SETTING AN INCLUSIVE TONE FROM THE GET-GO
It’s not really a secret who, demographically speaking, these private equity and venture capital players are. Those two spaces might be the whitest and most male-dominated of any in the financial industry. Globally, women hold about 12% of senior positions in private equity. For venture capital, the number is around 15%. For minorities, the numbers are less.
Between the four co-authors, they have recent combined experience at Google, Bain, Boston Consulting Group, and Berkeley Haas. “All of these institutions are disappointingly under-represented amongst minorities,” Alvi says. “And it’s also the case in this new business of cannabis.” But while those organizations are playing catchup now, Alvi and Bronner believe it’s important for industry leaders to set the tone in cannabis from the get-go.
But, in addition to the massive cost of entry, at least some regulations have tilted the tables in the wrong direction for minority players. Most states deny cannabis business licensure for individuals with a previous conviction. “In cannabis, there are legal obstacles preventing African Americans and Hispanics who got a possession charge when they were 17,” Alvi explains. “But their white counterparts in the suburbs never got charged because their dad had a lawyer friend.”
And while some states have loosened marijuana possession laws, at the federal level, the issue remains largely unchanged.
Still, “The federal level can set a tone that we don’t want to arrest people and send them to jail for marijuana possession charges,” he adds, noting President Obama’s more lax approach to the laws.
DISASSOCIATING THE B-SCHOOL BRAND FROM A PRODUCT THAT’S ‘STILL SOLD ON STREET CORNERS AT 2 A.M.’
Though the minority community in the space remains small, it is highly connected and strong, Alvi and Bronner explain, with leaders like Barnette and Wanda James, who in 2015 became the first black and female CEO in the cannabis industry in Colorado. Both Alvi and Bronner are optimistic changes can be made before the industry really launches, which could be soon after the vote in November. “It becomes a conversation at our level, but hopefully action at a municipal level,” Bronner says.
And business schools, which have largely remained on the sidelines so far, have a part to play. One reason B-schools have watched from a safe distance is the stigma surrounding the industry, Bronner says. “You don’t necessarily want your brand, from a top-tier institution, to be associated with something that’s still sold on street corners at 2 a.m.,” he points out. Many MBAs are going out and playing major roles in massive beer companies, he notes, but they aren’t yet willing to put their reputation on the line for something like cannabis. There are notable exceptions. Most recently, Yale School of Management graduate Brendan Kennedy created Privateer Holdings, a $75 million private equity fund focused solely on cannabis.
THE ROLE OF B-SCHOOLS IN INNOVATIVE INDUSTRIES
Though recreational marijuana is a new path — especially for most MBAs — Alvi believes it’s a natural progression in business education. Barnette, for example, is still using concepts like vertical integration.
“Thinking about business schools fostering leaders — and not just in traditional industries like CPG and healthcare and banking — but using those skills in something completely new, I think is something students are really hungry for, and professors hopefully will be excited to teach,” Alvi says.
Bronzer agrees that B-schools should focus more on emerging industries and innovations, for example drone technology, artificial intelligence, and virtual reality.
“MBA programs and business schools are increasingly becoming the graduate programs for leadership, which is a very high ask of any program to do,” Alvi concurs. “And I think this was a really interesting exercise in how you lead in different industries and how you still pull from traditional business concepts.”
Of course, the two explain, B-schools can also do more to prepare leaders with a sensitive mindset toward women and minorities. Alvi says they hope the case helps business professors and students put themselves in the shoes of a minority entrepreneur and think about the pros and cons of getting into the business.
“Jamaur and I are trying to do our part in getting smart business students at the very best business schools to be smart about these things and putting themselves in the shoes of an actual minority,” he says, “regardless of what industry it is.”