Economist, Beau Whitney, released a report on the 2024 Cannabis Business Conditions and Sentiment Survey. It states that the legal cannabis industry remains structurally unprofitable for most operators—an issue that disproportionately impacts social equity entrepreneurs. The survey found that only 27.3 percent of U.S. cannabis businesses are profitable, while 40.6 percent are breaking even and 32.2 percent are operating at a loss. Profitability gaps are even more pronounced along racial lines: 33.7 percent of white-owned cannabis businesses reported being profitable, compared to just 17.5 percent of non-white-owned operators. Whitney attributes these outcomes to systemic barriers, including limited access to capital and banking, heavy regulatory compliance costs, and punitive federal tax policy under IRS code 280E, which can push effective tax rates above 50 percent.
The same story keeps repeating over and over again. States launch social equity grants with promises to provide financial, business, and technical support to equity applicants. Time and time again, lives are ruined and dreams broken because there isn’t adequate business planning support to mitigate the risk of failure.
BIPOCann Leads In Colorado
Founded in 2020 by Ernest Toney, Colorado-based incubator BIPOCann was created to address this gap, which he saw early in the rollout of social equity cannabis programs around the country, where many states were focused on license access, few invested in the long-term business planning, capital support, and operational infrastructure needed to help equity operators survive beyond launch.
BIPOCann works with minority and social equity entrepreneurs to support the full lifecycle of a cannabis business, from license applications and business planning to capital raising, operational setup, and product launch. Although the organization works with founders nationwide, its core programming is centered in Colorado through a partnership with the state’s Office of Economic Development. Beginning in 2022, BIPOCann helped pilot a model that paired state-issued social equity grants of up to $50,000 with structured mentorship, ecosystem introductions, and technical assistance designed to help founders avoid common pitfalls and accelerate time to market. The program has since expanded from an initial eight-week pilot to a 15-week accelerator, and in late 2025, BIPOCann secured its first state contract. In 2026, the organization expects to support up to 60 Colorado-based cannabis businesses through a year-long combination of structured programming and ongoing advisory services.
Four years into the program, BIPOCann can produce solid data on the efficacy of the program, says Toney, “We’ve worked with over 50 unique social equity licensed businesses and helped some get their doors open, expand throughout the state, expand to multiple states, and last year, a few of our participants were awarded about a quarter of a million dollars worth of investment funds.” He estimated that about 60% are license holders and 40% are service-based businesses seeking support from the BIPOCann program.
Toney also points to the advantages of launching a cannabis brand in a mature market like Colorado. With decades of legal market history, the state already has a dense ecosystem of established operators, retailers, and service providers, giving new brands multiple avenues to promote products and build distribution quickly. That existing infrastructure—from cultivation and manufacturing to storefronts and marketing channels—can shorten the path to market and reduce the typical early-stage friction. By contrast, while newer markets often generate significant excitement, Toney notes that brands entering those markets may face delays as foundational infrastructure is still being built, limiting immediate opportunities despite long-term potential.
Financing Remains The Biggest Obstacle
Access to capital remains the most persistent barrier for social equity entrepreneurs. Investment opportunities have largely dried up over the past several years, particularly for first-time founders who lack operating history or personal wealth to self-finance early stages.
Toney says BIPOCann places heavy emphasis on financial literacy, pitch development, and helping founders clearly communicate their brand story. “Ultimately, we want them to be in a position where, at the end of the program, they have a pitch deck to approach angel investors or friends and family,” he says. “Even better is when they can show revenue history to demonstrate business capability.”
The program relies heavily on experienced cannabis professionals who volunteer their time to mentor participants and share real-world operational expertise. That peer-driven support, Toney says, often fills gaps left by state programs that stop short of providing ongoing guidance.
It is unclear why states continue to repeat the same mistakes. Program after program has failed to meaningfully support social equity entrepreneurs beyond the point of licensure. States need to partner with organizations like BIPOCann to implement comprehensive business training programs with ongoing operational oversight, more closely resembling how venture capital firms engage with portfolio companies. Capital alone is not enough.
Learn From Past Mistakes
Even in states that have touted early social equity wins, the outcomes have fallen painfully short. New York, for example, successfully awarded roughly 54 percent of adult-use licenses to social equity applicants, but its promise to deliver turnkey storefronts and meaningful financial support ultimately unraveled. The state’s reliance on public-private partnerships, including DASNY and private investment partners, led to delays, cost overruns, lawsuits, and allegations of misconduct tied to how funds were allocated and how executive compensation was structured. For many licensees, the result was months or years of uncertainty rather than the operational head start they were promised, leaving some entrepreneurs carrying rent, legal fees, and licensing costs without ever opening their doors.
California offers another cautionary tale. While the state has distributed hundreds of millions of dollars in social equity grants through local jurisdictions, the support has been uneven, slow to reach operators, and heavily dependent on municipal capacity. Many equity entrepreneurs report receiving funds after critical startup windows had already passed, or without the technical assistance needed to deploy capital effectively.
In Richmond, California, a local equity program illustrates how these breakdowns play out at the municipal level. As reported recently, the city returned more than $1.1 million in state cannabis equity funding after failing to meet reporting requirements, while a separate $600,000 grant allocation has remained stalled, leaving qualified equity applicants waiting more than a year for promised support. In some cases, California grant dollars have helped cover rent or fees, but they have failed to address deeper challenges, such as cash flow management, compliance costs, access to the supply chain, and long-term business sustainability in one of the country’s most competitive cannabis markets.
These failures are too common across state and local equity efforts. Access to capital without execution, accountability, or ongoing operational support is not equity. It is a system for failure. States need to partner with organizations like BIPOCann that work hand in hand with entrepreneurs to build viable businesses, not just issue licenses and grants.
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