The Complexity and Promise of Legal Cannabis
The evolving legal American cannabis industry can be summed up in two words: It’s complicated.
Considering that cannabis is now legal in 33 of 50 states to varying degrees, many industry insiders consider widespread legalization to be inevitable, but on a federal level the drug is still prohibited as a Schedule 1 narcotic. This ties the hands of everyone from potential researchers exploring therapeutic uses, to the federal agencies who would normally provide regulatory oversight, to the financial institutions hesitant to give funding to cannabis businesses.
Added to that are the entrenched societal aspects of cannabis use, like the lingering effects of stigma, marijuana-related incarceration, public health, and established underground markets.
Despite these quandaries and contradictions, entrepreneurs and advocates alike are eager to jump into the fray, ready to shape an emerging marketplace and develop socially and environmentally conscious policies.
Among those leading the way in this uncharted territory are Beloiters, four of whom we’re profiling in this issue. While their vantage points on the cannabis industry range from efficient energy use to production, distribution, public policy, and investor dividends, they all agree on one thing—navigating this complex field is well-suited to the interdisciplinary approach and critical thinking that come with a liberal arts background.
Tim Leslie’89, CEO - Leafly
If you’re at an event and looking to run into Tim Leslie’89, head to the front row. Sitting there is a habit he picked up from Les McAllister, and it stuck.
Leslie remembers McAllister, longtime chair of Beloit’s economics department, telling him “with that kindness and directness that he always had, that ‘the best students sit in the front of the class,’ and to this day I sit in the front.”
Leslie can wax poetic about many a memory from his time at Beloit (co-captaining the basketball team under legendary Coach Bill Knapton; staying up all night, determined to write an ‘A’-worthy paper for Psychology Professor Larry White; long rides to away-games playing euchre with his teammates). It’s high praise from a man whose educational and professional pedigree also includes Yale Law School and two decades at one of the most universally well-recognized companies in the world: Amazon.
In fact, he calls his decision to attend Beloit “easily one of the best decisions of my life. I generally feel that I would not be where I am today without my Beloit College experience.”
Where he is today is at the helm of Leafly, the online platform that helps consumers discover, find, and buy legal cannabis through the world’s largest website devoted to that goal.
Leafly was founded in 2010 by three engineers, and in 2011, venture capitalists Brendan Kennedy, Michael Blue, and Christian Groh bought the company through Privateer Holdings, their private equity firm, specifically because they saw an opportunity to fund legal cannabis businesses. Leafly’s revenue is composed of subscriptions and advertising paid by cannabis brands and dispensaries, and it’s been likened to a kind of Yelp or Consumer Reports for cannabis. Leafly’s website and app are expected to have 100 million unique visitors this year.
Less than a year into his tenure as its chief executive officer, Leslie touts Leafly as the premier educational resource when it comes to cannabis, not only for the consumers who read the crowd-sourced online reviews of thousands of strains and dispensaries, but for the entities (and governments, even) who are seeking to better understand how to monitor and regulate this emerging industry.
A case in point is Canada, where recreational cannabis use became legal in October 2018.
“When cannabis was legalized in Canada, many government officials told us that the first thing they did was read the Leafly guide to cannabis,” Leslie says. “That’s just demonstrative of the level of trust in Leafly.”
Much as Amazon has become the de facto source for, well, pretty much everything, Leslie is excited to take Leafly to that level, making it the go-to global brand for all cannabis-centric education and resources.
According to him, that foundation is already set. “I wouldn’t have joined just any cannabis company,” he says. “Leafly stands out in this industry as a trusted, authoritative source. It’s a trusted brand.”
At Amazon, he was a part of launching the company’s international websites and built their legal team from the ground up, from just a few employees to a team of hundreds. While the native Midwesterner (he grew up in the Chicago suburbs) spent a total of 20 years with Amazon—17 in Seattle—he also led the launch of Amazon Prime Video in more than 200 countries and worked for several years in Luxembourg and London. One of the things that drew him from international ecommerce to cannabis is the inherent complexity of the industry.
“No industry is more complicated than cannabis, for better or worse; that’s the reality of it,” he says. “It’s complicated legally and socially, and we embrace these complications as problems waiting for a solution. And that’s what Beloit and the liberal arts is about—I have Beloit to thank for giving me the perspective and skills to tackle those problems.”
One of the problems he’s determined to tackle with his high-visibility platform is disparities in drug-related incarceration. “Leafly has been a voice in this, that we need to address the harm that the War on Drugs has caused,” he says. “It’s disproportionately incarcerated black and Hispanic people around the country, even in states where cannabis has now been legalized. It’s important that we fix this injustice.”
