ESG Investing & Cannabis
Black people are 3.64 times more likely than white people to be arrested for marijuana possession.
As the cannabis industry becomes legalized or decriminalized in states across the US, there are environmental, social, and governance (ESG) issues that need to be considered. Of particular importance are the social and governance issues - Who seeks to gain the most from this new sector? Who has paid the dues? Who is being excluded from participating? How can we ensure that things are being built equitably from the get go? What are the externalized risks associated with the industry? Who has been bearing the brunt of those risks?
Making ANY industry more sustainable and equitable starts by examining what’s material and who needs to be at the decision-making table. The tumultuous history of racially biased arrests and a war on drugs make the conversation around equity even more important as investors evaluate the emerging cannabis sector.
In this week’s episode of Do What You Can For The People, Mo McCarthy and I talk about how ESG criteria need to be considered as the cannabis industry starts becoming more financially and commercially viable. We strongly believe that getting the governance piece right and making sure that the industry has fair representation of all stakeholders will allow for the social and environmental pieces to fall into play.
Mo McCarthy is an ESG Ratings Analyst at Institutional Shareholder Services (ISS) and a fellow graduate of Bard College’s MBA in Sustainability. Mo is incredibly passionate about ESG and the cannabis industry. Join us as we talk about how this emerging sector is a perfect storm of ESG issues, but also presents an opportunity for socially conscious investors to shape the future of finance.
THINGS MENTIONED
ESG Criteria: https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp
Disclosing Material ESG Issues: https://www.forbes.com/sites/bobeccles/2020/01/22/understanding-the-financial-intensity-of-industry-specific-material-esg-issues/#7b2564ed21b5
Institutional Investors: https://www.investopedia.com/terms/i/institutionalinvestor.asp
SME Sustainability Reporting: https://www.globalreporting.org/information/news-and-press-center/Pages/Small-Business,-Big-Impact-Making-the-case-for-SME-Sustainability-Reporting.aspx
Nasdaq’s Sustainability Efforts: https://www.nasdaq.com/sustainability
Racially Biased Arrests: https://www.aclu.org/issues/smart-justice/sentencing-reform/war-marijuana-black-and-white
CannaBS Podcast Episode on Social Equity: https://cannabspod.libsyn.com/all-things-green-series-ep-4
Legalization & Decriminalization: https://norml.org/laws/decriminalization/
Risks Facing the Cannabis Industry: https://www.fool.com/investing/2020/03/17/4-of-the-biggest-risks-facing-the-cannabis-industr.aspx
Environmental Issues in Cannabis: https://daily.jstor.org/the-environmental-downside-of-cannabis-cultivation/
ADDITIONAL RESOURCES
NORML [activist group focused on legalizing marijuana]: https://norml.org/marijuana/fact-sheets/racial-disparity-in-marijuana-arrests/
American Civil Liberties Union: https://www.aclu.org/news/criminal-law-reform/a-tale-of-two-countries-racially-targeted-arrests-in-the-era-of-marijuana-reform/
New Frontier Data [industry/consumer data]: https://newfrontierdata.com/
CannaBS Detector [podcast]: https://cannabspod.libsyn.com/
Marijuana Moment: https://www.marijuanamoment.net/
National Cannabis Industry Association: https://thecannabisindustry.org/
War on Drugs: https://www.oah.org/tah/issues/2015/august/pondering-pot/
Cannabis & Sustainability: https://www.greenentrepreneur.com/article/345097
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