These entrepreneurs want a cannabis business to bring wealth to Hartford’s Black community

While deep-pocket backers are aligned with many of the social equity applicants in the Connecticut adult-use cannabis program, at least two are going their own way.

Coming from the badly hurt communities from the so-called war on drugs, feeling camaraderie with Black residents of those areas, Mark Christie and Janice Flemming-Butler say they want to make sure the money stays local and that they will work to help bring generational wealth and opportunity to Hartford residents.

Flemming-Butler is a community organizer and wants Let’s Grow Hartford LLC to give back to members of her community.

Christie, 58, of Bloomfield is the primary contact for FRC Holdings LLC, hoping for a provisional license as a cannabis cultivator. First, though, like all social equity applicants, he must pay a $3 million licensing fee, set by the General Assembly.

Christie said that in talking to his peers in Hartford’s Black community, including lawyers and politicians, “We said that we wanted to really have true economic impact and really bring a true kind of generational wealth opportunity to the city of Hartford.”

The way the program is set up, the applicants must have 65% control over the company that is applying for a license, but the $3 million must come from the remaining 35%. Those backers are often companies known as multi-state operators or MSOs.

But aside from the challenge of finding people with $3 million to give, which won’t bring any returns because it all goes to the state, the arrangement may not benefit applicants for long, Christie said. The percentages are set only for four years. After that, the operation can be restructured.

“We all came together and we started to look at the economics of this and talk to people,” said Christie, who represented former University of Connecticut basketball star Ray Allen. What they saw was a situation in which the person intended to benefit from the program might not after a few years.

“If you got an opportunity to look at their contracts, I’m pretty certain at year four they will be owning between … 5 and 20% of the enterprise,” Christie said. “It will flip and they won’t be in ownership or control. And so it really takes about 2½ years before you get up and running for profit. So that leaves one year to participate in the 65% position. So you do all that, you get one year, and then you’re done.”

FRC Holdings — FRC stands for Four Rivers Cann — doesn’t have backers listed on its application, which is unusual in the social equity program. Christie said he’s looking for someone in the community who will have the $3 million to give and who shares his philosophy.

When it came to finding an MSO, “we weren’t going to do that,” Christie said. “We were going to stay true to the integrity of the social equity program. All of the people that are kind of like my advisory team, we call them founders, everybody’s African American. On my leadership team, my executive management team, everybody is a person of color.”

Among them are people with MBAs from Howard and the Wharton School of Business at Penn. One is a graduate of Yale Law School. “We’ve got a Kellogg MBA [from Northwestern University] that’s done multicultural marketing for 25-plus years in Fortune 100 companies,” he said. Another MBA from Michigan University has worked for more than 25 years in the pharmaceutical industry.

None was in the cannabis business before, Christie said. He has a finance degree from Hampton University and worked in commercial banking before becoming an entrepreneur.

“Everybody’s coming together,” Christie said. “This effort about social equity and bringing economic opportunity to a people that have been shut out, everybody understands that mission.”

The Rev. Bruce Carter and his brother, David, had a classmate at Westminster School, James Winokur, who is CEO of Berkshire Roots Cannabis Dispensary, based in Pittsfield, Mass. Berkshire Roots became a management partner.

“They didn’t ask for any equity,” Christie said. “And they’re going to help us run this vertically integrated operation, and it’s very complex. It’s a very complex business model.”

Moving ahead is still difficult, however.

“We are in a position that we don’t have to give up the farm, we feel, but now once we’re in the capital markets … you would think that having a strong team, you would think that being from the local area, staying true and committed to the integrity of social equity, that we could go out and find this capital that we need,” he said.

“We could probably debt-finance everything else,” he said. But the $3 million is different “because it doesn’t go into the enterprise. The capital markets are not responding well,” Christie said. “It’s not an investment really in the company.”

Besides, he said, it is the highest fee in the country, “and that’s what they’re asking the social equity guy to pay to get an opportunity at the highest level. … We’re going to take on the challenge, but man that’s a tough one to swallow.”

The license fees are intended to be spent in the communities that suffered from the drug arrests and joblessness during the 1970s and 1980s, when the war on drugs was at its peak and Black and Latinx men were targeted for heavy penalties.

That’s got Christie “stirred up,” he said. “OK, so you’re going to ask the broke Black guys to put money in a pot to help take care of the broke Black community. Come on, man. That’s hypocrisy, man. I can’t believe that that’s what they say and tell people.”

Janice Flemming-Butler launched Let’s Grow Hartford LLC to give back to members of her community.

“I’m from a housing project and I felt like, here’s the opportunity to deal with some of the residue that was left over from the war on drugs,” she said. “And if I can give somebody a choice between selling weed on a corner or trying to figure out how to build generational wealth, give him leadership skills, I was up for the task.”