Another is challenging the entrenched social stereotypes the product invites.
“People do have this stereotypical vision of what it means to consume cannabis, the stereotypical vision of a stoner, and that’s just not the case,” he explains.
“Cannabis consumers look like me, you, your neighbor. They’re executives, mothers, athletes, and more. They span the spectrum of society.”
Leslie predicts that widespread legalization is inevitable, and his excitement is palpable as he describes the combined effects of federal legalization and decreased stigmatization, especially when it comes to the increased potential for innovation and research.
“We’re just at the tip of the iceberg in terms of the level of research and innovation we’ll see in the industry,” he says. For example, CBD and THC are only two of 50 active cannabinoids in cannabis, albeit the most well-known. “I’m excited about everything we don’t yet know, and all the product we have not yet seen, and all the benefits that patients and consumers are going to recognize over the next five to 10 years.”
He knows the road ahead for this industry is uncharted and bound to be full of unexpected challenges. He’s not only ready for that, but eager to relish it.
“The liberal arts really trained me to take a multidisciplinary, inclusive approach, which is useful for solving any complicated problem,” he says. “And no industry’s more complicated than cannabis.”
Josh Rosen’95, CEO - 4Front Ventures
Discussions of any controlled substance are hard to divorce from invocations of morality or lack thereof, and cannabis is no exception. The U.S. Drug Enforcement Agency currently classifies cannabis as a Schedule 1 narcotic alongside heroin and peyote.
This is a distinction not lost on Josh Rosen’95, the chief executive officer of 4Front Ventures Corp.
Categorizing cannabis this way led to policies like the War on Drugs, which disproportionately targeted people of color, devastating entire communities, often for possessing small amounts of marijuana. Building a professional framework for the cannabis industry and businesses is one way of fighting the stigma that contributed to these damaging drug policies.
“I had a conversation with someone recently who said, ‘how do you deal with the stigma within the industry from a moral standpoint?’ I actually said since I’ve been involved in the industry, I feel morally compelled to help move it forward,” Rosen explains.
This is at the core of 4Front’s work—propelling the industry in any number of ways. The company is involved at every point in the cannabis supply chain, from cultivation to managing storefronts to product research and development to distribution. These fall under the umbrella of three distinct divisions within 4Front Ventures: BrightLeaf Development oversees the cultivation, production, and manufacturing functions of the business, while Mission Dispensaries manages seven dispensaries in five states. The third division, Pure Ratios, is focused on product research, development, and testing, all from a holistic health perspective.
The complexity of the cannabis marketplace (Rosen describes the industry as “something of a blank canvas”) attracts entrepreneurs who enjoy the challenges of applying a critical-thinking lens to problems, a skill Rosen honed during his time at Beloit—along with discovering a love of employing an analytical approach to his work.
Rosen grew up outside of Madison, Wis., in a family of social workers and teachers. As a high school student, he didn’t know what he wanted to study in college (he jokes that he still doesn’t know what he wants to be when he grows up), but his parents encouraged him to seek out a liberal arts education, and Beloit College fit the bill. He was a multisport athlete, recruited to play soccer, and the shooter of a game-winning three-point basket against Ripon during conference basketball championships his senior year.
It was his time at Belmark Associates—Beloit College’s student-managed market research organization—and the mentorship of Economics Professor Jeff Adams, that truly opened his eyes to the possibilities of a business career. A summer program at the University of Chicago and an introduction by Adams to a fellow Beloit alumnus led to an informational interview, which resulted in a post-graduation job offer.
Rosen quickly made a mark in the Chicago business world, crediting his Beloit-sharpened writing skills for setting him apart from colleagues. The first decade-plus of his career included roles as a stock analyst for a regional investment bank, one of the youngest-ever vice presidents at investment bank Credit Suisse, and a founder at a boutique investing firm. That last position—and a desire for warmer weather—led him and his family to Phoenix. There, he began managing investments for John Sperling, the University of Phoenix founder and a drug-reform philanthropist.
“[Drug reform] was a topic that I knew John cared a lot about, and I ultimately took the idea to him to take a hard look at the business side of it,” Rosen says. That was the catalyst for the formation of 4Front Advisors in 2011. By 2014, Rosen had joined the company, and this past summer, 4Front merged with Canadian-based Cannex and became 4Front Ventures, a publicly traded company. News stories about the merger described the resulting firm as “a cannabis company built for the long haul.”
The idea, Rosen says, is that “We bring a better combination of what the more mature cannabis markets in the country have—which are California, Washington, Oregon, Colorado—and apply a lot of the lessons learned in those markets to the emerging markets, albeit mostly east of the Mississippi.”
