PORTLAND, Ore., Oct. 14 (UPI) — Nearly a decade after the first states approved recreational cannabis, righting wrongs from the drug war –including making the business accessible to minorities — is driving implementation across the country.
The wave of recent legalizations in the Midwest and on the East Coast have made social equity a key component of their new regulatory frameworks. Western states that legalized the drug earlier are also following suit.
These efforts seek to reinvest in minority communities damaged by the drug war. They include expunging marijuana-related offenses and setting aside grants and licenses to give these communities a foothold in a crowded industry that’s seen a “green rush” in the 18 states that have legalized the drug.
Proponents say these efforts are needed to help minority entrepreneurs overcome barriers to licenses, capital and technical assistance that keep them out of legal cannabis markets. Tahir Johnson, director of social equity and inclusion for the Marijuana Policy Project, likened the range of programs to little laboratories that are finding out what’s working.
“None of them are perfect, but they are getting better and better,” he said.
The programs should create opportunities for those formerly involved in what he calls the “legacy market,” Johnson said. These people developed marijuana growing techniques and sold the drug when it was illegal, laying the groundwork for the legal market that one estimate valued at $12.4 billion as of 2019.
But they’re locked out of it because of criminal records and lack of startup funds, he said. They’re also disproportionately Black and brown. A 2020 ACLU report found that Black people are nearly four times as likely to be arrested for marijuana as White people on marijuana charges despite their roughly equal use of the drug.
There’s no authoritative source for how much of the industry is owned by minorities. But a Marijuana Business Daily survey found that 19% of respondents who at least partially own a cannabis business are minorities. BuzzFeed News estimated that 1% of dispensaries are Black-owned.
Johnson and other advocates say cannabis social equity programs are needed to confront the drug war’s racist legacy.
In 2017, the city council of Oakland, Calif. adopted the country’s first cannabis equity program. It set aside half of all permits to “equity applicants,” residents who made less than 80% of the city’s median income, lived in an area impacted by the drug war or had been convicted of a cannabis-related crime.
Alphonso “Tucky” Blunt Jr. opened Blunts And Moore in 2018 after getting the city’s first equity permit. Blunt said the store employs eight workers and sells $5,000 to $7,000 worth of cannabis daily. But Blunt can recall a time when it seemed out of reach.
Blunt said cannabis was present at games of dominoes, Thanksgiving and other occasions while he was growing up in the 1980s and ’90s. He first knew he wanted to open a weed store while taking his grandmother to run errands in 1999. After picking up medicine in a building off Telegraph Avenue downtown, she came back with a white bag. Inside was medical marijuana.
He spent the following years working in dispensaries in the Bay Area, growing cannabis and selling it on the street. But opening his own dispensary was out of reach.
“Back then I was told that Black people wouldn’t own dispensaries, and I didn’t really question why,” he said.
City of Oakland data shows that Black and Latino people accounted for up to 90% of cannabis arrests, despite each making up about a quarter of the city’s population respectively. White people accounted for 4% of arrests. In 2005, Blunt was arrested for selling cannabis.
After realizing he qualified, Blunt applied for an equity license. But there was a limited number of licenses and the city used a lottery to determine who got one. He recalled watching a city official remove numbered bingo balls from a chamber to determine which applicants wouldn’t get a license.
At the end, Blunt’s numbered ball remained. His dream came true. He screamed. He cried. He praised God.
“It’s up there with having my kids,” he said. “It’s not better than that, but it’s up there.”
Aiming for equity
When Illinois Gov. J.B. Pritzker signed a bill legalizing cannabis in 2019, he called it “the most equity-centric” of its kind nationally. The new law created a “social equity applicant” program and set aside grants to help businesses get started. But the process for awarding licenses produced no minority-owned businesses.
Massachusetts also included a social equity component in its legalization law. But 73% of active owners, employees, executives and volunteers of cannabis establishments are White, MassLive reported.
Jeannette Ward Horton, executive director of the NuLeaf Project, said Illinois demonstrated that equity programs need to look closely at the ownership of companies to see who is benefitting. A more central problem, she said, is access to capital.
Minorities have less personal wealth than White people, according to the Federal Reserve’s Survey of Consumer Finance. This lack of startup capital puts minority entrepreneurs at a disadvantage, particularly when trying to enter the capital-intensive cannabis industry, she said. Bank loans are largely out of reach because cannabis remains federally prohibited.
“It’s about capital,” she said. “The more money you have, the more successful your business tends to be.”
The NuLeaf Project was selected in 2018 to run the city of Portland’s Cannabis Business Development Equity Program. Funded with a tax on cannabis sales, the NuLeaf Project has awarded 25 grants and loans to minority entrepreneurs entering the cannabis industry, Ward Horton said.
Awards are usually between $10,000 and $25,000 but have been as big as $200,000, she said. The money can be used for marketing, moving to a less expensive property or covering costly administrative fees, she said. NuLeaf doesn’t use collateral or credit scores to evaluate applications because they end up being a barrier for disadvantaged entrepreneurs.
Ward Horton and Johnson said they’re watching New Jersey and New York as they roll out their programs. Johnson said New Jersey isn’t putting a cap on businesses, which he said gives smaller businesses a better shot against multinational companies. It also includes regulations to protect smaller players from predatory contracts.
New York’s program sets aside 40% of the expected $360 million annual cannabis tax revenue for a broad range of social spending. Half of the state’s licenses will go to equity applicants.
Johnson said these programs will be successful when victims of the drug war can freely participate in the industry and can rise to executive and ownership positions.
Blunt said there should be more education for equity applicants suddenly thrust into an expensive and hyper-competitive industry. But even that, he said, isn’t enough.
“I’m not going to say that it makes up for anything because there are so many lives that have been lost to jail time,” he said. Instead, people like himself, who have been to jail for cannabis, should be in the room where laws are written.