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Not Just a New Industry: But a New Kind of Industry | SXSW 2021

Steve DeAngelo
Co-Founder at The Arcview Group
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SXSW 2021
March 16, 2021, Online, Austin, USA
SXSW 2021
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Not Just a New Industry: But a New Kind of Industry | SXSW 2021
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About speaker

Steve DeAngelo
Co-Founder at The Arcview Group

Steve DeAngelo has spent his entire career at the intersection of cannabis activism and entrepreneurship. As CEO of Harborside Health Center, Steve co-founded and directed California’s most widely acclaimed medical cannabis dispensary–and set a new standard of excellence for the entire industry.

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About the talk

New Kind is a call to create a just, diverse, sustainable cannabis industry. Most industries emerge from an organic, gradual process shepherded mostly by private entities. Legal cannabis is different. The industry opens by decree all at once; its structure is heavily influenced by extensive regulation; its own internal mores are embryonic; everything from production methods to marketing to compensation is still on the table, giving the public and cannabis insiders alike a unique opportunity to shape its development. The opportunity is extraordinary to provide a safe alternative to alcohol & pharmaceuticals, anything made from petroleum, trees or cotton. Destined to become the next global industry, cannabis should break the standard corporate mold to set an example for other industries.


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Hello friends. I hope you're happy and well, wherever you are in the world today. Most of you have probably already heard that legal cannabis is one of the most rapidly growing Industries in the world. Today. In North America alone, the arcview market report predicts that legal cannabis sales will jump from 9.2 billion dollars last year to 47.3 billion in 2024. Add in the rest of the world and that estimate jumps to 57 billion dollars. This rapid growth has led some people to compare legal

cannabis to the Telecommunications work, internet booms. But I think it's more like the falling of the Berlin wall or the opening of China to International Trade, the internet and Telecom all of the traditional trajectory of a developing industry from basic science to research and development of usable products and more research to determine that the optimal product-market fit followed by a long period of public education. And an incremental roll out, starting with early adopters and eventually building to mass marketing It's a

process that takes several years and sometimes several decades and almost always plays out of beyond the reach of average citizens and small business people. This incremental and private development means that by the time the general public sees products in the marketplace, the basic standards ethics and culture of most new Industries are already well established. With few exceptions, there's no meaningful opportunity for regular citizens or investors or entrepreneurs to weigh in on new Industries until the mold

is already set. The legal cannabis industry is different, it's born an instant with the stroke of a pen in full view of the public are not the result of a political process like a voter initiative over the passage of Reform legislation. Decades of Industrial Development aren't necessary because human beings have been making things out of cannabis and consuming cannabis for as long as we've been human, all it takes is the lifting of prohibition and we're living through that moment right now

and the standards, the ethics, the culture of the industry are still being formed. There's a multitude of voices, as varied is Dan Bilzerian and Martha Stewart, Steve DeAngelo, offering different images of what it might become. And his worst states and countries. Legalize each jurisdiction. Presents what they see as the best framework for regulation. What works and what doesn't, what is acceptable and what is not? Acceptable are still being debated. People who are usually voiceless,

consumers and small investors entrepreneurs. Have a wide array of opportunities to influence. What is becoming a major Global industry and those opportunities they, just about every step in the process of legalization, Include Drafting and campaigning for voter initiatives. Testifying it hearings and public, comment. Lobbying for cannabis reform. Legislation at every level of government, Municipal County state, and federal They included additional hearings white

papers and stockholder testimony, that will be needed to write up the regulations implementing those laws. And the public hearing is for the granting of renewal of specific, cannabis licenses and the heavy news and social media coverage of the whole debate. It's a once-in-a-lifetime chance for regular people to mold the shape of a new industry. We all get to ask a question. That's normally reserved for corporate boards, and institutional investors. If you can build an industry, exactly. The way you wanted it, what would it look like? The

