Cooperatives: Not just a buzzword
Applying cooperative principles to the Cannabis industry
If you have been following Chicago Cannabis Company for some time then you already know that we are a worker-owned cooperative, meaning worker-owners share in the profits of the company and agree to operate the company democratically. Each “member” of the cooperative is an owner and represents one vote.
Learning how to cooperate can be challenging! However, in a post-pandemic world, collective ownership will become evermore important and worker cooperatives may even begin to thrive. Worker ownership is a fair and just approach to building a company and can be especially transformative at a time when income inequality is a growing problem.
We are encouraged by political support behind cooperatives like the Illinois Limited Cooperative Association Act and a rise in co-op enabling organizations like Democracy Collaborative. Even Chicago’s mayor appeared to endorse the idea of a weed co-op:
Anecdotally, there seems to be a growing interest in “cooperatives”, both in name and in practice. For us, being a cooperative is not about being trendy — it’s a statement — we are on a mission to democratize cannabis.
Social Equity in the Cannabis Space
Chris Hudson, one of Chicago Cannabis Company’s founding members, recently participated in a panel discussion “Social Equity in the Cannabis Space” at the Sensible2020: The Virtual Drug Policy Conference. One of the main questions we were trying to answer was:
How can worker-owned cooperatives help address social and economic issues facing the cannabis industry?
There are many different forms cooperatives can take, and they may all operate to tackle unique challenges, but here are several ways worker co-ops can mobilize to create cannabis companies owned and controlled by the people:
1. Overcome High Start-up Costs
All businesses have a start-up cost, but high start-up costs in cannabis can be attributed to regulatory burden, limited licenses, and rigorous compliance guidelines. It may be difficult for sole proprietors or small groups with limited access to capital to participate in the legal cannabis industry. Traditional methods of raising capital include investment from venture capitalists, angel investors, initial public offerings, and crowdsourcing.
Co-ops essentially crowdsource funds from their owners/members in exchange for co-op membership, which can be an effective mechanism for pooling together capital and other resources needed to start a business.
At Chicago Cannabis Company, potential members can meet their membership fee via sweat equity, not only a capital contribution. This levels the playing field so to speak, allowing anyone with good work ethic and applicable skills to become an owner.
2. Maintain Control & Profit Sharing
Worker-owners collectively take on the economic risks and benefits of working in, owning, and operating their cooperative business. Worker-owners decide how the net income, or net losses, are allocated and govern and control the enterprise on the basis of one member-one vote.
Instead of seeking outside investment in return for equity or stake in the company co-op members pool their resources and capital together to invest in the venture, maintaining control of the company and its profits. This does not necessarily solve the problem of access to capital, but it allows the co-op to remain autonomous and free of outside influence. At Chicago Cannabis Company worker-owners share in the profits of the company and vote on major decisions.
3. Build Equity in Cannabis
Individuals who have been arrested or incarcerated due to drug laws suffer long-lasting negative consequences, including impacts to employment, business ownership, housing, health, and long-term financial well-being. Individuals living in Disproportionately Impacted Areas face greater difficulties accessing traditional banking systems and capital for establishing businesses. Cooperative ownership is a powerful way to extend the benefits of business ownership to all the workers that are sharing in the risk and reward of this enterprise.
Membership in a worker-owned cooperative can be an effective strategy for enabling entrepreneurship in the cannabis industry. As Chicago Cannabis Company grows, we will strive to bring on owners who are Equity Applicants, Individuals from Disproportionately Impacted Areas, or Socially or Economically disadvantaged communities. We continue to work with community groups and other organizations to further our mission of an equitable cannabis industry.
