MJBizMag July 2021 - 70

Building
theBoard
Diverse Directors
With every single
one of my directors,
I always try to get to
know the person on a
personal basis first. "
- Raymond Chang
CEO and chair of Agrify
vertically integrated cannabis company
that formerly operated as Medicine Man
Technologies. The company has a sixperson
board as well as a four-member
advisory committee.
Due diligence is key during the
recruitment process to avoid future
board strife and conflicts,
said Justin Dye, CEO and
chair of Schwazze.
" You do your background
checks, " Dye said.
" You get their references
and then you also go find
your (own) references
that would know of them.
You try to get a really
good picture of the individual:
how they behave,
how they get along (with others), how
they perform, how they think through
things, where their value is, etc. "
Candidates interview with Schwazze's
executive team as well as board members.
Dye ultimately makes the hiring
recommendation to the board, which
votes to approve or reject new board
members, he said.
SETTING COMPENSATION
A board's compensation committee
commonly determines how directors
will be paid for their service to the
company and its shareholders. Agrify, for
instance, has a compensation committee
70 MJBizMagazine | July 2021
Justin
Dye
comprised mainly of independent
directors who benchmark pay against
industry peers, including companies of
a similar size that also are listed on the
Nasdaq, Chang said.
Agrify typically provides directors
with 50,000 shares through an employee
stock-ownership plan.
The shares vest during a
three-year period,
he said.
To attract strong board
members, larger multistate
operators often
provide directors with
monetary compensation
between $50,000 and
$70,000, Bernard said.
In addition, the MSOs
provide 50,000-80,000 shares in equity
that vest over two to three years.
Involvement with directors varies by
company, but most businesses expect at
least five to 15 hours of engagement per
month, she said.
Dye communicates with at least
some of Schwazze's directors on a
near-daily basis to update them on
business operations or get their input on
decisions, he said.
" Really good directors are there to
think about the shareholder, " he said.
" They're there to drive performance and
hold the board and the CEO accountable.
They're there to offer their time. "
Cannabis firms
want to move
away from
having corporate
boards that
are comprised
of all men and
devoid of people
of color, said
Sean Conner,
co-founder and
chief progress
officer at New
York-based hiring
agency ForceBrands.
Sean Conner
Companies must make sure they
have a wide range of candidates and
prioritize finding board members
who are reflective of their markets
or customer bases, Conner said.
" Diversifying the industry starts at
the top, " he said. " The more diversity
we have in leadership roles, the
more open the dialogue, the better
connection with consumers and
ultimately the better equipped each
company will be to achieve longterm
success. "
For its part, ForceBrands has
connected with associations
including the J.E.D.I Collaborative
and Project Potluck-groups that
support and promote professionals
with diverse backgrounds-to
expand its pool of diverse
candidates. Potential board
members also must be considered
in an " unbiased " way that evaluates
their knowledge, expertise and
character, Conner said.
It's common practice for boards to
recruit members who are friends
with the CEO or colleagues of
another board member, said Liesl
Bernard, CEO of California-based
recruiting firm CannabizTeam.
While there's a " level of comfort "
when hiring someone from your
personal network, Bernard said it's
beneficial to seek out people who
can elevate the current board and
add diversity.
" By assembling a diverse board of
directors, your team will be more
likely to come up with innovative
solutions that discover unmet needs
and new opportunities to reach a
wider audience, " she said.
- Adrian D. Garcia
MJBizMag July 2021

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