earliest pioneers of the legal industry. People like Dennis Peron and Debbie Goldsberry. And Jack Herer me came to this question from a place of deep love and close relationship with the plant. We saw cannabis more, is it teacher than as a commodity? And we took the lessons. She taught us seriously. so, when some of us were finally able to open the very first legal cannabis business is the lessons we learn from the plant guided our way, we built a culture of radical inclusion and then Economy based on

sharing and compassion, we baked sustainability, diversity, fairness activism and social justice into our business models. Most of us early Pioneers were white people. We were coming from a place of relative privilege and I'd weed in Black. We probably never would have gotten away with what we're doing. We already view the world through a lens of radical critique. What are Vision was Fog by the my Opia that comes from growing up in a society that practice is systemic racism. The

fog began to clear and clear as we engage with patients and staff and communities of color other marginalized populations. As we became friends and comrades in a common struggle, as we build relationships of trust and love across the boundaries, that separate most Americans. As we are, early Pioneers woke, one of the first, and most obvious things we noticed was the whiteness of the new industry were building. Drawing Consciousness was reinforced by the ethic of towns like Berkeley in Oakland, which were the first to license cannabis dispensaries, and

we're on commitment to racial justice has long been recognized as a queer Community value. Play around 2012. The lack of diversity was being discussed at cannabis industry events, like the arcview conference, by 2015, we began to see people of color within the industry. Launch social Equity, advocacy organizations, like the minardi, Cannabis Business Association and Supernova women. They had their specific Mission building more diversity into the industry. And in 2016 I barely

even Depot and lenise. Martin launched, the very first business incubator designed specifically for people of color. The hood, incubator that was in my hometown of Oakland California. And a really brilliant stuff of organizing this new generation of cannabis activists Amplified. The equity conversation, they refused to take no for an answer and they're Relentless demands for greater opportunity in the legal industry. Resonated throughout the community were eventually heard by the city council of Oakland, which in 2017, became the first jurisdiction

anywhere to an active social Equity Provisions, into their cannabis licensing, programs. Iceman Oakland pioneering example, along with the public outrage, resulting from the murder of George, Floyd and growing awareness of the racial disparities in law enforcement. Has inspired many other cities and states and even foreign countries to include social Equity, Provisions in their licensing, programs. Michigan Washington, Nevada, Oregon, Colorado, several other states number among them, and

Massachusetts, all delivery licenses are reserved exclusively for social Equity companies in Mexico, 40% of all. Cannabis licenses have been reserved for indigenous communities. Thailand, traditional healers have been promised a role in the industry and similar efforts to promote inclusivity of our being discussed all around the world. We've just scratched the surface of what's possible. What could we do if we really stretch our imaginations and I'll do a city,

if we really listen to the lessons, the plant teaches house. The opportunities are almost endless. One of the most vexing problems facing human societies isn't ever-increasing disparity of income with a small slice of the world's population controlling most of its resources while billions of other people struggle just to meet the bear demands of daily existence. It's a problem. The Cannabis speaks to for those who listen carefully Think about a circle with people smoking a joint. When another

person comes up to the edge of the circle of the circle, doesn't close up to exclude them and expands to welcome them and to share the joint and it doesn't matter how unusual or different or even weird. That person is And if the newcomers cold or hungry, most likely they're going to be offered of warmth and food. Spirit of inclusion and generosity. It's a universal phenomenon, common to cannabis consumers everywhere, it's just who we are. And now today, we have an opportunity to massively scale-up the

spirit of inclusion and generosity to embedded deep in the bones of the new industry, to enable people who come from families that have never owned anything to have a real shot at prosperity. One way to do that is with executive compensation limits, like they do at dr. Bronner's where the highest paid executive can't make any more than five times the compensation received by the lowest paid employee. Another stopped at just about any cannabis company could and should take is to implement robust

profit sharing with employees. So they can share in the success but they're helping to build. And for the really bowls and audacious, there's an idea of creating employee owned and managed cannabis companies. I've seen it done with cannabis yet, but groups of cannabis workers, could each contribute a small amount of capital build whatever kind of management structure they like and if they're successful divide the profits equally. and my guess, my guess is that work, her own Enterprises could successfully organized, to

