Founders Q&A: Insights from Khalil Ferguson of Urban Soyal

Welcome to another exclusive Founders Q&A where we dive deep into the minds of entrepreneurs shaping the future. Today, we're excited to sit down with Khalil Ferguson, the trailblazing founder behind Urban Soyal, the first Black-owned dispensary in Contra Costa County. Get ready to discover the passions and challenges that drive one of the cannabis industry's most forward-thinking leaders.

Can you tell us about your personal background and how it led you to founding your startup? 

When I graduated college in 2018 I quit my job at Wells Fargo to get into politics. I wanted to use my economics degree to influence legislation that helped uplift Black and Brown communities out of their lower socioeconomic conditions. One of the areas I began conducting research in and lobbying for was the cannabis industry. At the time, 2018, Proposition 64 (legalizing the recreational use of cannabis) had gone into effect. This was a perfect opportunity to direct capital to communities that were targeted by the war on drugs. I was hired by a non-profit to engage in advocacy to engender cannabis equity in Sacramento which led to the establishment of Sacramento's cannabis equity program. In 2020 I started my own nonprofit and consulting firm to expunge criminal records and seek contracts to establish programs in other cities in California. This effort resulted in me influencing cannabis equity programs in Richmond, Long Beach, San Diego County, and the City of San Diego. During this time, I met investors and entrepreneurs operating in California's cannabis market. The relationships I fostered led to an opportunity to acquire a distressed dispensary for one-fourth of what the sellers invested in the operation. After completing the acquisition we launched our own brand dispensary - Urban Soyal. The first Black owned dispensary in Contra Costa County.

What problem does your startup solve and how did you identify it? 

Our startup solves two issues primarily: minority representation in the cannabis industry and access to safe and legal cannabis products. A dearth of minorities make up the cannabis industry. This can be substantiated by many reports and are the reason why social equity is important in the cannabis industry.

How did the idea of your startup first come about? 

The idea came through years of advocacy and legal studies. I went to law school specifically to study business and cannabis law. My business partner is also a board member on my nonprofit. We had many discussions about how we could enter and scale a brand in the cannabis industry. We just needed the opportunity.

What is your startup's mission and how does it drive your daily operations? 

Urban Soyal is committed to reshaping the Contra Costa cannabis market by ensuring product quality and safety, promoting informed usage through education, enhancing accessibility and inclusivity, transforming public perceptions to recognize cannabis’s benefits, and championing sustainable, community-oriented business practices.

Urban Soyal - El Sobrante is our pilot storefront. It is located in El Sobrante, California, a city on the border of Richmond, California. My business partner and I are from Richmond and are familiar with the community and the community is similar with us. So being a trailblazer while serving the community we grew up in drives our daily operations.

How did you go about securing initial funding for your startup?  

Like most Black owned business our initial funding came from personal savings. My business partner and I use capital from our other businesses and jobs to invest in the operations of the company. We continue to seek investment from outside investors.

What were some major obstacles faced during the early stages of your startup, and how did you overcome them? 

Raising capital and navigating California's regulatory environment and dual licensing system. Because I mentioned issues with raising capital in the previous question, I will focus on the latter.

The latter proved to be an obstacle but it was not a tall one. My legal studies and ownership of other businesses allowed us to acquire ownership of the business with rights to the state operating license. Prop 64 established a dual licensing structure, which means that we have to obtain local permits and then a state license. Fortunately, by acquiring the business we did not need to navigate this process from scratch. Participants in California's cannabis market navigate requirements that vary from county to county and city to city. In Contra Costa County, the main authority over cannabis business is the Environmental Health Department. Because the department is not proficient in regulating businesses they were not sure what the process was to transfer ownership of a business. We had to guide them through this process.

Can you tell us about a time you failed and what you learned from it? 

I cannot say that there has been a recent instance of failing that comes to mind. But I am always reflecting on how I could have taken a better approach. Whether it is launching a business or navigating a tenuous conversation/situation with a friend or family member. At this stage in my life, I am big on reflection and evolution.

How does your startup stand out from competitors in your industry? 

In our area we are the only cannabis company that is 100% Black owned and one of the few Black owned cannabis companies in California. My business partner and I come from service backgrounds. We have been advocates and leaders in our communities for a decade. Maintaining positive community relations, providing great customer service, maintaining high standards for our product, and having a passion what we do distinguishes us from our competitors.

What has been the most rewarding part of being a founder so far? 

Building something from scratch and providing people with good wages and benefits has installed in me sense of pride as we grow the business.

How do you stay motivated during challenging times?  

I keep my eyes to the future. I reflect on what we have built. How far we have come. The impact we have had on our customers and community. That keeps me going.

How do you manage work-life balance, especially during intense periods of work? 

Unfortunately, between law school, running a nonprofit and now this business, I do not have much a work-life balance.

What does success look like for your startup, and how do you measure it?

For this individual location, success looks like maximizing revenue and streamlining operations. Once the location's operations are self-sufficient, we will model it and pursue additional licenses. Then, success looks like the number of locations we can operate in the regulatory environment.

How do you encourage a culture of innovation within your team? 

The cannabis industry changes rapidly. Budtenders and sales teams are more keen to changes in customer preferences than management. Establishing a culture of innovation is important for survival in this industry. We often tell the store

Could you share any pivots your startup had to make and the reasons behind it? 

Not yet.

How have you leveraged technology to grow and improve your startup? 

Partially, the State of California requires us to use Metrc Track and Trace system. But that is the scope of our technology use. We are happy to explore and include technology to increase efficiency.

What is one thing you wish you knew before starting your business? 

I cannot say that there is anything that I did not know before launching Urban Soyal. I spent years studying the laws and market trends.

Can you discuss a time where customer feedback directly influenced a decision or direction for your startup? 

Not yet, we have only been operating for one week.

How do you see your startup evolving in the next 5 years? 

I see our startup becoming vertically integrated to minimize supply chain costs and acquiring more licenses not only in California, but in other cannabis friendly states.

How have you adapted your startup to changes in the market, especially during crises? 

We entered the market as the bottom is falling out. There are many distressed cannabis businesses in California's market at the moment with an equal amount closing their doors. So to our benefit, our market entry point is near the bottom and have not had to adapt to changing market conditions.

What are the key qualities you look for when hiring new team members? 

Willingness to learn, their ability to navigate adversity, eager to work, and good communication skills.

Can you tell us about a significant partnership or collaboration that has greatly benefited your startup? 

A business meeting turned friendship has culminated between someone who has ownership in 15+ cannabis licenses throughout California and Mexico. We met for two years discussing ways to potentially work together and offered me the opportunity to acquire a retail storefront that was not performing to their satisfaction.

What advice would you give to someone considering starting their own business? 

Maintain positive relationships. Be very intentional with who you partner with in business and do not burn bridges.