Growing up in Charter Oak Terrace in Hartford’s South End (now Walmart Plaza), Flemming-Butler is a community organizer who knows how important it is for people to work together to lift themselves up.

And she knows how badly the war on drugs hit the Black and brown communities. It was “something that I was a part of that impacted my life, impacted my family life. It continues to impact my people,” she said.

“As the organizer who has fought against criminal justice issues that have impacted my community, this seemed up my alley,” she said. “I really wanted to challenge myself and put together a local team and challenge myself to work with people locally and to create real social equity.”

Flemming-Butler, 49, is working with David Salinas, founder of District New Haven, a business incubator, who is seeking to create the Parkville Arts & Innovation District in Hartford. She doesn’t want to say where she will get the $3 million licensing fee, but said it’s not a multi-state operator and that “I’m not going to be without it.”

“I think it’s problematic when it’s supposed to be social equity,” she said. “I get what they may have set out to do. … I think they were really in fairness try to set out to create equity. But just like any other thing, depending on who’s defining it, decides whether it is what it set out to be.”

The war on drugs ‘impacted my life, impacted my family life. It continues to impact my people.’

—  Janice Flemming-Butler

Flemming-Butler also has a joint venture partner who she said is local. She also won a licensing opportunity in the general lottery in the food and beverage and delivery sectors. She said, like others, she entered the lottery multiple times, though “not in the thousands.”

“I don’t remember the exact number but it was a decent amount,” she said. “I rolled the dice.”

The food and beverage license is important to Flemming-Butler because she wants to have direct contact with customers, especially women approaching menopause, educating them about cannabis’ healing properties. “I really want to focus on women’s health and an incubator for young people” to get a good-paying job.

“I really want to challenge myself to bring something to my people who have stood on a corner, have been to jail for this, something we can leave to the next generation the right way,” she said. “Leave them an option. And I believe if they see that I can do it then they could do it too.”

She plans a training curriculum, teaching young people how to work in business. “It’s something that no one taught me,” she said. “I had to learn on my own.”

Flemming-Butler said she lost both her parents in her teens and put herself through Trinity College. She founded Strategic Outreach Solutions, a lobbying firm, and, before that, Voices of Women of Color.

“Their mission is to create safe spaces for women of color, to come together with one voice as one community for the liberation of all oppressed people in the areas of housing, education, public health and voting,” she said. “The things we’re most proud of is how we develop women in different leadership roles and watch them excel.”

Flemming-Butler said her focus is on building up people in the Black community of Hartford, and she sees cannabis as a way to do that.

“I’m not driven by money. Anybody who knows me will tell you that I’m driven by how many people we can get off welfare,” she said. “To me, if you are so blessed to become a social equity applicant, and you don’t pour into the community in which you decided to set up shop, you are part of the problem.”

Christie said that, in order to raise the money, “we’re talking to anybody and everybody.”

People in the cannabis industry turned out to be the wrong people, though. “Most folks really just want to basically steal the license on the front end for cheap,” he said.

“You know, a lot of folks are having trouble,” he said. “We’re not the only ones. And the people who are successfully finding that money. It’s not like they went out and raised it. … So people who are backed by MSOs, the MSO just really made that investment for those folks.”

In some cases, the MSOs even wrote the applications, Christie said.

He said the math doesn’t work when it comes to minority ownership because the backers will want a return on their investment. According to the legislation, half of the cannabis businesses are to be awarded to social equity applicants, who have 65% control of their operations, meaning those applicants will have 32.5% ownership, Christie said.

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In the fourth year, when those deals can be restructured, he predicted the social equity ownership will be 10% or less because the backers will want more of the profits.

“The folks that are putting out that kind of money are saying, we know how profitable this can be,” Christie said. “And really, we shouldn’t be relegated to 35%, because mathematically it doesn’t make sense. I put in zero, you put in $3 million [for] 35%. … So they say look, we got to flip this to a more appropriate percentage.”

In order to avoid that scenario, Christie said he and his partners are “going through all of our Rolodexes and networks to identify high net worth individuals that have the capability … wanting to get into the cannabis business but wanting to support the social equity initiative and cause, because you’ve got to have that somewhere in your philosophy before you write this check based on the dynamics of what this check means.”

He said they have three strong leads. Then, he’ll borrow the $35 million to $40 million he needs to get the operation going. He has a site picked out on Homestead Avenue, which needs to be cleaned of contamination, but city officials told him they would have to hire a consultant, have a community redevelopment plan and go through local councils.

Christie said it will be difficult to finance his startup by borrowing money, but he didn’t want to end up as a minority partner in a few years. It doesn’t fit his vision of how cannabis can benefit his community.

“For me, as a Black man, that’s 58 years old and in America, if I have the opportunity to start and own a business in a new, emerging industry, I feel a responsibility to my people, to not trade that opportunity in just for cash to benefit me and my family.”

Ed Stannard can be reached at [email protected].