Keeping the Pressure on Cannabis Social Justice Reform

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There is no shortage of controversial topics in the cannabis
industry, but the intertwined issues of social justice and social equity reside
near the top of the list.

Politicians, activists, and industry operators from coast to
coast generally agree social justice should be prioritized on local, state, and
federal levels, yet there are few, if any, meaningful programs to help people
of color (POC) gain a financial stake in the fast-growing, multibillion-dollar
industry. No matter how well-meaning existing programs are, POC still represent
a tiny fraction of stakeholders in the industry, and individuals who were
targeted during the drug war still face many of the same challenges they did
during prohibition.

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To this day, African-Americans and Latinx represent almost half the convictions for drug law violations in the United States, despite representing only 32 percent of the population, according to the Drug Policy Alliance. Some of the top priorities for social justice and equity proponents include expunging cannabis arrest records, initiating small business incubators and education/mentoring programs, and offering no-interest loans and grants to people who were adversely impacted by the drug war.

California was the first state to raise the social equity
flag, but local and state programs have been lackluster even there. Promising
signs in the Midwest and on the East Coast indicate meaningful reforms could
make 2020 a breakthrough year.

A slow grind out west

Nobody said reform would be easy. Myriad political,
economic, and social factors make designing and implementing programs
challenging for both legislators and industry operators. That’s not to say
success stories don’t exist, but they are few and far between in an industry
that enjoyed more than $10 billion in sales during 2018 and is projected to
surpass $12 billion this year, according to New Frontier Data.

Proposition 64, which legalized recreational sales and use
in California, sparked lively discussions about social equity, protections for
small farmers and other operators, and creating a fair and balanced industry.
But despite proponents’ good intentions, the reality has been disappointing.
Large corporations and investors with deep pockets flocked to the state to
dominate the industry from top to bottom. Much the same is happening elsewhere.

Chaney Turner co-founded The People’s Dispensary (TPD) in San Francisco in 2017 with a mission to promote social equity and cater to marginalized communities including POC, queer, disabled, the formerly incarcerated, and economically disadvantaged people. When she looks at the competition now, in the Bay Area and beyond, she sees few other companies on the same track. The state needs to do more to promote social justice policies, she believes.

“They have not done that well, and they are not taking the
lead in making [the social justice situation] better,” she said. “Equity isn’t
that hard, and being socially responsible isn’t that hard. When elected
officials and people in policy bring up equity, they want to make it a big math
equation, but it’s not. Just give the people what they need.”

She explained California has not allocated enough funding to
support equity programs. Paperwork from prospective POC businesses is piling up
in San Francisco and Oakland. “These cities want to throw out the word
‘equity,’ but there isn’t any action behind it. I feel like the onus is put on
small businesses of color to get things done. But we need some type of support
from the state. If you look at all these cities, it’s POC with no capital.”

Turner and her POC and queer business partners who started
TPD have developed a co-op-style business model, allowing investors from the
community to have an ownership stake in the dispensary. Turner and her
co-founders have offered to help people in other states open like-minded
dispensaries and are actively pursuing projects across the country.

“We are invited to certain places and we partner with
communities there, and we want to make sure we partner with people that are
values-aligned with our mission,” she said. “Part of that is having
non-accredited investment, reinvestment into employees and local communities.
Whatever cities we operate in, those people do the civic engagement and hiring.
Make sure the empowerment is into the community we serve, [because] the
priorities are different in every city. TPD is about partnership when we go to
outside communities.”

Plotting a new course

In the Midwest and on the East Coast, legislators and
industry operators are watching social equity developments on the West Coast,
duly noting the pitfalls and challenges. They’re optimistic they can do better.

Legislative initiatives in Illinois and Massachusetts are
attempting to reach individuals who have been economically disadvantaged,
disproportionately impacted by the war on drugs, or both. However,
Massachusetts’s program has been slow to develop, and to date only 1 percent to
2 percent of cannabis businesses are owned by minorities. Illinois was the
first state to legalize the sale and use of recreational marijuana through
legislation, and activists have praised the law for its social equity
components, which include reduced application fees and grants and loans. Some
financing comes from existing cannabis companies. Of course, now the state must
determine how the loan and grant program will work. The application process
opens in October.

Chicago-NORML-board-of-directors
Chicago NORML’s board of directors.

“There is a political will in Illinois,” said Kiana Hughes, educational director for the Chicago chapter of the National Organization for the Reform of Marijuana Laws (NORML). “We will be the flagship [equity program] in the Midwest, and the provision that passed is more comprehensive than anything out there across the U.S. It can happen and will happen here, but there is some confusion about how exactly it’s supposed to work.”

