Legalization levels playing field for small entrepreneurs
For decades, smoking culture had a negative connotation – smoking weed is bad and the laws aimed to restrict it. More recently, the widespread legalization of marijuana has shown a shift in perspective, opening up new doors of opportunity for small entrepreneurs in the cannabis space.
Historically, many convenience stores in America were under contract with large tobacco companies. These contracts limited which rolling papers a store could carry, thereby limiting competition, and making it difficult for independent brands to take root. Meanwhile, products like RAW and other smaller brands – which could be used for cigarettes or cannabis – ruled the roost in independent smoke shops, bodegas, and dispensaries.
Founder of RAW Rolling Papers Josh Kesselman says the small shops were the best to work with.
“We did best when there was a small independent operator making decisions to truly help the success of their own store, whereas large corporate chain buyers would too often get locked into mega tobacco paper contracts. In my experience, that hurt their stores and made them fall behind the market,” said Kesselman.
The increasing legalization of marijuana has disrupted this, shifting the distribution chain and marketplace. Now, more people are going to dispensaries, CBD shops, and alternative smoke shops – places that don’t have contracts with Mega Tobacco. Consumers are faced with a new range of options and increasingly, they are side-stepping huge tobacco companies.
Kesselman says he’s seeing firsthand this loosening of mega tobacco’s stranglehold. A marketing maestro, Kesselman has built a global empire using his pre-rolled cones, unbleached papers, and his charismatic and unique personality. But he’s quick to point out that his success is shared.
“Mega Tobacco operates under the model of a ‘peaked mountain.’ They’re at the top of the mountain and only the big brand owner benefits. They design systems where they make the lion’s share of profits and stores get only a penance margin. It’s how they’ve always done it, and they’re quickly trying to cash in on the cannabis market in the same way,” said Kesselman.
“But I believe in ‘a gentle sloping hill.’ The wholesaler, distributor, and the retailer are all part of the success. We are all partners in a way, and we all succeed together. By allowing the stores and distributors to earn a generous margin, they truly joined in the success of RAW. Our mantra is ‘we all get higher together.’”
The widespread legalization of marijuana has blazed a new trail of opportunity for entrepreneurs known as “legacy operators”, or individuals who commercialized cannabis for a majority of their income prior to legalization. These entrepreneurs have been given the freedom and resources to now create new smoking innovations, evolving the industry that they’ve built the foundation for. As states begin to roll out their legislation around marijuana, deciding on parameters for licenses, individuals who were previously locked up due to cannabis-related injustice are finding themselves in a rapidly changing world.
The greenlight to legalization gives access to products that were not very easily accessible before – or at all. This levels out the playing field for small businesses, entrepreneurs, and legacy operators who are finding their footing in this quickly growing industry.
Kesselman says it’s been awesome to see the transformation.
“So many entrepreneurs are emerging from the shadows, as barriers to their success are removed,” said Kesselman. “The people who built this industry from the ground up are the ones who should be benefitting, not Mega Tobacco. The small entrepreneurs are the true lifeblood of this industry and the ones who will continue driving innovation.”
As the industry continues to expand, Kesselman says he hopes there will be a ripple effect of economic equity and diversification of who can succeed in the legal cannabis industry – not just for those entrepreneurs, but across all sectors – including cultivation, processing, distribution, marketing, and retail.
