A Hampden wine store has joined the growing number of worker-owned cooperative businesses in Baltimore, boosted by an infrastrure that is instilling democratic ideals into community-based firms.
After announcing in March that he would sell the Wine Source, the gourmet food and beverage shop at 3601 Elm Ave., longtime owner David Wells completed the transaction Sept. 30 by turning over the asset to his employees.
The deal was facilitated by the Baltimore Roundtable for Economic Democracy, a worker-owned cooperative finance and technical assistance organization that is behind such businesses as Taharka Brothers Ice Cream and Waterbottle real estate co-op.
The Wine Source now becomes the city’s latest worker cooperative, owned and run by its employees. Worker-owners will make consensus-based decisions: one worker, one vote.
Employees say they gradually came around to the concept after much discussion, and are now excited about the future.
Phil Romero started part-time at the Wine Source in 2017. He was juggling multiple jobs while pursuing a career in TV and video editing. What he found working at the Wine Source, however, was a company that cared for its employees, paid better, and allowed him to grow his knowledge and develop his career. He now manages purchasing for the spirits, mixers and non-alcoholic beverages.
“I’ve grown to be personally invested in the store,” Romero said. “This is what I want to do. This place has given me the opportunity to grow.”
Romero said he was nervous about the looming sale, and joined many coworkers in informal discussions contemplating the future after the sale was announced.
His colleague, Caitlin O’Connor, a 14-year veteran, started with the company as a part-time cashier before moving to the cheese department as a cheesemonger and later its manager. O’Connor now works in store operations.
“We found we were all coming to work with the same kind of mission and vision, and we had all been brought to this place and felt that this place was offering something different to the community and its customers and its employees,” she said. “We wanted to preserve that, if at all possible.”
The terms of the purchase were not disclosed, but workers relied on help from BRED, which was founded in 2015.
The financing organization, known as BRED, hosted in-person and virtual meetings with a rotating cadre of wine store employees in large and small group settings to learn how worker co-ops generally work, how the Wine Source sale to a worker-led cooperative could work, how to convert the business to the co-op model and more.
“I actually just threw it out there, almost in a joking manner, to people as we were talking about this, ‘How about a co-op?” O’Connor said. “Every time I would throw it out there to one of my colleagues, they also didn’t laugh about it, or think it was silly. The more I did that, the more it solidified itself in my head… Maybe there’s something to this.”
Added Romero: “At a certain point, it became clear that BRED and our co-op bid [was] the best opportunity out there.”
Technical assistance and financing
BRED’s executive director, Christa Daring, said the organization has worked with more than fifty worker cooperatives across the state.
Those companies are encouraged to follow seven cooperative principles, which include democratic decision-making, cooperation with other co-ops, and concern for the community in which the business operates.
“We grow up in a democracy, and we think that we know how to do democracy,” said Abby Mello, a Towson University professor who runs the school’s human resources development graduate program. “Really there’s a lot of training that needs to go into that because most people who are entering into a worker co-op have always worked under those other types of models.”
BRED offers business and cooperative organization resources for worker cooperatives in Maryland, and it trains employees on the founding and conversion process, as well as on running a business and handling all facets of running a cooperative.
But it also provides projects with capital, often a hurdle for small businesses.
“What BRED is looking for [in potential borrowers], in Baltimore, and in Maryland, generally is individuals who don’t have access to the traditional routes of capital: folks that might be returning citizens, communities of color, women, immigrants, LGBTQ people,” Daring said. “Folks that are, for whatever reason, going to be either discriminated against or excluded from traditional finance.”
Origins at Red Emma’s
It was the hurdles of accessing traditional financing by another popular Baltimore cooperative that led to BRED’s origin in 2015.
Founders of Red Emma’s, now located at 3128 Greenmount Ave., began their bookstore-coffee shop project more than two decades ago without explicitly identifying with the worker co-op model.
“We didn’t really talk about what we did as being a worker cooperative,” said founding owner Kate Khatib. “Part of the reason for that is that on a national level, there really was not very much conversation about worker co-ops.”
After about a decade, Red Emma’s owners began to understand their work reflected the worker cooperative movement, and the group also began to see the need to grow and move, Khatib said.
“At that point, the question of capital came up, and this is really what jump-started this whole enterprise that would eventually turn into BRED and that would eventually turn into Seed Commons,” she said, referring to the national community development financial institution cooperative of which BRED is a founding member.
For Red Emma’s to move from its former North Avenue location, traditional financing was a challenge for the group, with banking institutions requiring collateral from members with the best credit and most personal assets.
“That’s not the way a co-op works,” Khatib said. “We don’t want to create a world in which some people have more on the line than others, and we also don’t want to create a world in which people who are already excluded from economic security are further excluded by being denied the access to the credit that they need to grow a sustainable source of employment for themselves.”
Red Emma’s secured capital from a now-defunct local foundation, a Minnesota-based cooperative lending institution, and the Working World, a New York-based loan fund that had been instrumental in the formation and conversion of a number of worker cooperative projects.
“The Working World was the first of all of the lenders that didn’t just see us as an activist project. They saw us as a business…. And I think the fact that they saw us that way helped us to see ourselves that way,” she said.