In Massachusetts, the state senate recently rejected
Democratic Senator Sonia Chang-Díaz’s proposal to make zero-interest
cannabis-related business loans available to benefit small businesses, diverse
owners, and disenfranchised communities. A proposed budget of $1 million was
meant to be self-sustaining through a portion of projected tax revenue and
other sources.

In New York, lawmakers recently agreed to decriminalize
cannabis by decreasing penalties and allowing expungement of previous arrests
for small amounts of cannabis. The state legislature was unable to muster
enough votes for a legalization bill, in part because the bill lacked enough
social equity provisions.

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Shanita Penny, president of the Minority Cannabis Business Association

“It looks like New York is on the social justice and decriminalization path but they are at a standstill, and I think it’s smart to hold off,” said Shanita Penny, president of the Minority Cannabis Business Association’s (MCBA) board of directors and a member of the New Jersey Cannabis Industry Association’s board of trustees. “I’m happy to see them being thoughtful. New Jersey has a deadline for four more vertically integrated licenses. That will require significant capital, and those opportunities are geared toward larger operations. But there are pending licenses that will be available without the requirement around vertical integration, and that will open the door for smaller operators.”

Nelson Guerrero is co-founder and executive director for the Cannabis Cultural Association, a New York-based nonprofit group that helps marginalized and underrepresented communities participate in the legal cannabis industry. “We’ve seen all these mistakes on the West Coast,” he said. “When I was in Governor [Andrew] Cuomo’s office, I reiterated we don’t want be a copy of the West Coast. That’s the opposite of what we need here. These programs have always been underfunded, and sometimes the equity applicants get sharked at the last minute—people getting offered $50,000 to $100,000 to be on the application as an equity applicant” even though they will have no role in the business.

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Cannabis Cultural Association team

Guerrero explained Latinx and African American communities
have been disproportionately criminalized for marijuana possession, making
individuals in those communities hesitant to use cannabis for medicine or
participate in the industry at any level out of fear they may be prosecuted.
Nonetheless, he believes the equity legislation proposed in New York and New
Jersey will be impactful and said promising models that give equity applicants a
legitimate ownership stake in the industry are being developed in other states.

“I’ve seen franchising models come up where there is a
multi-state operator (MSO) and an equity applicant, and those seem to be
working,” he said. “It’s not the most ideal model, because they are giving a
large chunk of ownership to a private corporation. But if that gets you going
to create a viable business, and there’s a way to have a buyout option, that’s
one of the better solutions going forward. Hopefully, on the East Coast it will
be enacted better. The last thing we want is a bunch of MSOs like MedMen with
100 locations.”

Putting corporations on the spot

Effecting real change by integrating social justice into the
foundation of the industry will require MSOs and other large corporations to
support meaningful programs that give drug war victims and POCs the education,
training, and other tools to help them find long-term employment and a genuine
financial stake in the industry.

Chicago-based Cresco Labs is one of the few major MSOs to initiate a comprehensive program. The company’s Social Equity & Educational Development (SEED) initiative, launched in May 2019, is designed to promote “inclusion, equality, and community engagement” and centers on three main components: social equity, a community impact incubator program, and workforce development/education.

Barrington Rutherford, senior vice president of community
integration at Cresco, grew up on Chicago’s rough-and-tumble south side and
knows all too well the drug war’s impact on urban communities. He explained
social justice and equity are part of Cresco’s foundation. The company worked
with Governor J.B. Pritzker, a Democrat, to design SEED and advocated the
legislature mandate cannabis companies offer social justice programs.

“Our CEO [Charles Bachtell] told the governor that if you
want to see diversity and equity, then force the industry to do it,” Rutherford
said. “It’s a privilege to be in this business, and we should treat it that
way. We were part of crafting what the minimum standard should be, and we will
exceed that, but we are also thrilled to be able to help out and become an
on-ramp for people who want to enter this industry.”

Cresco is mentoring eight equity groups, providing education
and applied experience members will need to work in the industry or start their
own businesses. The company plans to roll out similar programs in every state
where it operates and scale up as they go. Cresco also hosts expungement events
and partners with community organizations across the U.S., and it has secured
large law firms’ commitment to help people through the process.

“The [Illinois] governor and the legislature did a
phenomenal job of setting a standard saying everyone should be responsible for
fixing this problem, and I think Illinois will be the model for the rest of the
U.S.,” Rutherford said. “Everybody is responsible for making sure this nascent
industry gets off on the right foot and people who were harmed by the drug war
can participate in the industry in whatever way they can.”

