Mass. marijuana industry is mostly corporate and white. Inside one Boston battle to change that

Except there was nothing ordinary about it.

In attendance were three businessmen, each vying for the right to open a store in the heart of Mattapan Square, a place that doesn’t usually draw that kind of commercial competition.

All three were black, in a city where business ownership so emphatically tilts white on the racial fault line.

And then there was the product they hoped to sell, one for which the neighborhood has already paid a heavy price in both arrests and altered lives — marijuana.

The business of selling legalized pot to the public is finally getting underway in Boston, and, viewed at street level, the market is unfolding very little as the state had intended.

Massachusetts was the first state in the nation to make social justice goals a cornerstone of marijuana legalization. But two years in, those equity provisions are giving way to old inequities, small players are being squeezed by the bigger national ones, and the question of which minority entrepreneur most deserves the neighborhood’s trust is proving to be hard to discern, a Boston Globe Spotlight Team review shows.

On this winter night, it was Tito Jackson’s turn to make his pitch to open the first pot shop in the neighborhood in what is now a laundromat on Blue Hill Avenue. Addressing the crowd with the natural ease of a former Boston city councilor and mayoral candidate, he offered a direct appeal to local pride.

“Do you partner with someone who has a demonstrated history of partnering with you?” Jackson asked, microphone in hand. “Or do you partner with many of the folks who are coming from California and Oregon and other places?”

He also spoke to another form of pride entirely, describing his company, Verdant Medical, as a “100 percent black-owned business.”

The audience burst into applause.

But not everyone joined in. Jackson’s words were more than Chauncy Spencer, one of his rivals for the local license, could take.

“I expected better from you,” he said later before the gathering, his eyes locked on Jackson.

Behind Spencer’s words was the suspicion that Jackson was not truly independent from his white, out-of-state financial backers — a well-founded concern, according to a Spotlight review.

Spencer went on to portray himself as the local entrepreneur best suited to prevail. He hopes to run his business out of an old Payless shoe store, also on Blue Hill Avenue. “We are minority-owned, family-owned,” he said forcefully.

Keeping silent but sharing similar doubts about Jackson was the third competitor, Kobie Evans, who wants to open his store on nearby River Street. He stood in the back of the room, in quiet consternation, and planned his next move.

Stakes are high

The battle is on and the stakes are large: Who will be in the first wave of winners and losers as this retail revolution comes to town? Yesterday’s illegal drug is today’s potentially lucrative business, creating opportunities for local people but also attracting big national companies that some fear are looking to take advantage.

The stories of the three men competing for the first Mattapan Square license offers as good a window as any into the complexities in this shift, which is unfolding rapidly here as it has in nine other states and will perhaps soon in New York and New Jersey, where lawmakers are debating legalization efforts that emphasize social equity.

Few feel the tensions of the moment more than the minority entrepreneurs hoping to get in the game. The financial risks are high, as it can take a million dollars or more to finance a new outlet. Credit is hard to come by; most banks want no part of this market while pot remains illegal on the federal level. And thus the temptation is considerable to join forces with one of the big national players seeking to dominate the new trade, even though the price for such backing can be a loss of operational freedom and a nagging fear of being exploited.

Such ties also raise this question: Whose new business is this, really?

Massachusetts lawmakers, mindful of this dynamic and of the disproportionate enforcement of marijuana laws against black and Latino communities, sought to level the playing field by mandating preferences for potential minority operators and by setting a three-license limit for all companies trying to enter the market.

But, despite those rules, the field remains severely tilted thus far. Of the 15 recreational marijuana stores opened as of the start of April, not one is run by a minority operator.

Likewise, few, if any, people of color operate any of the dozens of medical marijuana dispensaries established in the last four years in Massachusetts.

The state has even created an “economic empowerment” program that would allow businesses to skip the line for state licenses if they, among other considerations, are helmed by minorities or those who have helped communities with high rates of drug arrests. But out of more than 120 applicants approved for this program, none has opened a marijuana business.

Not that some notable people of color haven’t been recruited as executives for some large multistate marijuana companies in the Boston area. Former state secretary of public safety Andrea Cabral last year became chief executive of Ascend Wellness in Massachusetts; former state lawmaker Marie St. Fleur is an executive at Union Twist. Harvest Health & Recreation has brought on Larry Ellison, former president of the Massachusetts Association of Minority Law Enforcement Officers. And, of course, there is Tito Jackson.

