have created a legal framework for the creation of medical cannabis cooperatives. The state of Washington, for example, allows for cooperatives of up to four medical cannabis patients, who may collectively grow the plants they need to cover the needs of each member. While recreational use is also legal in Washington, the state is yet to offer licenses for non-medical cannabis cooperatives.
Producer Cannabis Cooperatives
Producer cooperatives allow farmers and other agricultural workers to sell their produce collectively. This allows small producers to join forces and share their operational and marketing costs, thereby allowing them to compete against larger corporations.
For small-scale cannabis growers, this may represent the only feasible way to enter the market. After all, craft cultivators who grow relatively small amounts of weed are unlikely to have the resources to license and market their product independently, and those that do are certain to be outcompeted by the large companies.
By forming a cooperative with other small cannabis growers, however, these costs can be shared. Marketing can be achieved collectively, with all members selling their weed under one united brand.
Participating in a cooperative therefore allows each individual grower to remain small while at the same time benefitting from the security that comes with being part of a large organisation. This means that none of the participants has to worry about scaling up their own operations and can continue to focus on craft cannabis rather than mass-producing their plants. As such, grower cooperatives have a reputation for providing high-quality produce, and are therefore popular among consumers looking for premium products.
Unfortunately, forming a cannabis producer cooperative is not so easy. The state of Massachusetts, for example, offers a Craft Marijuana Cooperative license that is intended to allow for exactly this type of co-op, yet virtually no such licenses have been granted as the caveats and restrictions involved make them somewhat difficult to obtain.
Cannabis Worker Cooperatives
The third major kind of cooperative is a worker co-op, which, as the name suggests, is a business that is owned by its workers. This type of organisation is highly democratic. Every individual employed by the company receives an equal say in how the organisation is run, and profits are shared according to how much work each person puts in.
In contrast, classic corporations pay dividends to shareholders and investors, while board members and executives make all the decisions. In such a set-up, the rich get richer, and power is concentrated in the hands of a select few. While this may be a common situation in other sectors, the need to avoid such a scenario within the cannabis industry is widely acknowledged.
After all, with minority communities and those from poorer backgrounds having been disproportionately affected by prohibitive cannabis laws in the past, it’s only right that such groups are given priority when it comes to reaping the benefits of legalisation. Yet once big corporations get on the dancefloor, it’s always going to be difficult for these communities to participate.
Forming cannabis worker cooperatives could therefore offer a way in for these groups, as no one individual needs to bear the financial burden of setting up their own company. When an entire community owns a cannabis business, not only are all the costs shared, but the profits all stay within that community. On top of that, workers have the collective power to determine their own wages and working conditions, with the only ‘boss’ in such an egalitarian model being the community itself.
Several countries and states have intended to foment social equity within the cannabis industry through special legislative clauses. Yet, the reality is that these have been slow to take effect. Consequently, we generally see a white-male-dominated marketplace, with the costs involved with running a cannabis business preventing minority groups from taking part.
If the law isn’t going to ensure fairness, then worker cannabis cooperatives may be the best way for certain underrepresented groups to take on the larger corporations. A great example of this is ¡High Mi Madre!, a female-of-colour-owned worker cooperative in New York that is helping to channel the economic benefits of cannabis legalisation into communities that have historically been suppressed or targeted by the War on Drugs.
What About Micro Cultivation Licenses?
Smaller growers who don’t wish to join a cannabis cooperative may benefit from applying for a micro-cultivation license designed to enable craft cultivators to enter the market. Currently available in Canada and certain US states, these licenses allow for the production of a limited number of plants each year and come with a range of benefits such as reduced licensing fees and fewer regulations.
Essentially, micro-cultivation licenses are intended for those who wish to produce small batches of high-quality weed without dealing with the pressures of mass production. Unlike the cooperative model, though, this would still require a grower to cover all their own business costs, which can very easily run into the millions of dollars – even for a microbusiness.
However, some states are now implementing measures to give micro growers a head start in the cannabis industry. New Jersey, which legalised recreational cannabis earlier this year, has announced that 25 percent of all cultivation licenses will be reserved for microbusinesses, with priority given to those owned by women, minority communities or military veterans.
In doing so, the state hopes to allow smaller businesses to control a greater share of the legal cannabis market, thereby ensuring a thriving craft industry and preventing weed from falling into the corporate mire.