If You’re a Woman in Cannabis, Can an Accelerator Help You? The Pros and Cons.

Amy Margolis remembers the moment she decided to found what is likely the nation’s only women-only cannabis accelerator, The Initiative. “I had been touching this space a long time,” Margolis, a long-time cannabis industry lawyer, said in a recent interview during this Women’s Small Business Month.

“I had an experience when I went to a conference and realized that of the 50 or 60 people there, that I was the only woman in the room. That was followed by hosting a business meeting where there were five or six brands in a room, and decision-makers.

“I said to them at the end of the meeting that, ‘The next time we have a meeting like this, I’d like women decision-makers in the room.’ And the men there immediately started complaining about their wives.

“That was my aha moment when I realized that if somebody didn’t do something, we were going to wind up in an industry completely dominated by white men.”

That’s why, n late 2018, Margolis founded her Portland, Ore.-based accelerator, which as one of about ten such industry organizations in the U.S., focused on helping new entrepreneurs develop their company missons attract venture capital and network to realize their goals. How many of those accelerators are women-focused in that they require participating companies have at least one female founder? “I think we’re it,” Margolis said with a laugh.

And that fact is appreciated: “The huge benefit of the accelerator was the network that we were given access to,” says Valarie Sakota. Sakota and her partner Meryl Montgomery co-founded Barbari, a Portland-based business which creates herbal blends to mix with cannabis. “Not only additional cannabis investors and advisors but production advisors and really anything that would enhance the business operation” Sakota said of the advantages she found through The Initiatve.

“Their network is a great place to start or just be pointed in a direction you want to explore.”

Sakota and Montgomery were part of the first, January 2019, graduating class of The Initiative. (Two classes, constituting 15 businesses, graduated before Covid hit.) Over 12 weeks students attended sessions three or four days a week geared to each week’s focus: legal aspects, corporate structures and strategies; fund-raising, design, public speaking skills; and more. “It was pretty intensive,” Sakota said.

But there were rewards. “Since that program,” said Montgomery, “we have been able to close some fund-raising rounds and have been able to launch our full THC line as well as our CBD line. We’ve been able to increase our revenues, and now we’re projected to come in at around $150,000 by the end of this year, our first year as a fully capitalized company.”

Margolis also pointed out that, “Women network together totally differently” than men; they don’t see one another as competitors so much as potential business allies, she said. And as a result, she’s seen deals happen among participants.

Yet of course none of this comes free: Margolis’s contract with participating companies requires companies fork over a 6 percent equity stake should they profit from a “triggering event” like an exit sale. Of course that could take years; meanwhile, Margolis, who has just one employee, gets by with help from sponsors and on the industry events she hosts, largely for women in the cannabis space.

She also emphasizes that while in the program, participants need not ignore their business responsibilities. “The idea is you’re working on your business while you’re there, so it’s not that you’re stepping away,” she said. “The businesses are operational while you’re working in the accelerator. Being able to prepare to do fund-raising goes alongside your delivery business. We try hard to be flexible.”

Sakota and Montgomery have a different view. Although mostly positive about their experience at The Initiative, asked if they’d advise other women to follow their example and join an accelerator, Sakota came back with, “That is a loaded question.

“Meryl and I constantly evolve our opinion about this,” Sakota continued. “But as we encounter people who are interested in the [next] cohort of The Intitiative – and this is based on conversations we’ve had with people in other accelerators: If you’re going to do it, recognize what you’ll have to give up … an accelerator will be almost full time for a period of a few months at least. So especially if you’re small, you’re giving up the ability to run your business as thoroughly as before.”

Then there’s the equity payment. “I would say try to negotiate that equity or try to nail in what your expectations are of the program,” Sakota continued. Her advice was that applicants have a target in mind – what the accelerator can provide and what might be lacking. “You have to take control of that learning experience” she said.

Still, Montgomery, her partner said, the access the two gained to a larger capital network was valuable; after the accelerator they were able to attend a cannabis investment network conference which gave them their first five investors. They had determined even before those weeks in the accelerator , partly that their focus their had to be a fund-raising strategy for their then-new product.

Finally, there’s the outlook for women in the industry and here Margolis’s is not rosy. Asked if the cannabis space is opening up toward women, her blunt response is “no.”

That view differed dramatically from the findings of a 2017 New Frontier Data survey of 1,742 respondents from the cannabis industry. In that survey, 30 percent of respondents — almost half of them businesses owners — reported that women occupied all positions of ownership at their companies. And some 57 percent reported that their companies’ ownership teams were at least half female.

The survey showed something similar for those companies’ upper management: 25 percent of respondents said women occupied all management positions; and 58 reported management teams at least half female.

Margolis’s take on opportunities for women in cannabis was more pessimistic, “Everyone wants to ‘talk’ about it,” because no one wants to look bad on social media, she said. “That’s very different from saying, ‘We are making a commitment to have a board that’s 50 percent people of color,’” or taking actions to promote women.

The “reality,” she added, is “that as capital comes into this space it’s mostly men.” She cited the oft-quoted PitchBook finding that in 2019, VC investment in all-female founding teams across all business categories – a total $3.3 billion – represented just 2.8 percent of all U.S. capital investment.

Meanwhile women have to cope with what the numbers merely hint at: attitudes. Montgomery, from Barbari, mentioned how the fast-growing cannabis industry is pulling in players from more traditional business environments, like finance. “With that comes certain kinds of characters,” Montgomery said. “The other day, Valarie and I were on a meeting [call], and the men kept calling us ‘girls.’

“So we called them ‘boys.’”