Taking the High Road to Success

Facing protestors and blatant sexism in the cannabis industry, this female startup partner won over opposition by embracing regulation and supporting the community that initially stood in her way

Ruby McConnell and Paul Hampshire

Our foray into Oregon’s newly legalized recreational cannabis industry earned us a spot on the cover of the local newspaper for two weeks running – though not in a good way. The headlines described us as facing “complications,” but the content quoted angry locals as saying we were bent on manufacturing and selling drugs across the street from a family-friendly park filled with kids.

This publicity followed on the heels of a town hall meeting to obtain a state-mandated Conditional Use Permit from the local municipality. The permit was the State’s way of ensuring that local governments were informed of any cannabis businesses opening in their jurisdiction and also enabled those municipalities to take a cut of the development money. Our town, like most in Oregon, took a big cut.

Several new facilities had already petitioned for permits, but ours threatened to be the “one too many.” Like many small towns, the public felt overwhelmed by the influx of new people and distrustful of the new recreational cannabis industry as a whole. The meeting drew a packed house with an organized group of protestors testifying against us, shaking their fists and yelling that we would ‘have dope fiends hanging off the fences’ of our property.

My husband and I, the cofounders of Full Circle CO2, kept our cool, agreed to all the City’s stipulations, and left with our approval.

But our buildout also became something of a circus. There were, at times, up to six people parked on lawn chairs across the street watching – and often hurling ugly comments — as we pulled out 400 feet of old, crumbling sidewalk; poured new, handicapped accessible curbs; and installed an eight-foot landscaped greenway on all public-facing sides of the property as well as cedar fencing (mandated by the city to replace the old chain link). There were several incidents of angry locals not just yelling at us but throwing rocks. The worst of the vitriol was directed at me – the female cofounder in our start-up cannabis enterprise. Since I was the one who spoke at the meeting in this conservative logging town, I got nailed. Trolls in online forums, coffeeshop gossip mongers, and people on local radio call in shows dismissed my cofounder and husband, Paul, as “a pretty boy” and went after me as a “domineering b*tch” that didn’t know my place. That a cannabis company had moved into their town was tough enough to swallow; the front person being a woman just ratcheted up the hysteria.

We kept our heads down and focused on putting the fence up.

It was an episode that was emblematic of my experience as a woman in the cannabis industry. Sometimes you have to keep your head down and focus on the task at hand, and sometimes you have to step into the center ring and advocate for yourself. The trick for me has been to remain true to the vision and mission of our business and not allow anyone else to define who I am or what role I should be allowed to play in this male-dominated business.

This is the story of that journey, but, first a bit of background.

CANNABIS GOES CANNABIZ

In 2014, Oregon became the third state in the U.S. to legalize cannabis for recreational use by adults. It would take three years for the industry to transition from the past two decades of loose oversight under the medical program to a functioning recreational market. In that time, thousands of businesses would start and fail, many even before receiving their licenses. Today, only a small percentage of the hundreds of initial applicants are still in business, even fewer with their original owners. Those that did survive have largely done so because of huge amounts of investment money that allowed them to ride out those turbulent early days of legislation, rulemaking, black market leaks, and oversupply. Today, only a handful of the small-scale, Oregonian-owned, self-funded operations that dominated the medical market remain.

My husband and I own one of those companies, Full Circle CO2. We are a two-person, self-made cannabis processing facility that stands out as much for our 50 percent female ownership and unique business model as we do for our hand-crafted products. This year, for the first time, we will see steady revenue, enough to cover both our business and home expenses, though I still supplement our income with writing. It’s been a long road filled with construction, research, networking, policy advocacy, and out-of-the-box business development. But we’re still here, and we’ve learned a lot that can help other small businesses thrive, especially those in highly regulated markets such as cannabis and alcohol, even in the midst of big-money competition.

Our journey — and that of any early-to-the-game cannabis company — can be divided into three phases: pre-legalization/medical, licensing, and early market. I call our current phase “early market” because like most new industries, regulations and consumer preferences change quickly in the early years, preventing the stabilization of industry practices and norms. How long that kind of volatility will take to even out is anyone’s guess; in the cannabis space, we expect the unexpected as long as national and international laws continue to evolve.

FIND THE MARKET NICHE

My husband, a construction contractor and long-time believer in the healing effects of cannabis, entered the industry in the waning years of medical, before we married. He was in his early thirties and started with a small-scale grow operation in an outbuilding on his residential property, with just enough space to provide flower (the bud) to a few patients.

Pretty immediately two things became clear: He wasn’t very good at growing cannabis, but he saw high demand in value-added products such as vape pens, tinctures, topicals, and edibles. As well, nicotine-based vaping products were growing in popularity. That drove him to research the manufacturing of cannabis-based vape oils, a difficult project after nearly a hundred years of research suppression. He persisted though, and, in 2015, he settled on using CO2 for extraction, which is a non-toxic, non-explosive method of extracting the essential oil (which includes the THC, cannabinoids, and terpenes) from the cannabis plant. It’s a method widely used in the production of essential oils from plants such as lavender and roses.

