Top executives at the 14 largest cannabis companies are overwhelmingly white men, an Insider analysis shows

• The cannabis industry has a long way to go on gender and racial diversity at the executive level.
• White men make up 70% of top executives at the 14 largest cannabis companies, an Insider analysis found.
• Black executives make up 7% of the cannabis C-suite.
• This article is part of a series called "The Cost of Inequity," examining the hurdles that marginalized and disenfranchised groups face across a range of sectors.

Executives at the largest publicly traded cannabis companies are overwhelmingly white and male, an Insider analysis has found.

White men comprise 70% of the C-suite at the 14 largest publicly traded cannabis companies by market value in the US and Canada. Of the 75 executives surveyed, five – or 7% – identified as Black.

As in many other industries, the cannabis industry has a long way to go to ensure that its executives are representative of the overall population, despite their attempts to put diversity and inclusion front and center, said Amber Littlejohn, an attorney and executive director of the nonprofit Minority Cannabis Business Association.

"It's bad business," Littlejohn said, adding that companies have a fiduciary duty to "dig deeper" and help their investors understand the value diversity brings.

Littlejohn said the problem is particularly acute in the cannabis industry, since Black and other minority populations have borne the brunt of cannabis prohibition and the decades-long "war on drugs," while the economic benefits of legalization have mainly gone to white men.

The US cannabis market currently stands at around $65 billion in annual revenue, according to analysts at investment bank Cowen. By 2030, this number is expected to balloon to $100 billion if marijuana is federally legalized.

A recent report from the ACLU found that Black Americans were nearly four times as likely to be arrested for marijuana as whites, despite similar usage rates. Arrests and criminal records can affect people's employment opportunities for the rest of their lives.

More diversity would benefit the bottom line

Littlejohn said that having more diverse executives would benefit the industry.

"Diversity is one of the best things to be able to adapt to change and risk and manage your externalities and innovate," she said.

Insider reached out to the 14 largest US and Canadian companies by market value and asked the companies to disclose the racial and gender breakdown of their executives.

Of the 14 companies, 11 volunteered the information (Tilray, Aphria, and MedMen declined to comment). Tilray and Aphria completed their merger in May, keeping the Tilray name. For the companies that declined to comment, Insider used securities filings and other public information.

Our review showed that 22% of the executives at the companies were women. Ninety percent were white, including women and men.

Canopy Growth, Curaleaf, and Cresco Labs told Insider that they acknowledge the lack of diversity within their companies and were pursuing initiatives such as ramping up hiring and setting up diversity and inclusion task forces to address the problem.

Canopy Growth's chief human-resources officer, Holly Lukavsky, told Insider that the company has implemented initiatives such as unconscious-bias training and diversity-and-inclusion training, among other moves to ensure it builds "a diverse, equitable and inclusive environment for our employees," which better reflects the communities it serves.

Lukavsky added that Canopy was prioritizing the hiring of a vice president of diversity, equity, and inclusion to further this strategy.

A spokesperson for Curaleaf told Insider it had established an internal diversity, equity, and inclusion task force to foster similar efforts.

Cresco Labs' chief communications officer, Jason Erkes, said the company was "actively pursuing diversifying our company at all levels" to ensure that its representation reflected "the diversity of people impacted by cannabis."

Fewer than 2% of cannabis entrepreneurs are Black

While Insider's analysis focused on large cannabis companies, the story is similar for small cannabis firms.

Fewer than 2% of cannabis company entrepreneurs or CEOs are Black, according to a report from Leafly, a cannabis-information site, citing Cannaclusive, an organization pushing for minority inclusion in the cannabis industry.

Executives at the top cannabis companies can be paid well. Canopy CEO David Klein received $33.8 million in total compensation in 2020 according to SEC filings, while Joe Lusardi, who was CEO of Curaleaf before stepping down late last year, made about $1 million in 2019. Kim Rivers, the CEO of Trulieve, made $443,750 in 2019.

The main sources of funding for cannabis companies are wealthy individuals, family offices, and private-equity and venture-capital firms willing to take the risk, Insider's reporting has shown.

"Those are historically the types of capital that people of color do not have access to," Littlejohn said.

Recently there have been some investors, including Jay-Z and former NBA All-Star Chris Webber, who have created funds to invest in Black and other minority cannabis entrepreneurs.

Because cannabis is federally illegal, entrepreneurs are unable to go to the Small Business Administration or their local bank to get a business loan in most cases.

Onerous licensing processes and a lack of capital keep people out of cannabis

In states where cannabis is legal, such as California and Massachusetts, it can be difficult and expensive to get a license to open a dispensary. In some states, it can cost upwards of $150,000 to hire the lawyers and consultants needed to put together a competitive application, Littlejohn said.

That can create barriers to minority applications, even though states set aside a portion of licenses for "equity" applicants, defined as those from communities most affected by the war on drugs, she said.

The SAFE Banking Act - a bill working its way through both chambers of Congress that experts say has a high chance of passing this session - is looking to resolve issues around access to banking and loans for cannabis entrepreneurs. But it's unlikely to be a quick fix.

Littlejohn added: "Do I think SAFE Banking alone can fix centuries of systemic racism when it comes to finance in our country? No."