While some have embraced the economic potential of this newly legal industry, there are many in minority neighborhoods who don’t care which racial groups prevail in the marketplace of marijuana; they want all applicants, including those vying to open a store in Mattapan, to fail. Among them are local pastors, medical clinicians, and parents who insist their struggling neighborhoods, of all places, shouldn’t have to deal with marijuana’s potentially damaging effects.

“We already have a lot of problems in Mattapan,” said the Rev. Zenetta Armstrong, the rector for the Church of the Holy Spirit. “We have to be serious about protecting our children for the future.”

To that, Jackson, Evans, and Spencer have a similar response: A marijuana store is coming to Mattapan anyway, so wouldn’t it be better that it be run by someone who looks like them and knows their world?

Evans prides himself on local funding

If one of the goals for legalized pot in Massachusetts is to create opportunity for those who have known the harms caused by the illegal trade, then Evans has good cause to ask: Why not me?

Evans, 47, grew up in Grove Hall, and he knows about the toll that drug crackdowns can have in black communities: Like so many young men, he felt the fear of being stopped by police at any moment or of being searched for a baggie of weed. He remembers, as a teen, being in the car as Boston police chased a relative who was eventually charged with marijuana possession.

If all goes according to his plan, Evans will open the first legalized cannabis shop in Mattapan Square in a now-vacant storefront on River Street, sandwiched between a family dental office and a chiropractor. It’s not far from the square’s main drag of Blue Hill Avenue, a vibrant district where the bustle of customers and shopkeepers is too often interrupted by police sirens.

Evans, who lives in Dudley Square and has worked for years in real estate, would be an owner in charge of the store. That, by itself, would offer a social equity benefit to Boston, and it is the main reason he wants in.

“Owning a business creates an opportunity for generational wealth, creates an opportunity to affect the lives of people other than yourself,” said Evans, who attended Boston Public Schools and then Brookline High through Metco, a state-run voluntary desegregation program, before attending Bentley University.

He is determined to resist the pressure to sign away control or ownership to the big players seeking local partners.

“I don’t think we got this opportunity to squander it or make someone else rich,” he said.

He is still looking for more funding; so far, his main source of capital is a local investment group with minority leadership, which he said doesn’t want to be named because of the stigma related to marijuana.

Despite his determination to retain local control of his enterprise, he said, he gets frequent solicitations from outsiders seeking to take advantage, he believes, of his local connections or his preferential status as an “economic empowerment” applicant.

Earlier this year, executives from Ohio-based Green Growth Brands requested a meeting at the Charles Hotel in Harvard Square in Cambridge.

As Evans and his business partner dined with several of the company’s employees over bottles of Spanish red wine and liver pate, his hopes for a deal faded quickly. Rather than offering the financing that would let Evans carry out his own vision, they described an agreement that seemed to offer a salary to help open stores but little management control or profit-sharing.

“They wanted more than what I was willing to give,” he said.

When asked about the terms it offers, a Green Growth Brands spokeswoman did not respond to the specifics but said a number of factors determine what deals they make.

Jackson defends his corporate ties

Jackson radiates confidence about winning Mattapan Square’s first license, and why shouldn’t he? He has spent much of his life building neighborhood credibility and learning how the city works — and doesn’t.

At an early age, he became one of Boston’s most promising politicians, propelled by a compelling backstory: The son of a teenage rape victim, he was adopted by two well-known community activists. He graduated from the Brookline public schools through the Metco program and the University of New Hampshire.

When he capped his years on the City Council with a mayoral run in 2017, he focused on the stark racial and economic inequalities that still divided the city. After Mayor Martin J. Walsh handily won reelection, Jackson accepted a brief fellowship at a nonprofit aimed at helping struggling families.

Then Sea Hunter Therapeutics came calling.

The company, which is seeking to be a major player in the Massachusetts market, tapped Jackson in 2018 to become the chief executive of Verdant Medical, one of its affiliated companies here. Jackson told reporters at the time that his position — opening up locations in Mattapan, Provincetown, and Rowley — would help bring jobs to local communities.

Though Jackson, 44, is typically an accessible person to all, including the media, he declined several requests by the Globe for an interview for this story, before finally agreeing to one, with the cofounder and chief executive of Sea Hunter, Alexander Coleman, at his side.

At Sea Hunter’s Cambridge office, over the noise of builders working on a new marijuana store on the first floor, Jackson said he will become the sole owner of Verdant Medical once regulators approve its conversion from a nonprofit to a for-profit company. And the paperwork is filed, he said.

That’s why, he said, he felt comfortable describing Verdant as “100 percent black-owned” when he spoke in Mattapan.

He will truly be in charge, Jackson insisted, saying with some emotion that he has “never in my life fronted for anybody.”