But entry into the cannabis industry via processing appeared cost-prohibitive, especially for lower-middle class Americans, which we were. At that time, a mid-sized, no-frills extractor ran to $250,000 or more and the ancillary equipment commonly used for post-processing and refinement could cost another $100,000 to $300,000 (all figures in US dollars). We scraped together financing for the extractor and bare necessities with small personal loans, savings, and credit cards. And then Paul started down the long road of learning how to make cannabis extract while I learned everything I could about operating a small business.

The first thing that hit me was pretty obvious: Nearly everyone in cannabis was male, and it had been that way as long as anyone could remember. In pre-medical, black-market days, women were customers (often in need of a male escort who could vouch for them) and arm candy relegated to wait on a couch while stoner dudes talked breeds, trichomes, and pricing. Under medical, it wasn’t much better. Since mostly men had been growing, mostly men continued to run cultivation, distribution and management. If women gained entry to the sector at all, it was usually filling roles as low-paid trimmers or clerks in the newly-allowed dispensaries.

REGULATION TAMES THE WILD WEST

Our marriage in 2016 coincided with the dawn of the recreational market and a promise of change. The State of Oregon began issuing administrative rules, making it clear that the recreational market, in stark contrast to the medical days, was going to be highly regimented. The old way of doing things would not cut it. Opportunities opened for people with skills in mainstream agriculture, manufacturing, retail, and distribution. Like myself, a lot of women made the transition, applying their diverse life and work experiences to the cannabis industry.

I brought an advanced degree in geology, five years of experience in environmental consulting and community college instruction, as well as hefty student loans to the sector. Remarkably, that set me up well to sift through the weeds, as it were. While Paul focused on the extraction side, my role touched every aspect of the start-up — reading up on the administrative rules and keeping us in compliance, overseeing the application process, setting the timeline for construction, and managing the budget. Most in the industry paid thousands to attorneys to read and interpret the hundreds of pages of guidance documents and legislation the state was pumping out, while I read and reread every page. When I had any questions, I never hesitated to pick up the phone and call a regulatory agency or policy maker directly. Apparently, this is infrequent in an industry still wary of government officials. For us, this initiative was essential. And it’s something I recommend any business owner make a habit of doing, whether for occupational health and safety, weights and measures, or simple building code compliance. The best information always comes directly from the source, and I found regulators are often are surprisingly eager to help.

One of the state’s first regulations was a restriction on operations in residentially zoned properties. That left most of the industry, including us, without a place to operate, even for research and development. The scramble for agricultural, commercial or industrial space created a land race. Within months, the inventory of cannabis-appropriate properties (the guidelines stipulated distance from schools and lot size) dwindled to almost nothing. Pricing — for purchase or lease — responded to the demand, increasing to twice or three times the asking price of just a year earlier. Worse, even those companies lucky enough to secure a property before prices soared often found themselves back in the search after counties and cities held special elections to opt out of cannabis.

We were lucky. Just eight months into our search, we found a lot to lease in a small town 30 minutes from our house. It had a roof and reasonable rent and that was about it. Then we had to endure the hell fire of obtaining our permit to build. And then there was the tall task of fulfilling the requirements of the permit, which dictated everything from storage (we would need a secure vault) to surveillance (our 25 by 30-foot structure has seven cameras that record 24/7), to the prep counter material (food grade). It was like building a mini casino.

DIY ON THE FLY

Most of the industry solved this particular logistical nightmare by throwing money at it. The average processing facility build-out at that time cost between $500,000 and $2 million. For us, frugality became the mother of invention — and one of the reasons that we survived this roller coaster industry. From the beginning, we drew on our own skill sets and invested our own sweat in the build out. My husband’s contractor license enabled us to handle most of the construction. As a registered geologist and with my experience as a researcher, I was able to write our complex Standard Operating Procedures, safety plans, and training manual myself. When we required outside expertise for landscaping and irrigation, plumbing or website design, we reached out to people in our network, finding friends and contacts willing to work for labor in kind or low fees.

McConnell’s processing equipment

 

We also hunted out bargains. From my time in research, I knew labs paid a premium for equipment so I sourced kitchen, farm and alternative industry suppliers for devices that could collect, contain, measure, and disperse liquids — and we bought everything we could secondhand. We found office furniture at salvage stores, and we pulled heavy steel storage cages and security gates out of autobody shops to make our vault. One day, we emptied out most of a recently closed restaurant, scoring stainless-steel tables, cleaning products, mop buckets and even a picnic table to give us a place to eat lunch — all for less than $500. After being quoted upwards of $13,000 for a security system for our tiny space, we took the regulations into a big box store and made friends with a clerk willing to read them. We left with $250 of equipment that kept us in compliance until we could upgrade to something more robust. We still use vintage sterilized mason jars we pulled out of a farmhouse canning room to store and transport our bulk product.

Finally, in January 2017, we became one of the first of 40 licensed processors in Oregon. After we paid $5,000 for the license fee, we had maxed out every credit card we had and were left with just $7 to our names. But we had done it! We had built a processing facility, and we were shipping stock.

