‘Trying it, failing, doing it again’
The only Black- and Native American-owned commercial cannabis business in the city of Kalamazoo, Ahki Canna is set for a multi-million-dollar expansion of their growing and packaging operation.
Ahki grows up to 110 pounds a month in a 30,000 square foot building that is only half used now, the plants processed into loose flower and pre-rolled joints and sold to consumers through dispensaries including several here in Kalamazoo County.
Construction to build out the other half of the building has begun, with more than half of the $4 million investment round already raised. This will add more than 600 lights and expand to seven grow rooms by the end of this year, boosting their output to a projected 500 pounds a month.
In their headquarters in the industrial far-east end of the Edison neighborhood, near the I-94 business loop and the Kalamazoo County Jail, Ahki co-founders Raphael Thurin and Trent Friske spoke with NowKalamazoo about their business plans and efforts to leverage their success to raise funds for social justice causes.
“I feel like a lot of this has been like giving it a shot: trying it, failing, doing it again. Trying, failing, doing it again. And then winning a little success. And then doing that just over and over and over and over and over again,” said Thurin. “It is really intimidating, I think, for a lot of people to get into. And just knowing how to even try to give it a shot is pretty hard. But I think right now, it is probably about as easy as it’s going to get.”
Friske and Thurin grew up in Saginaw, and now live in Kalamazoo and Battle Creek, respectively. They started in the industry in 2013 with a dispensary in Detroit that was legal but poorly received by police, they said.
When voters approved recreational cannabis in 2018, nearly a decade after medical use was legalized, they found Kalamazoo was enthusiastic for their investment and supportive in finding a location to launch. The City of Kalamazoo finalized their recreational regulations in 2020.
When they look back at the hurdles to get to this point, they lament an industry that is mostly white and easier to access if wealthy, despite promises during the legalization campaign to make up for decades of the nationwide “War on Drugs” that disproportionately targeted people of color and the poor, filling prisons and upending lives.
“The racialization of cannabis enforcement was not accidental,” wrote John Hudak, deputy director of the Center for Effective Public Management at The Brookings Institution, and author of a 2020 book on the history of state and federal drug laws. “The entire foundation of the War on Drugs was built on racial resentment and outgroup targeting by the government.”
An ACLU study of federal government-collected data between 2010 and 2018 found that “Black people are 3.64 times more likely than white people to be arrested for marijuana possession.”
Ahki just released a new brand, called Da Fakto, where $1 for every “prepack” sold will be donated to area groups. The first organization identified is the Kalamazoo and Battle Creek affiliate of Black Lives Matter because of their work in fighting against racism in the criminal justice system.
Ahki will also need to go on a hiring spree, beyond the 17 permanent employees currently. They want to create a pipeline of future cannabis industry workers that is more representative of the spirit of the “social equity” programs than what state and local governments have created thus far.
The barriers to entering the cannabis industry are already high, requiring significant funding – originally, a half million dollars in the bank just to apply for a license – to already be secured. Plus, there are the costs of expenses like lawyers to navigate state and local laws for the industry, in addition to the costs and expertise required of a successful entrepreneur. (Thurin’s mother and brother are lawyers in the industry.)
Michigan’s “social equity program” provides limited educational support and licensing fee discounts for people previously convicted of certain marijuana offenses or living in certain locations in the state.
But in practice, neither state nor local regulations or assistance programs facilitate meaningful support for people in communities harmed by the war on drugs, who have to catch up to compete against wealthy business people in an industry that regulators have essentially required high capital to enter.
The result: according to the 2021 edition of industry publication MJBizDaily’s “Women and Minorities in the Cannabis Industry” report, only 3.8 percent of cannabis businesses in Michigan are owned by Black people.
“From my lens, it has failed all the way across the board,” said Eric Cunningham, a former city commissioner, who still sits on a city committee that helps regulate the industry.
He said a less-than-aggressive city administration, a court order setting a deadline to get the rules written, and state laws that prevent directing economic benefits based on race has led to a thriving local industry that is predominantly white.
Other than Ahki, Cunningham said he doesn’t know of any other minority-owned cannabis business of any kind in Kalamazoo – and knows of one Black resident of Kalamazoo who owns a growing operation in Kalamazoo Township.
The cannabis committee of the city’s Economic Development Corp. requests diversity presentations when approving licenses. “That’s how we get a pulse,” Cunningham said, who is on the committee. But there’s no hard requirements or repercussions for lack of follow through, he said.
There are certain benefits for owning a business on paper, but he said it is often a token role that doesn’t translate to control or dividends in the business.
“I think that there’s a lot of other operators that will literally use a face to be their social equity. We know that,” said Friske. “But I think if you want real equity, you have to either have ownership or have some high level of employment in a company.”
It’s only going to become more difficult as the industry develops, the Ahki co-founders predict. They combined their early experience in the industry with their own funds and existing connections to hire the lawyers to flesh out presentations to raise more funds and continue to grow. But with a market veering toward saturation, there’s less opportunity and, likely, consolidation in the industry that will make fewer but larger companies to compete with.
With the capital campaign finishing up shortly, Ahki will turn toward staffing in time to start work when construction ends. They’re looking to hire mostly full-time positions, and want to hire people from the immediate and surrounding neighborhoods.
“That’s a focus of ours,” Friske said. “I think that we could probably do a lot of good, you know. We offer benefits. Decent employment. We’re close.”
Thurin said they want to hire people who are looking at this as a career choice.
“We’re really focused on trying to bring people in, help create an opportunity by bringing them in on the ground floor, and then trying to get them as skilled up as we possibly can,” he said, either for upward mobility in their company, to join another company at a senior level, or to start their own company. “In the same way the cannabis industry is a huge opportunity for a lot of people I know, getting access to it is kind of hard or tricky. But I think here, we try to make it as accessible as we possibly can.”
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