NORML’s Hughes is cautiously optimistic about the social
equity programs and incentives in place in Illinois, but she also is aware how
starting any small business can be difficult in a highly regulated industry
like cannabis.

“Think about living in an area where there are businesses
owned and operated by black people. It’s so layered and multi-faceted,” she
said. “A dispensary is a retail business, so there is some general
understanding of entrepreneurial business stuff that is lacking. And then the
people who do have the capital and business mindset, there is fear or
trepidation about being in the cannabis industry or even being associated with
it.”

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Legislating social justice

Important reforms also are under discussion at the federal level. In February, Senator Cory Booker (D-N.J.) introduced the Marijuana Justice Act, which would remove cannabis from the federal list of controlled substances and expunge past convictions. Senators Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), Kamala Harris (D-Calif.), and Kirsten Gillibrand (D-N.Y.) co-sponsor the bill.

The list of prominent Democrats who support some form of comprehensive cannabis reform grows by the day and includes presidential hopefuls Beto O’Rourke (former U.S. Representative, D-Texas) and Senator Amy Klobuchar (D-Minn.). Whether federal legalization becomes a major campaign issue in 2020 remains to be seen, but advocates expect progress on issues including banking, expungement, and other aspects of the social justice equation. Three pending comprehensive reform bills call for removing cannabis from the Controlled Substances Act: the Marijuana Justice Act; the Ending Federal Prohibition Act, sponsored by Representatives Tulsi Gabbard (D-Hawaii) and Don Young (R-Alaska); and, the Marijuana Freedom and Opportunity Act, sponsored by Senator Chuck Schumer (D-N.Y.).

On the federal level, MCBA’s Penny said the SAFE Banking Act may be the policy initiative that could have the biggest impact for people of color, because it would create new opportunities for small business owners who need loans, access to traditional banking services, and tax write-offs that every other business in the U.S. enjoys. Since most banks do not work with cannabis companies, operators often must come up with the capital to start a business themselves, which is another major challenge for POC looking to start a cannabis enterprise.

“SAFE Banking is definitely something that is going to tip
the scales, and it is critically needed wherever you are in the industry,” she
said. “The large MSOs are losing millions because of [inability to write off]
business expenses and are having trouble operating at scale. So, the industry
needs it, minority business owners need it, social equity participants need it,
and I am very excited about it passing this year. It would be a big step in the
right direction, and it has bipartisan support to give relief to states that
are implementing programs.”

In July, a formidable group of civil rights and cannabis
advocates formed a coalition in order to lobby for more social justice
considerations as legislators begin debating legalization bills in the House
and Senate. The coalition includes the Drug Policy Alliance, Human Rights
Watch, NORML, American Civil Liberties Union, Center for American Progress, and
Students for Sensible Drug Policy.

The coalition’s top agenda items include removing cannabis
from the Controlled Substances Act, justice reform measures like expungement
and resentencing, eliminating public-benefit penalties related to cannabis use,
directing tax revenues to local governments to reinvest in communities most
impacted by the war on drugs, and eliminating cannabis testing and arrests as
factors for child welfare and immigration cases. 

“Black and brown people have been traumatized by our racist marijuana laws and, as the federal government embraces reform, our groups will make sure any proposal will repair the damage done to those communities,” said Queen Adesuyi, policy coordinator at the Drug Policy Alliance.

Making their voices heard

While politicians and industry leaders talk a big game about
social justice and equity, very few laws compel companies to make programs an
integral part of the industry. The tide seems to be turning, though, as more
attention and debate develops in states where legalization is on the horizon
and legislators want to create equity from the beginning.

“New York almost had adult use in the budget but there was
no social equity in the bill, so the legislature wasn’t for it,” said Guerrero.
“Whatever eventually passes will be similar to what Illinois passed. We can’t
avoid the social equity question, or there won’t be an industry here. We have
yet to see one that is perfect, so it’s a work in progress.”

Regardless the slow progress thus far, activists fear criticizing
current efforts will discourage people of color from continuing critical work
that remains to be done.

“It’s really frustrating to see how equity is discussed in
the media,” said Hughes. “The headlines are always salacious and emphasize that
black people don’t think enough is being done to address the problems, and it
becomes a negative narrative. But it’s off to a great start in Illinois, and
way more than we’re seeing across the U.S.”

Penny agrees progress is being made, slowly but surely, and
remains optimistic about the future for people of color at all levels. In some
respects, the answer to further progress is the same as it always has been:
activism and advocacy on the front lines, both locally and nationally.
“You should see the lines to get into
congressional hearings,” she said. “People are lined up so they can get a seat
for those hearings and are becoming more educated and understanding their
impact.”

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