Throughout this whirlwind of growth, Rosen sees his role as a strategic one, very necessary in an emerging market with so many head-turning opportunities.
With the constant shifting of laws and regulations, Rosen hearkens back to his days as a philosophy major, touting the importance of logic, mental agility, and critical analysis to any business enterprise.
“If one of our critical assumptions needs to be challenged because of what we’re doing and new information, it’s my job to make sure we adapt and don’t get left behind,” he says.
Sam Milton’97, Founding Principal
Climate Resources Group
“I think of it as 50 laboratories where states can test different public policy approaches. Every state’s different, and every state has its own priorities,” Milton says. “Because there are no federal regulations governing commercial cannabis cultivation, states have to solve this problem on their own, in potentially 50 different ways, using 50 different sets of assumptions, constraints, and motivating forces.”
The problem he’s currently occupied with solving is decarbonizing commercial cannabis cultivation.
Milton never envisioned himself as an entrepreneur. He became just that, though, in 2017, with the founding of Climate Resources Group, which provides ancillary services directly to the cannabis industry and lobbies for better public policy. Founding CRG gave him the flexibility to seize on a niche market—cannabis cultivators and their regulators who needed guidance in reducing the industry’s water and energy usage.
“There were few, if any, companies directly providing services to the cannabis industry as it relates to the energy performance of facilities or reducing their environmental footprint,” Milton says. “The industry is notoriously wasteful, but the types of services I offer didn’t exist. So I jumped in because there was a massive unmet need.”
Milton became intimately acquainted with domestic energy efficiency issues, especially in the Western United States, while working as an energy-efficiency program implementer for a national firm based in Boston.
“California, Oregon, Washington, they were all struggling with runaway energy waste from cannabis cultivation facilities in particular. Early on, utilities weren’t sure how to engage this customer segment, and policymakers weren’t reacting with solutions that could mitigate the skyrocketing growth of new indoor growing operations sprouting up on the West Coast,” he recalls. Most utility companies make money selling energy, he explains, but it does them little good if the large-scale growing operations buying said energy shut down portions of the grid due to a taxed infrastructure.
Creating more energy-efficient cannabis cultivation isn’t just good for the environment—it’s good for the bottom line. In one example, Milton observed many opportunities for cultivators to reduce their energy use and costs, but most weren’t taking advantage of financial incentives offered by state agencies or utility companies. “There are a lot of utility programs that basically hand companies hundreds of thousands of dollars if they buy a slightly more efficient piece of equipment, but the vast majority of growers don’t take them up on the offer for multiple reasons,” he says.
Milton sees his value—and the value of CRG—as that of facilitator, working with businesses, policymakers, and utilities to increase the adoption of energy and environmental best practices across the indoor horticulture community. That ability to see the entire playing field and take in the interconnectedness of all the disparate players and factors is one he attributes to his time at Beloit, where he majored in international relations.
“The work that people do to grow commercial crops indoors can have a tremendous upside, but if it’s not done in a way that acknowledges its potentially huge energy and carbon footprint, you have a massive problem on your hands,” he says. “My Beloit education led me to anticipate what unintended consequences there might be and to try to shape public policy and business practices in a way that can reduce the negative outcomes.”
Milton said his time studying abroad in Senegal played an integral part in his career trajectory. “It wasn’t until I had that transformative experience studying and living in West Africa that I got a real flavor for the linkages between energy access, environmental degradation, and the human condition,” he says. “After I returned to Beloit and later graduated, all I wanted to do was study and work on international energy and sustainability issues.”
Between Beloit College and a master’s degree from Tufts University in law and diplomacy, with an environmental policy and development economics concentration, Milton and his wife (fellow Beloiter Jinna Halperin’97) traveled the world, including a return to Senegal. An internship there renewed his interest in climate change and further stoked his desire to work in the clean energy sector.
While Climate Resources Group is an indirect player in the cannabis world, it’s given Milton a unique vantage point to observe the industry’s fast-paced rate of change. As part of the nonprofit Resource Innovation Institute, he’s working on creating standards for indoor agriculture that inform regulators and businesses about best practices in cannabis cultivation and have the potential to improve the energy footprint of increasingly popular indoor farms. The institute’s website also serves as a resource for growers, who can take an online survey to gauge their operation’s energy efficiency.
Milton observes that as cannabis growers “trade in their Birkenstocks for wing-tips,” their innovations are beginning to have a broader, positive influence on indoor horticulture. He says he’s glad to be playing a role in uniting policymakers, industry players, and consumers as they rally behind a more sustainable growing model. “With the right tools and market signals, indoor horticulture can be done at scale without trashing the planet.”