secure licensing, preferences, just like those one, by social Equity activist, And collectively collectively, these steps could produce an industry, their spreads the wealth more wisely than any. It's come before it. Actually really makes up impact on global income disparity. Pay careful attention to the size of cultivation. Footprints has also important. Everything starts with a plant. Large-scale cultivation attracts large-scale finance and those sources of financing, tend to prefer large

law firms. Large Distributors large manufacturers, large marketing companies in large advertising, budgets Leaving not much room for family Farmers, craft manufacturers or ancillary companies. We want to avoid this outcome. Then we have two reasonably limit the size of cannabis grows. And the number of grows they can be owned by anyone and to take A quick look at Oregon or Florida illustrates this point. Legalization in Oregon was the result of a broad-based decades-long, incredibly energetic.

Grassroots movement. It came from the bottom up and the licensing structure, spreads opportunity wide. Like we're against licensed, thousands of crores limits, the size of commercial cannabis, Gardens to a maximum of 40,000 square feet, creative licenses for each step of a supply chain. This structure is made it possible for small Legacy Growers. To have a place in the legal industry. It's giving birth to a wide range of small support companies. And manufacturers, it's given families. That always work

for a wage and opportunity to become business owners and and it's produced some of the best cannabis as some of the poorest countries. if some of the lowest prices in the country, In Florida the brutality or state and local law enforcement and the corruption of the chords of a long suppressed most Grassroots activism. Performance. Florida was a top-down process is largely organized and financed by The Uber successful attorney in cannabis Advocate, John working. And we should all be grateful to John.

The lack of a broad-based movement, the lack of a broad-based movement of a small stock quote, stakeholders allowed the state to launch, what may be the most inequitable model of cannabis regulation seen thus far? Florida license. The only 7 vertically integrated companies. Each was allowed to grow process distribute manufacturing and Retail and unlimited amount of cannabis at an unlimited number of locations. This was a great structure for the already wealthy families in publicly traded

companies who paid millions of dollars to acquire these super licenses. But the law constricted opportunity, instead of spreading, there are no small Growers are manufacturers or retailers in Florida, there are no families become the owners for the first time and very few small companies providing transport or testing or processing services. And three consumers, this concentration of ownership has brought relatively low quality cannabis high prices and it should serve as a cautionary tale. If we,

the people failed to seize the small window of opportunity to spread cannabis Prosperity broadly, the same forces that have dominated. The economy for Generations will be all too happy to claim it for themselves. Some people think that's already a foregone conclusion. But I don't think so. Take a look at British Columbia in Canada. A case study, The regulations are initially favored, large, corporate players, and left. Most of the deep Legacy grower Community out of the legal system. But over the course of the last few years that

Community has organized, they put significant pressure on their elected representatives. And now the result Providence just announced that small Growers will be allowed to sell directly into retailers and to make farm gate sales right on their own property. This is a great example of a cannabis regulation that will help us spread Prosperity more wisely and it should be a standard part of every legal cannabis system everywhere in the world. Another one of our most urgent Global challenges is the climate crisis.

And the lessons we learned from Cannabis should inform our Behavior here, too. Almost, every cannabis consumer, I talk to him. Tell me a story about being in a park or a garden or hanging out with animal friends and having a Magic Moment, a moment of appreciation for nature. A realization of how precious that always. These moments are more about then just being high. We should take them seriously. We should understand the most messages from Mother Earth. We should understand the rest and urgent call to action.

Fossil based economy has an insatiable desire for growth. I've already poisoned our air and water and food, they've already destroyed and disrupted, the habitats thousands of other creatures, and the industrial machine we've built now threatens to drive up ourselves to Extinction Cannabis, cannabis may be the most viable way to control and reverse this damage to our planet. Anything made out of petroleum or trees or cotton or concrete, can instead be made out of him in 20, tons of atmospheric carbon

is sequestered with every hektar that's harvested. On top of that cannabis has this powerful ability to haul a rosian and clean up contaminated soil. It was first used for that purpose at the Chernobyl nuclear site. Since then it's been used successfully on many types of industrial pollutants are new industry. Should take full advantage of humping other. Eco-friendly and put our energy sources should be non-polluting. It renewable, our packaging should be compostable, our waste should be transformed into usable products. Totally possible.