But records reviewed by the Globe tell a more complicated story about these new ventures and who is in control.

Jackson didn’t start Verdant; a local businessman did and said he then sold the company to Sea Hunter in 2017. Jackson acknowledged that he put no money into the venture and that all of its funding will come from Sea Hunter.

Sea Hunter, while headquartered in Cambridge, is the creation of three men, all from the Palm Beach area of Florida and linked by blood or marriage to the Lilly Pulitzer family of fashion and publishing fortunes. All three are white.

Verdant’s own board of directors, to which Jackson reports, is composed entirely of Sea Hunter appointees, all of them also white. One is Anne Nagle, a former employee of the lobbying firm used by Sea Hunter, Novus Group. She is now Verdant’s chief operating officer.

Another is Todd Peter, a Palm Beach real estate agent. And there is Kendall Cheatham, a Florida oil executive. Both have ties to the Pulitzer family.

After Verdant converts to a for-profit company, Sea Hunter will name only half the board, Jackson said. But Coleman, during this line of questioning by the Globe, acknowledged that Sea Hunter should not be appointing anyone to Verdant’s board.

Jackson declined to disclose his compensation package with Sea Hunter, a subsidiary of TILT Holdings, a publicly traded company in Canada.

He has consistently defended his work with the company, saying it has given him the opportunity to create the company’s “inclusion” program, which provides up to $1 million in financing and services to minorities and small business people who want to open marijuana businesses. Without the money and help, Jackson said, many startups would never get off the ground.

“I have dedicated my whole life to opportunity, equity, and inclusiveness,” said Jackson. “This program is in essence to me . . . one of the most transformative things that I’ve done with my career.”

Coleman has said Sea Hunter wants to help open 30 such stores. Jackson has approached about 85 people about the program, he said, and seven so far have signed preliminary contracts.

But some say the program offers operators oppressive terms. Company officials would not disclose which terms they imposed on different applicants, but a draft of a Sea Hunter loan contract obtained by the Globe showed that the company sought control of many aspects of the applicant’s business.

For one thing, the loan agreement would impose caps on the salaries of managers and executives. It would also require the entrepreneur to get Sea Hunter’s permission before spending more than $50,000; entering into practically any business arrangement with other companies, including leases; or making any changes to the firm’s ownership.

Other documents obtained by the Globe indicate Sea Hunter asked entrepreneurs to pay 14 percent interest on its loans and buy up to 85 percent of their marijuana products from Sea Hunter affiliates. Sea Hunter also proposed charging a $3 fee for every individual product sold, revenue to fund the legal, accounting, management, and other services it provides.

Until the five-year loans are paid off, entrepreneurs are asked to give 70 percent of their excess cash flow to Sea Hunter and cannot sell their companies without first allowing Sea Hunter to make an offer.

Sea Hunter officials say some promising entrepreneurs have joined their program.

One is Seun Adedeji, a Nigerian immigrant now living in Washington. The 25-year-old opened his first dispensary in Oregon and likened himself to a “franchisee” of Sea Hunter, which gave him a $1 million loan to open a store in Athol. He declined to show the Globe his contract but said he believes the terms are fair.

“They gave me full rein,” he said. “For them to trust us that much, to have that faith and put that much capital in us — we’re very grateful.”

While Sea Hunter’s loan terms on their face may not be extreme, given the lack of traditional credit in the cannabis business, some critics say these offers — taken together with its management contracts — raise serious questions about control and fairness.

Steve Grossman, a former state treasurer, called the terms offered by Sea Hunter “overwhelmingly onerous.”

“It is tantamount to giving away virtual control of your company,” said Grossman, who now runs a Roxbury-based national nonprofit focused on entrepreneurship in distressed communities. “The prospects of ever getting out from under these terms and making a serious profit . . . seem so remote.”

These concerns come as state regulators are investigating whether large marijuana investors are trying to control smaller companies and more licenses than legally allowed here, an issue that was the subject of a Spotlight Team report last month that focused on Sea Hunter and another company, Acreage Holdings.

Laury Lucien, a local lawyer and marijuana business consultant who works extensively in the minority community, said she initially welcomed Sea Hunter’s offer to work with her and her clients. But after reviewing the terms, she said, she wouldn’t counsel her clients to sign on.

“I basically told them the truth,” said Lucien. “The risks are enormous, and I don’t think it can create a space where your business can be healthy.”

Ricardo Correia, Lucien’s business partner, said he feared corporations are pursuing these types of contracts in minority communities in part to improve their diversity optics, knowing all-white companies could go over poorly among local residents and government regulators.

