fbpx
QQQ
+ 2.58
328.93
+ 0.78%
DIA
+ 2.29
343.25
+ 0.66%
SPY
+ 2.93
416.17
+ 0.7%
TLT
-0.69
140.61
-0.49%
GLD
+ 1.55
168.49
+ 0.91%

The Cannabis Industry Should Lead ESG Adoption

May 3, 2021 11:05 am
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
The Cannabis Industry Should Lead ESG Adoption

This article By Robert Hoban was originally published on Forbes and appears here with permission.

Last year reminded many folks about the vital importance of integrating social, environmental, and corporate governance (ESG) principles into business. Simply put, to not do so is to be left behind. The cannabis industry is uniquely connected to these issues because of the historical criminalization and propaganda-driven stigma surrounding the plant, which has disproportionately affected underprivileged populations.   

Cannabis has long been known to be a potential answer to many environmental challenges. In 1985, Jack Herer published his revolutionary manifesto: The Emperor Wears No Clothes. Mr. Herer lit the torch that much of the hemp legalization movement in the U.S. carried until the passage of the 2014 Farm Bill. He postulated that hemp is the only annually renewable natural resource capable of providing the majority of the world's paper, textile, transportation, and energy needs while reducing pollution, rebuilding the soil, and cleaning the atmosphere. Attending the 2021 NoCo Hemp Expo in Denver, CO this past weekend, these ideas are fully coming to fruition in the backdrop of a growing carbon economy.

Now, with the Biden Administration’s policies driving ESG principles forward and the investment world maniacally focused on them, they’re no longer optional for the cannabis industry, but guiding tenets. ESG refers to the three central factors in measuring the sustainability and societal impact of an investment in a company. These criteria help better determine the future financial performance of businesses and help “qualify” them for investment, acquisition, aggregation, or the like.  

According to a multitude of sources, investors are increasingly applying these non-financial factors as part of their analysis in identifying material risks and growth opportunities. Because marijuana is not yet legal in the United States, and because hemp derivatives are not yet regulated by the FDA, investor pools available to the cannabis industry are fairly nuanced and often limited. Compare this to the institutional investors and lending that will ramp up in a post-prohibition environment. 

I was first exposed to the great importance of ESG investing and principles as they relate to cannabis when invited to speak at an event in New York in 2018. It was the annual gathering of Nexus Global at the New School in Manhattan; for the first time, their program included the cannabis topic. For those who don’t know, Nexus Global is not just any forum but has 6,000 members in 70 countries, representing a significant portion of the world’s wealth. 

I was thrilled to participate in an extraordinary panel led by the one and only Christina Hollenback of Nexus Global. It included the Chairman of Creso Pharma, Boaz Wachtel, and UCLA’s enormously smart and talented Dr. Jeff Chen. But the “star” of the discussion was the Co-Founder and CEO of the People’s Dispensary, Christine De La Rosa — the walking, talking, and breathing epitome of ESG in practice.     

The discussion ranged from how cannabis can bring about social justice and healthier communities — to everything in between. As we spoke about these principles and answered questions, I saw firsthand how critical ESG was to the cannabis industry. All of this was reinforced as I listened to a variety of non-cannabis-related programs — every venture now had an element of ESG.   

In the cannabis industry, much focus has been placed on social impact issues, social justice regarding government programs, and policy reforms. One organization involved in this movement is the “Last Prisoner Project,” of which I am a proud supporter. Another is the Denver-based “Kind Colorado” and others have popped up in the past several years. 

They all seek to create social justice in the cannabis industry through corporate responsibility and service-based measures. “Kind Colorado’s” founders, Kelly Perez and Courtney Mathis, have made a huge impact on this industry for the better. The organization was created to connect cannabis businesses to communities, to highlight the good the sector is doing, and to put into action purpose-driven partnerships to support equity and justice, positive community impact, and environmental sustainability.

The cannabis industry has taken this to an international level with the movement known as “Regennabis.” Its founders, Patrick McCartan and Geoff Trotter bring industry and global business expertise to the table in a manner that’s attracted a great deal of attention and momentum. Regennabis believes in building a disruptive and innovative community, driven by actions in alignment with the UN’s Sustainable Development Goals.

As this industry grows and companies attempt to distinguish themselves, it’s essential that they embrace the principles of ESG – for both survival and growth. Commercial cannabis has a unique opportunity to make a substantial social impact, create good jobs, and be long-standing members of the business world. As Steve DeAngelo likes to say, “Support the companies that support our communities.” Don’t get caught in slow motion as others dash to the door of innovation.

Benzinga's Related Links: 

Posted-In:

Cannabis Markets