110, I just heard recently shows how possible it is. The development of carbon nanotubes made from Cannabis crop waste, they're more efficient supercapacitors in crafting. And now, there's companies looking at using these Nano sheets to spin cars and airplanes and houses right turning them into giant solar collectors. Agricultural policy also presents possibilities. United States, paid Farmers more than 22 billion dollars in subsidies. In 2019, most of that money went to support

non-organic and animal-based products that contribute to global warming. Some of those subsidies, probably the majority of them should be redirected towards promoting cannabis agriculture. Farmers could be rewarded for planting hemp on contaminated land and a Road Atlanta restoring and places suffering. From bee colony collapse. We can provide foraging be used with a late-season source of nutrition and extend their lifespan. After all the other crops going out of loom. It's right. In addition to all of its other benefits and

could also help save the bees. So how cool would it be to see a big sign Times Square showing a countdown being grown worldwide and the corresponding amount of carbon being removed from the atmosphere, Maybe even include an estimate of the number of fees being saved. At the state level and in other countries traditional sun and soil. Growers, whose environmental impact is a small fraction of indoor. Growers should be protected. Appalachians origin. Just like we do with wine and cheese. Their

eco-friendly methods should be incentivised with appropriate tax and Licensing benefits. And States could and should also mandate diverse representation on cannabis corporate words. Are California already requires all corporate boards to have at least one female mentoring. We should take it much, much further. These goals are lofty but they're not impossible. Some of them require government action, but many could be accomplished, find enlightened industry acting independently of any requirements for mandates.

That's what the pioneers of this industry. Like, Dennis Peron and Debbie Goldberg and I did, we were way too far. Locked and struggle with the government to trust it. Such an important mission. But times have changed the government's we battled for decades are beginning to come around. The laws have changed in many places and the stigma has begun to fade Canada has become the first G7 Nations completely legalized cannabis, and it's opened its public exchanges to cannabis companies, red and blue States. Ally continue to pass legislation, creating legal

cannabis businesses. And even the federal government of the United States is showing some signs of imminent reform. This expansion of opportunity dialing down of risk and especially the opening of the Canadian Public public stock exchanges. The tractor, the whole new cast of players into the industry people who are attracted mostly or entirely by financial gain people who have already built success and other Industries, people prefer the most part, don't see a need for radical social change. Some of them consume

cannabis but many don't and very few are familiar with the history and culture of the plant. So cannabis, consumers should know the companies they buy from how their cannabis has grown the size of carbon footprint, their diversity, in governance, how their workers are treated and what's being done with profits. And then, then you should vote with your dollars, there's a battle going on for the soul of the Cannabis industry and every cannabis consumer plays a role in it, consciously or unconsciously. Another way to balance the increasing power of

corporate cannabis is to create legal space for a small-scale nonprofit cannabis Market. Not everybody who loves cannabis, feels a need to build wealth. And many cannabis people don't feel comfortable and carefully. Polished corporate environments. The foundation of this nonprofit sector should be legal recognition of every individual's right to grow and share their own cannabis. And these aficionados should be able to form nonprofit Association Gathering club houses and share cannabis with each other. And they shouldn't be

any more restricted. Sharing the common interest and gun clubs in hunting clubs and wine clubs are In Spain, where did a thousand cannabis clubs operate this way. And most of them are way more fun than North American dispensaries. Ideas about line represent, just a small fraction of what's possible, as we build the global cannabis industry, everything should be on the table, everything, whatever we can dream this time. New possibility. And New Hope is

precious and it may be fleeting. So, let's cast aside, our daily acts of the Rat Race. Let's open our minds, and open our hearts and together Reach for the Stars.

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