When Christine De La Rosa, CEO of The People’s Ecosystem, a California-based cannabis operator, suffered a pulmonary embolism from undiagnosed lupus in 2010, it took her five years before she began successfully treating her condition with cannabis—something she would have tried sooner, she said, if she would have seen her Latino culture reflected in California’s medical cannabis dispensaries.
“I think that for me, personally, … the most important thing is representation,” De La Rosa told Cannabis Business Times and Cannabis Dispensary. “The reason it didn’t occur to me to look at cannabis for five years was because I didn’t see representation of myself in those dispensaries.”
Her medical condition halted her career as a technology consultant and left her bedridden with a treatment regimen that included opioids and steroid infusions. Transitioning to cannabis in 2015 helped De La Rosa manage her lupus, achieve remission and get her life back.
De La Rosa’s health journey led her to launch The People’s Dispensary, an underground dispensary in Oakland that opened its doors in 2016.
In 2018, when California launched its legal adult-use cannabis market, The People’s Ecosystem, a Black, Indigenous, People of Color (BIPOC)- and women-owned company, transitioned to the regulated market.
“We raised … about a million dollars between 2018-2019, while other very large companies were raising millions and millions of dollars,” De La Rosa said. “We are 85% BIPOC- and women-owned, so we have less access to capital than most people do.”
Despite this barrier to entry, The People’s Ecosystem has expanded to operate a delivery service in California and a cultivation operation in New Mexico. The company also formerly operated a dispensary in Oregon, which it recently sold. That retail operation, which was based in Portland, was largely a learning opportunity, De La Rosa said.
“We never intended to have more than one dispensary in Portland, and the reason I bought the dispensary in Portland in 2019 was strictly to learn about the legal industry,” she said. “We had raised about $900,000 and wanted to purchase that, and then we moved our team to Oregon out of California so they could learn to operate in the legal market. We were operating in the legacy market for a long time, so we had to learn, how do we do 280E? How do we do taxes? How do we do Metrc? How do we do seed-to-sale?”
The People’s Ecosystem now plans to launch a product line in Oregon, De La Rosa said, to maintain its presence in that market.
Armed with lessons learned in raising capital—and with a desire to teach others what she wishes she had known when she first entered the cannabis industry—De La Rosa launched The People’s Group in March 2021 to fund other BIPOC- and women-led companies in the space.
“It’s all the things I wish I’d had when I was raising capital for my company,” she said. “I wanted to create something to offer all the things we wish we had when we started.”
The fund raises start-up, operating and growth capital for BIPOC- and women-owned cannabis businesses in legal markets across the country. It closed its seed investor in June and deployed its first capital earlier this month, on Sept. 1.
“We’re moving really, really fast and we have about 20 deals currently in our deal flow,” De La Rosa said. “Everybody in our deal flow are the people that we see as being incredibly valuable and also really on the cusp of making some really big changes in the industry that may not have access to normal types of capital.”
Entrepreneurs interested in applying for the fund must first submit their pitch deck, and if it catches the attention of The People’s Group team, they will schedule a meeting with De La Rosa. With her approval, the candidate goes to the next step, which is a meeting with the evaluation team.
If the team ultimately decides to pass on the investment, The People’s Group works with the applicant on what they can improve before pitching their company to other investors.
“We try to help them clean that up, so that even if we don’t invest in them, the next time they go to an investor, that will be something they can talk about and explain and back up,” De La Rosa said.
Suppose The People’s Group selects an applicant to receive funding. In that case, the team pursues a deeper review of the candidate’s experience and management team—and helps locate a management team if one doesn’t yet exist.
If everything checks out, the applicant goes before the fund’s advisory council.
“And then the fund managers, who have anywhere between five and 30 years of experience, will talk to us about: This is what we think is good, this is what we think is bad, this is what we think you should think about, these are things we’re not sure of,” De La Rosa said. “On the opposite side of that, we’re teaching … our fund managers and advisors how to look at softer skills, especially around people of color, especially around legacy operators who have been operating very well in the legacy market but may need help transitioning to the legal market.”
If the advisory council gives the green light, The People’s Group refers the applicant to its transactional lawyers, who do the final due diligence before paperwork is signed and funds are transferred.
“And then we help you,” De La Rosa said. “We don’t just say, ‘Here’s some money, go do whatever you want to do’ because a lot of times, we need to be able to help them leverage the money that they just received.”
The People’s Group usually takes on an advisory role, she said, such as a seat on the company’s board.
“Making sure that they have access to all the knowledge that I have and that my team has is super important to make sure they’re successful,” De La Rosa said. “We want to de-risk the investments that the fund is making, and part of that is being hands-on with our investments.”
These investments will ultimately achieve what De La Rosa believed was missing in the industry back in 2010 when she overlooked cannabis as a treatment for her lupus—representation.
“If you don’t have representation and you don’t have people that look like their communities, you’re going to have a lot of people, in my opinion, who are going to be sick and they’re not going to understand that this is a medicine that they can use because they don’t feel comfortable or they don’t see themselves reflected in the industry,” De La Rosa said. “I think that would be such a shame being that the industry really comes from Black and brown people. The legacy market is mostly Black and brown people.”
“When I started in this industry, I was like, ‘OK, we’re going to be here. We’re 85% women-owned. We’re BIPOC-owned. My C-suite is mostly women. We’re going to make a difference,’” she added. “Then I realized other people weren’t coming with us. They had never owned a business before. They didn’t know how to raise capital. I was very lucky to be able to raise some capital. … There were just a few of us, and I really thought this would be such a detriment to the industry, but more importantly, to the communities that are going to need this medicine. I had to figure out a way to get people into the industry.”
Before launching The People’s Group, De La Rosa hosted workshops for social equity companies in the industry to teach them how to pitch themselves to investors, but many investors simply weren’t funding BIPOC- and women-owned businesses.
“That was the catalyst for the fund because I was like, ‘I know these people, I’m right beside them, I know their names, I know their families … but they can’t raise capital, so what if I went and raised the capital that they don’t have access to and really give my investors comfort in knowing that we are not just giving them money and walking away, but we’re actually giving them money and helping them figure out how to best utilize that money for whatever phase they’re in?’” De La Rosa said.
To further this mission, De La Rosa and her team plan to launch an accelerator program next year to provide entrepreneurs one-on-one training to help them access capital.
In the meantime, The People’s Group plans to invest all $50 million of its fund in the next three to five years and to give its investors a healthy return so it can do it all over again.
“My goal is to have a proof of concept that women-led and BIPOC-led companies are equally beneficial and fruitful for funds that are not investing in these companies and hopefully have some of those funds invest in these companies,” De La Rosa said. “I’ve talked to a couple of these funds that are going to want to co-invest with us. This will be their very first time investing in these groups of people. Basically, we’re just trying to change hearts and minds one person at a time, one fund at a time.”