“I’ve seen it happen, and I don’t want to see it in this industry,” said Correia.

One prospective operator, who requested anonymity because he feared professional retribution, said Jackson offered him a large loan and a lease on a properly zoned property, in exchange for about 75 percent of the shop’s shelf space and a 9.9 percent ownership stake in the entrepreneur’s firm.

“Five minutes into the conversation, I wasn’t interested anymore,” said the operator. “For the first six months, you need help, but then you’re tied to them forever.”

Spencer’s vision and new ideas ahead

Spencer, the third of the men seeking the Mattapan license, has a constant reminder of the challenges he faces. From the window of the empty Payless store, which he says friends and family are helping him rent for $5,000 a month, Spencer can see the laundromat where Jackson wants to open his shop.

Starting a marijuana business means more than just money for the Dorchester native. He remembers watching police officers drive across playgrounds in their cruisers, chasing down young black men with small amounts of weed.

More than a dozen years ago, he had his own marijuana-related arrest and is no stranger to how his run-ins with the law can affect employment prospects. He sees the store as a sort of redemption — a way of coming full circle in an abandoned space that used to be a convenience store he visited when he was younger.

Spencer, who is unemployed now as he focuses on his cannabis business, said he avoided a corporate backer who wanted a sizable ownership stake and another who wanted him to sell a certain percentage of their supply — a non-starter for Spencer, who designed his own system to cultivate marijuana.

“They want control,” said Spencer, 42. “There is a need for money, and there is a group that does not have it, but how should you provide that money? You hear all these speeches about inclusion and helping people, but why does it need to be a percentage of ownership?”

Trying to make it on his own, but still needing more funding, Spencer can’t help but be frustrated by the obstacles he encounters: He has long worried that Jackson may enjoy the political upper hand and that the city only responds when he confronts them in public, or he knocks on doors in City Hall — a complaint that other small entrepreneurs have voiced. In October 2018, he contacted Alexis Tkachuk, the city’s director of emerging industries, who holds the key to a crucial city approval, asking for more guidance.

He didn’t hear back, so he followed up again in December: “I’m concerned because I’ve had no response from you since May about the status of our establishment application and permit,” he wrote.

City officials said Spencer’s case was handled like those of other applicants and they oversee a fair process.

The path for applicants like him could soon be smoothed. The Cannabis Control Commission, which sets marijuana policy for the state, is now pondering changes that would give more benefits to disenfranchised groups, including reserving delivery and pot cafe licenses for them.

They are also considering changing the application process so the state approves preliminary applications before they are required to win local approval or even offering interest-free loans funded by state marijuana taxes.

One member of the commission, Shaleen Title, acknowledged that the time it has taken to roll out state efforts to boost minorities and smaller businesses helped create a “breeding ground” for predatory lenders to move in. She and other commissioners have called on the agency’s staff to scrutinize management contracts signed by license applicants.

“It’s on us as a commission to be vigilant,” she said.

Congress is also considering several bills that could allow banks to lend to cannabis operators.

As for which entrepreneur will open Mattapan Square’s first pot shop, it is likely to be unclear for months — and theoretically, all could fail.

The city’s criteria aren’t well articulated, but officials say they weigh a number of factors — including community input — when they decide whom to give preliminary approval. The city could also deviate from its past practices and allow more than one applicant to move on to the final stage — the state licensing process.

‘It needs to be local’

About a month after Jackson presented his proposed store in Mattapan, one of his competitors got a chance for a public hearing. This time, it was Evans at center stage in the Mildred Avenue Community Center, with his business partner, Kevin Hart.

This event didn’t draw nearly as large a crowd as Jackson’s did, but Evans was in a good mood after the city gave initial approval for another location, in Grove Hall, that he hopes to open.

On this March day, Evans pitched his plan for Mattapan, then fielded a wide range of questions.

A pastor asked them why they chose a site across the street from her church. Another resident asked why they hadn’t conducted a traffic study. One simply asked, “Where is God in all of this?”

Still, some questions focused on what has become a central issue to Evans.

Jovan Lacet, a longtime Mattapan resident, asked if he and Hart were the only owners — because Lacet and others in the neighborhood want local black and brown entrepreneurs to thrive.

Evans listened and nodded.

“No out-of-state is coming in here,” Lacet said, as he stood up to leave. “It needs to be local.”

Jeremiah Manion of the Globe staff contributed to this report. Nicole Dungca can be reached at nicole.dungca@globe.com. Dan Adams can be reached at daniel.adams@globe.com. Tips and comments can also be sent to the Spotlight Team at spotlight@globe.com.