Curt’s Cannabis Corner: Business Ethics in the Cannabis Industry

A primary focus of emerging cannabis companies is social equity and inclusion. Such pinnacle issues beg those in the C-suite and middle management to consider the overarching issue of business ethics. This includes methods and programs to expedite the adoption and implementation of inclusivity, sustainability, and social responsibility programs in an industry that has yet to mature and find its stride. 

 


CURT’S

CANNABIS

CORNER 

Business Ethics

In The

Cannabis Industry

 

By Curt Robbins

 


 

Standards & Regulation

With legalization comes regulation. Most regulations are imposed at the governmental level. However, in some areas, such as quality assurance and advocacy, guidelines emerge at the industry segment level.   

The current focus of such management and operational standards involves product transparency and accountability to both consumers and distribution channels. This represents a small step toward ethical business practices in which players are accountable for their supply chain and overall strategy. 

According to many thought leaders, becoming a better corporate citizen necessarily involves business ethics. These ethics and their practice must exceed a simple accounting of how profits are spent. These practices must define and, arguably, power strategies regarding revenue and reinvestment.

Several tools are available in this arena. Assessing and benchmarking the ethics of the practices of a business can be aided by Environmental, Social, and Governance (ESG) reporting standards. This modern corporate management methodology involves equal elements of environmental stewardship, social equity, and regulatory oversight.  

Mika Unterman & ESG 

In 2018, Canada shocked the worldincluding itselfwhen it legalized adult-use cannabis at the federal level. Montreal, Toronto, and Vancouver have since become cultural and financial epicenters within the Canadian adult-use cannabis marketplace.

Mika Unterman is founder of the Apical Ethical Cannabis Collective in one of those epicenters, Toronto. Her expertise is in business intelligence and the commercialization of the once-underground culture of cannabis into the now legaland heavily regulatedindustry of cannabis. One of Unterman’s core passions is that all companies in the emerging industry might understand the potential benefits of ESG. 

ESG is “an actionable commitment that companies can invest in to make the world a better place,” writes Unterman in an article for the Alan Aldous PR and digital strategy agency in Toronto. “ESG investing relies on independent ratings that assess what a company says and does for the environment, social justice, and governance issues,” explains Unterman in the article. 

The Interview

Curt’s Cannabis Corner conducted the following exclusive interview with Mika Unterman in August of 2021. The goal is to educate cannabis industry professionals in our reading audience about the topic of ESG and ethical standards that they may desire to adopt and promote.  

Curt Robbins: “Mika, thank you for taking the time to share your expertise in business ethics and, more specifically, ESG and social consciousness within the burgeoning cannabis industry.”

Mika Unterman: “Thank you for having me. It’s an honor to have the opportunity to speak on this topic.”

CR: “Mika, you have your finger on the pulse of business ethics within emerging legal adult-use cannabis markets such as the United States and Canada. What are the leading companies doing right in terms of ethics and ESG?”

 

MU: “The only thing I can say for certain is that it’s being discussed. What’s unique about cannabis as an industry is that most of the workforce is millennial and most of the consumers are millennial and Gen Z. The inclusivity, sustainability, and social responsibility initiatives of businesses are important to these demographics. It’s certainly being discussed when it comes to marketing initiatives.

“In terms of action, I’ve seen a wide range. Most ambitious have been cannabis investment funds that focus on small BIPOC-owned businesses. Some ESG reports have emerged within the last year. There have also been donations to specific social justice causes. But that is not the same as fundamentally changing the way you do business to build up the resilience of communities, both human and natural.”

CR: “The Apical Ethical Cannabis Collective website describes the cannabis industry as ‘fast paced and bootstrapped.’ Can you elaborate?”

MU: “As with any new industry or startup company, the work seems to never end. Not only is there very rarely a formal, tested process on which to rely, but the rules of the game are constantly changing. The challenge is like changing a tire without stopping the car. You have to figure it out as you go. Most companies are comprised of a relatively small team. That is very energy expensive in terms of human capital.

“The cost of compliance is very high. That’s what I mean when I say ‘bootstrapped.’ Planning and paying for a facility with the appropriate quality, security, and environmental mitigation equipment requires a long runway and heavy capital. Workers in the cannabis space will often hear from employers that they simply can’t pay market rate for their services and work…that there isn’t enough cash.”

CR: “What are emerging companies doing wrong in terms of embracing and implementing ESG programs?”

MU: “Not thinking about it early enough and not incorporating it into the business strategy from the beginning. Some confuse ESG and the practices around inclusivity, sustainability, and social responsibility to be more like charitable giving. Something you do after the profits are made. But ultimately, ESG is about how you run your business every day.”

CR: “What can small operators, who employ from three to 20 employees, do to understand the benefits of ESG and implement their own programs and standard operating procedures?”

MU: “I think these small businesses are the ones with the potential to take the most action. Larger companies are inhibited by bureaucracy and red tape. Small businesses can be nimble, try things, fail fast, and try again, in an iterative path to true improvement for all parties affected or involved. Another big benefit: Done properly, ESG programs can be both sustained over the long term and their benefits quantified by cynical accounting.

“The best way to start implementing ESG is to be open to asking yourself questions. This includes identification of all stakeholders and externalities. The environment is almost always an important one.”   

CR: “What can the United States learn from Canadaand what can Canada learn from the U.S.in terms of their respective ESG implementations?”

MU: “In this case, it might be the blind leading the blind. I think we have much more to learn from the European Union and Japan in terms of how we incorporate the cost of externalities into our business and how we are accountable to society. We must create an industry that is built for our environment and all in societynot on its shoulders.”

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