Emily Kaltenbach’97, Director of New Mexico’s Drug Policy Alliance
Laws regarding the decriminalization of marijuana production, possession, and consumption have swept across the country in recent years, leaving large swaths of unprecedented legal gray area in their wake.
There’s more at stake, though, than the future of a burgeoning legal marketplace. For example—what happens to people who were convicted in drug-related offenses for possession amounts that are now permissible by law? Who wins when marijuana use is legal? Who loses?
And, of greatest concern to Emily Kaltenbach’97: “How do we decriminalize drug use and possession in our country?”
It’s a question she’s uniquely equipped to address. Kaltenbach is the state-level director for the Drug Policy Alliance office in New Mexico.
Kaltenbach and the DPA are working toward the legalization of marijuana as part of a larger movement centered on a regulatory system rooted in public health and social justice.
Founded in part by billionaire philanthropist George Soros, the New York City-headquartered, non-profit DPA is concerned primarily with policy and advocacy regarding decriminalization, especially when it comes to addressing inconsistencies in arrest, incarceration, and now—licensure.
Kaltenbach encountered some of these inconsistencies while growing up in rural New Mexico, long before she worked in drug policy.
“I saw disparate arrests—being a white person and being in high school, who were the people who were being targeted?” she recalls. “It was the young people of color, and the white people who were using equally, if not more, were not being targeted by police or by the school system.”
At the DPA, she’s found the niche that brings together her policy work, public health background, and personal experience.
While she sees potential in drug policy reform and legislation—such as laws that provide mechanisms for expunging now out-of-date drug convictions and shifting commercial activity from underground markets to legal, regulated ones—equity remains an issue.
“We see all these amazing economic opportunities that get created under legalization, but at the same time, we want to make sure that communities aren’t left behind,” Kaltenbach says. “We need to disrupt the racial and economic disparities in our approach, and really get to a place where our policies are grounded in health, compassion, human rights, and science.”
For example, some states make it difficult for individuals with felony marijuana convictions to get licensed to operate a cannabis business. In many cases, Kaltenbach says, legalization can actually spur growth in the underground market, because of the obstacles inherent to creating a legitimate, licensed business.
“We want to see people who have perhaps been in the underground market now be able to work in an above-ground, regulated marketplace,” she explains. “We want to not only disrupt the underground market, but we want to also make sure there’s equity in who’s getting licenses.”
While her current work has her embedded in the state- and federal-level drug-policy trenches, the seeds of Kaltenbach’s career in drug policy were planted early on, while working in public health. It’s a field she entered after studying sociology and health care studies at Beloit.
“It feels like everything I’ve learned, whether that was at Beloit or graduate school, my work, or my personal experiences—they all seemed to come together in this issue,” she says. “The public health foundation I had at Beloit has really led me to where I am today.”
According to her Beloit College mentor, Professor Emerita of Biology Marion Fass, Kaltenbach also left her mark on health studies at Beloit. Fass credits her former student with laying the groundwork for what became the college’s health and society major. “She demonstrated how strong students can pull together diverse courses, internships, and study abroad into a coherent educational experience,” Fass says.
While Kaltenbach didn’t anticipate winding up in the drug-policy field, it repeatedly dovetailed with her work in public health, a tenure that included helping set up federally qualified health centers throughout rural New Mexico and working for the state, developing long-term care policies. She attended graduate school at the University of Washington-Seattle but was eager to return to the desert and mountains of her beloved home state.
In tandem with her work at the DPA, Kaltenbach sits on Governor Michelle Lujan Grisham’s working group for legalization, and chairs the Municipal Drug Strategy Project in Santa Fe. The latter follows a model pioneered in Frankfurt, Germany, in the ’80s and ’90s.
Kaltenbach’s voice grows passionate as she talks about moving drug policy from the criminal justice system to the public health system. All of it, she says, is part of the larger picture of building drug policies that go beyond legalization and aim for equity and social justice.
“Who were the people who were most impacted by this prohibition? They were low-income communities of color,” Kaltenbach says. “If we create this robust marketplace, these are the same communities who don’t benefit from legalization. Social equity programs need to be created as we move forward with legalization.”
How this looks could take many forms, she suggests, like funding for prevention, education, and treatment programs, or business incubators and economic development efforts for the stakeholders who have been most adversely affected.
For her, there’s no question about it. Equity is a must.
Lynn Vollbrecht’06 is a writer and editor living in mid-Michigan.
