Why Jay Z Partnered with Cannabis Company Caliva

It's not surprising that Jay Z became the Chief Brand Strategist for a cannabis company. It was only a matter of time before Hov claimed a stake in the legalized marijuana game. The boy from Marcy who had his stash box at 560 State Street has come full circle to sell drugs legally. You love to see it.

But some might be surprised why the Roc Nation founder partnered with Caliva specifically. Here's what I wrote in January in How Jay Z and Damon Dash's Split Still Impacts Hip-Hop:

Jay Z does not start companies that often. He builds partnerships, especially with “underdog brands.”Here’s Complex’s rundown of Jay’s underdog history:

‍"Jay’s early-aughts sneaker deal was with Reebok, not Nike. When he teamed with a search engine for the release of Decoded, it was Microsoft’s Bing, not Google. When he bought 1/15th of one percent of an NBA team in New York City, it was the Nets and not the Knicks (yes, he’s from Brooklyn, but still). When he hooked up smartphone users with his new album, it was Samsung holders and not people with iPhones."

‍According to Forbes, “Jay Z often does deals with underdog brands because they have more ground to gain from a connection with him.”

Caliva is not an underdog. It is a vertically-integrated market leader for branded cannabis products. It sells to both distributors and end consumers. The four-year old company has had big names attached to it, like hall of fame NFL quarterback and investor Joe Montana. In January, the company raised a $75 million Series A round. It's had 3.5x year over year growth, and is estimated to have made over $50 million in revenue. While I can't speak on Caliva's cost structure, it seems like this company is well on its way.

I spoke with Web Smith--founder of 2PM, a commerce research group--about this and he brought up a couple great points. Caliva is an emerging company that's competing with Green Growth Brand, a relative 'incumbent' in the young industry. While GGB has focused on traditional retail outlets, Caliva has taken a digitally native approach to its growth. Smith also called back to Jay Z's longtime fascination with Joe Kennedy, the bootlegger turned businessman who became the patriarch of "the Kennedy family." Caliva brings this narrative to life.

Yet still, this deal is a long shot from the 'private equity' type moves that Jay Z is known for.

But Jay likely partnered with Caliva for two reasons. First, legalized cannabis is a young industry. It's still sorting through U.S. regulation and cultural acceptance. There's no cash cow or dogs for Jay Z to turn around. The only true "established" players are in the black market—but that's a game that's far in Jay Z’s rear view mirror.

Second, the hip-hop mogul's partnership with a leading cannabis company helps counteract the cultural impression of marijuana. Here's a quote from Caliva's homepage:

In this position, Mr. Carter will focus on and work to increase the economic participation of citizens returning from incarceration - many of who are not seeing the monetary benefits of legalization - through advocacy, job training, and overall employee and workforce development.

He will play a crucial role driving creative direction, outreach efforts and strategy for the brand.

Many folks are rightfully annoyed about the current irony of the United States’ evolving stance on marijuana. The widespread legalization of cannabis does not address its decriminalization. For every Eaze billboard in a major city, there's still thousands of black men from that city serving time for misdemeanor drug charges related to marijuana. The 'gentrification' of weed is a problem.

Jay Z’s involvement bring these efforts full circle. If he partnered with a 'struggling' cannabis company instead, Jay would have less leverage to make an immediate impact. Timing is important. Companies like Caliva may have the influence to help shape policies that can last lifetimes. Let's hope that Jay's involvement is a positive move in the right direction.

Thank you to Web Smith for commentary.