WOMEN: MIND THE WELCOME MAT PULL BACK

By then, the media had picked up on the uptick of women in the industry, a welcome shift from the b*tches and buds’ mentality that had dominated the cannabis market for so long. While our numbers still lagged far behind men, there were more women in the industry, and those women were holding greater positions of authority. Women-owned dispensaries and wholesale facilities were becoming common, as were woman-dominated farming collectives. There were even Facebook groups for women in the industry, and woman-only cannabis business groups.

But that pink-in-the-green uptick didn’t last long.

In the fall of 2017, Oregon cannabis farmers harvested more than a million pounds of cannabis, far more than enough to supply the state. As regulations still don’t allow for export, the bottom dropped out of the local market. Prices plunged, farms failed and guess what? The good old boy network kicked back in. Competition became cutthroat with men infiltrating women-only spaces — online and in meetings — drowning out our voices and preventing us from networking. Next, they shut women and their products and services out of the game by excluding them from consideration and shelf space. Finally, they targeted our less established and therefore more vulnerable businesses for takeover in an ongoing consolidation process. Now, some dispensary owners estimate that nearly 80 percent of the value-added products on the shelves are held by just three parent companies.

STAY SMALL TO SURVIVE

We survived that first market collapse mostly because we were so small that no one saw us as competition. And our frugal build-out and lack of employees meant we had comparatively little overhead. We only needed a sliver of the pie to stay alive. Competitors tried to undercut our prices, and I faced several instances of blatant condescension and inappropriate sexualized comments, to the point that I started bowing out of “first-contact” business meetings. Instead, Paul began handling initial contacts to vet the value system of potential clients and partners — and shield me from potential negative behaviors and attitudes. It’s a policy we still follow today.

As with the build-out, we took a contrarian approach to other businesses fighting to establish their brands in a crowded market. Instead of promoting our own brand, we built a business model based on servicing the industry. So instead of investing money to launch a Full Circle line of products, we offer business-to-business services, providing custom processing and value-added products for a toll fee. We turned potential competitors into clients, and that helped us maintain a degree of independence and ride out market fluctuations. The strategy also insulated us from high-cost regulatory changes in labeling and testing, shifts that shuttered many start-ups.

But we don’t shy away from taking an active role in advocacy and policy making, both in the state and nationally, partly out of necessity. In the summer of 2018, with no notice or explanation, the state issued a verbal “cease and desist” order for our business. After all our effort to start up, we faced being shut down – and there appeared no means for appeal or reinstatement. I took to the phones, calling everyone from the small-business ombudsman at the Secretary of State’s office to the governor’s cannabis liaison to our federal senator. I often got through as we had taken the time to build relationships with all these people during the previous three years. We showed up for town halls, provided public comments on proposed rules, and lobbied directly. That all helped. As did going out of our way to become a part of the community that initially slammed us, by participating in arts events, spending money at locally owned businesses and being good neighbors.

TURN YOUR ENEMIES INTO FRIENDS

Ironically, it ended up being our good standing in our small town that made the difference. After a two-week shutdown, the local fire marshal went to bat for us. We knew him by first name, and he was already familiar with us, our business and how we operate. He wrote a strongly worded letter, which was backed up by the ombudsman, and we got our permission to operate. The Secretary of State’s office even informed us that we could lodge a formal grievance over the shutdown, but I declined; instead, I requested to be placed on the rules-making committee so I could prevent this from happening to others. They did. I was the only female processor in the room.

Running our business has gotten a little easier since those hurly burly start-up days. We have regular clients and our products, under their brand names, are sold in nearly every dispensary in the state. We still process, pack, and label everything ourselves, but we like the freedom that comes with that. There are still challenges, not the least of which is navigating the gray area that still exists between state legalization and federal prohibition. Because banks are federally insured and our business is not legally recognized federally, we can’t get business loans or a line of credit, which limits our ability to obtain credit and puts our current banking accounts at risk of closure.

And yet, we abide. This summer, we will launch a line of Chong’s Choice. The contract to process products for Tommy Chong (a cannabis activist who made his name in Cheech and Chong comedies) came to us via word of mouth, great references from our clients, and my husband’s determination to stick with his unique brand of craft CO2 oil. It will provide, we hope, the first stable source of income we’ve had in years.

But there is still a long road ahead of us to reach financial stability, and an uphill battle for women in the industry. I’m still almost always the only woman in the room. Most of the women in this industry still seem to work on the retail side, though there are some family and women-led farms that are surviving. And even though women control two-thirds of the purchasing power in the U.S. and so should be a primary target demographic, cannabis marketing still focuses on young men.

I remain hopeful. I look forward to the day that, for a change, women farmers and business owners dominate policy discussions and our products dominate the shelves. My current goal is to build a business that is sustainable over time and generates revenue and creates jobs in the same community that was so against us at the outset.  For myself personally, I’d like to see Full Circle provide Paul and I a stable income and a means of taking care of my parents as they age and ourselves into retirement.

And I’d like to pay off my student loans, a goal I almost gave up on but now seems within reach.

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