A team from Working World spent time with Red Emma’s owners and provided the technical support and mentorship along the way. That relationship made it clear to Khatib and others on the project that there was a need to continue this type of support for nascent or growing cooperatives in Baltimore and beyond.
Working World then helped BRED off the ground: building out the infrastructure to raise capital and lend it in a “non-extractive” manner aligned with the values closely held by worker cooperatives. Similar projects grew in locations all across the U.S., and the founding group organized Seed Commons as a national loan fund of sorts.
An impact beyond Emma’s
Before working with the Wine Source, BRED aided Baltimore companies like Taharka Brothers Ice Cream and Waterbottle, a co-op that purchases, renovates and then rents Baltimore vacants to community residents.
Taharka received BRED’s first loan in 2020 — $15,000 to help complete its conversion from a nonprofit and send out its pink ice cream truck.
“Without access to capital, we wouldn’t even be here,” said Sean Smeeton, a Taharka worker-owner.
Taharka has since secured others, including a $500,000 loan through BRED, Smeeton said.
“We tend to make smaller loans initially, take off and then ramp up over time,” Daring said. “Small businesses need financing, and that’s just pretty typical, so we want to be that financing partner whenever we can be.”
Waterbottle landed BRED’s largest loan, according to Daring. Founded in 2008, Waterbottle didn’t begin as a cooperative, but morphed into one after founder David Lidz did some research into shared equity.
Waterbottle buys, rehabs and rents distressed or vacant properties all across Baltimore. It boasts a real estate portfolio with two dozen properties. There are now 18 worker-owners, and no one who has become eligible has turned down the opportunity to own a piece of the work, Lidz said.
Waterbottle received $5 million in loans from BRED with “really catalytic, beautiful terms,” according to Lidz.
BRED manages $12 million in funding for projects like the Wine Source conversion, Taharka, or Waterbottle. Interest is only collected to sustain the fund, cover failed loans, and further the loan fund for future investing, Daring said.
“It is really important to us that the majority of interest that any co-op is paying is going to create a stronger co-op ecosystem, because that’s actually how we’re going to create a different financial model,” they said.
BRED loans don’t have late fees or penalties. If finances are tight, BRED works with borrowers to understand what’s happening in the business, sometimes even helping troubleshoot issues. Daring often attends co-op meetings to offer advice or insight.
“We really want to be in partnership with these businesses,” Daring said, “If something goes wrong, we want to be the first call. Traditionally in finance, your creditor is the last person that you want to talk to if something is going wrong.”
BRED itself is a founding co-op member of Seed Commons, the national lending cooperative, which operates a $65 million loan fund, composed of private investment, grant funding, and public money. BRED and 37 other organizations such as the DC Solidarity Economy Loan Fund and the Philadelphia Area Cooperative Alliance, help govern how Seed Commons funds are distributed across the country to further the cooperative community in the U.S.
The success of Seed Commons associated-lenders across the country is a testament to the success of the cooperative model, advocates say. Amid the Covid-19 pandemic, small businesses took the brunt of the economic fallout from the rapid closing up of the economy. But aside from Joe Squared, a pizza joint which relaunched as a cooperative after initially closing amid the pandemic and later shut down entirely, none of the BRED borrowers were forced to shut their doors, according to Daring.
Baltimore a hotbed for co-ops
For the new worker-owners at Wine Source, Baltimore provides a strong community of worker cooperatives to support its business. BRED is instrumental in making that possible, according to a number of sources who spoke with Baltimore Fishbowl.
“I love Baltimore, but … so much of the basis of the city is in exclusion, redlining is in racial segregation,” Daring said. “I think because of that, it has been necessary for communities to come together and band together. And create alternative economic systems for a very long time.”
Jed Jenny manages the beer department at the Wine Source. He started working at the store in 2005, stocking and running deliveries.
“Business has grown quite a bit since then, for a variety of reasons, but the staff has grown, and just the dynamic of the place has evolved,” Jenny said. “It’s been a fun ride.”
Jenny said Wells, the former owner, empowered his employees to take the lead on new business strategies, events, and products. Jenny can see himself as a small business owner; he’s even thought about opening a brewery in town or some other establishment in alcohol retail, but to build something like the Wine Source, “I don’t know how you’d get that off the ground.”
Jenny has participated in worker cooperative classes with BRED and the organization’s support amid the deal to buy the store is making it possible to realize that ambition. The worker co-op model is making it possible for Jenny to become a small business owner, and to him, a worker co-op model fits the Wine Source.
“Everybody pulls their own weight,” he said. “It’s a great team. It’s a balanced group without a lot of egos, and I think we share old passions for the product, but also want to…preserve our jobs.”
The team of nine worker-owners don’t anticipate major changes at the Wine Source as they build out their operating model as a cooperative. The founding owners are also raising money through donations to help cover the cost of the transition.
Romero is excited to see how the Wine Source co-op expands and grows its “impact on the community” it serves as a cooperative, pointing to one of the seven co-op principles.
“One of my goals with the co-op is to continue being a good thing for the community, and…be a more positive force than what a liquor, beer, spirit shop is normally,” he said. “I think we’re kind of already there because we’re kind of an anchor in the community. …We treat it with such care, [and] we kind of want to keep continuing that.”
