To connect with the diverse cannabis market, businesses in the space must incorporate that diversity into their leadership teams, according to Diane Katz, president of venture management company Electrum Partners. Unfortunately, she says, as more traditional business practices shape the industry, female- and minority-owned and -operated companies are scarce, and the leadership of cannabis companies does not reflect the diversity of their clientele.
Here, Katz shares the issues she has seen during her work with Electrum and how they can be addressed, as well as how the inclusion of a more diverse perspective can propel the cannabis industry forward.
Cannabis Business Times: What issues have you seen in the cannabis industry regarding female and minority leadership?
Diane Katz: I’m very lonely—let’s put it that way. As I am meeting more and more people over this period of time that I’ve been working with Electrum, because of the newness of this industry and because of the potential of great profit, investment money is basically pouring into the industry, which means people who are good players and more traditional players are coming in. So, a lot of what’s happening is more traditional of what has been happening in business for as long as it’s been happening. But I think it is exacerbated here because of the aggressive jumping into the industry.
Of the companies I meet, I would say 15 percent are owned or operated by women. Probably around that [same percentage] would be minorities. On the other side, of investors, I would say it’s a small percentage of women who are also investing, but I think that there is great interest of women to both get into the business as well as to invest.
One of the things that I am so aware of is when you have a new industry, you have the opportunity to do things differently. And what is particularly disappointing is that most of what’s happening is exactly the same that I’ve seen before, and I come out of Wall Street. I sit at meetings where very often I’m the only woman, and there have been at least three meetings where it’s been four or five men and me, and one of the men says a curse word and he’ll look at me and say, “Excuse me.” Only me. That’s a very small example, but a telling example.
I’ve spoken to minority women who are extremely frustrated with the lack of ability to get cannabis licensing in the states where it’s legal, and that presents a great obstacle. It’s 2019, and at least 50 percent of the cannabis market is women. It’s just poor business practice.
"If you really want to understand the market, the market has to be your team."
-Diane Katz, President, Electrum Partners
CBT: What can women and minorities do to secure leadership positions in the cannabis industry?
DK: Don’t give up. Be prepared. Don’t try to overachieve to prove you’re worthy. That, I think, is actually a confirmation of the prejudice. One of the things that we do at Electrum, which I’m very proud of, is we are very selective with who we do business with. That might mean that the revenue might not happen quite as quickly, but we only do business with vetted partners who understand that they can do good business, excellent business, with a woman and/or a minority.
CBT: How can companies work to address this issue in their hiring process?
DK: What we do at Electrum, and I think [what] more companies can do, is understand that diversity increases creativity and innovation. It’s not about doing good. It’s not about equal opportunity. It’s about having the most creative, innovative model. So, if that’s what a company is really looking for and [it] is willing to walk its talk, then recruiting becomes a shoe-in. It becomes a natural. For example, if I come from New York and I keep hiring people from New York, I’m not getting the Midwest perspective, I’m not getting the West Coast perspective [and] perhaps I’m not even getting the Latin America perspective. It’s really about what kind of perspective do we need so that we can be the most creative, innovative company possible? That’s one [way].
Then the second—which is a major, major issue with recruiting that companies do—is they always look to fill a job with someone who has already done the job. I would rather hire someone who has done something like the job, not the job, so they can walk in, they can learn, but they’re also highly, highly motivated.
CBT: Why is it so important to increase diverse and female leadership in the industry?
DK: If you really want to understand the market, the market has to be your team. So, you have to be able to reflect the marketplace with the people who work for you. In terms of cannabis, the market is not high net worth, the one percent. Your market is pretty much across the board because we’re talking about recreational, we’re talking about medicine, we’re talking about all of that. So, if you have representation of just one or two segments of the population, you’re making it less likely that you’ll be successful.
Plus—and this is a little more subtle—in terms of decision making, which is something I’ve taught around the country, if you have similar thinking people, the decision-making is going to be limited. Sitting in rooms with, for example, all men—not that they all think the same, because that would be silly to say that—but there’s a particular masculine kind of approach, if you will. And then a feminine point of view brings something else. If you bring the feminine point of view, then you’re looking at a more rounded way of dealing with solutions. You’re looking at being more inclusive. You’re looking at being more collaborative. And you can be highly competitive and be collaborative, and I believe that kind of model is what occurs when you have more diversity and you have more women in leadership positions.
Editor’s Note: This interview has been edited for style, length and clarity.
