Fostering Social Equity in the Cannabis Industry
While the War on Drugs finally seems to be ending, there is much work to be done to clean up its aftermath. Though it’s a daunting task, we must strive to rebuild the lives of people who have been disproportionately affected by the failed drug war, especially members of African American and Hispanic communities.
Aside from releasing the vast number of non-violent cannabis offenders still serving sentences in privately-owned prisons, states need to ensure that people of color have opportunities to enter the industry and benefit from the Green Rush.
Groups push to get more minority business owners involved in the recreational marijuana industry.
Unfortunately, less than one in every five of today’s cannabis businesses is owned by a person of color. According to a 2017 study published in Marijuana Business Daily, only 5.7% of cannabis businesses were founded by persons of Latino/Hispanic origin, and a scant 4.3% had African-American owners. Fast forward three years and things don’t look much better for the two communities most damaged by the drug war.
A Disturbing Conundrum
While celebrities like Snoop Dogg, Whoopie Goldberg, and Mike Tyson have been able to launch successful cannabis brands, the average person of color in the United States is mostly left out. Lack of financial resources presents a huge barrier for African Americans and Latinos wanting to enter the booming cannabis industry. Because cannabis is still classified as a Schedule I narcotic under U.S. federal law, banks can’t offer loans for cannabis businesses. Additionally, private lenders hesitate to invest money in an industry that remains illegal on the federal level.
Members of more privileged communities may be able to use personal resources or borrow from family members. However, people of color have historically been victims of generational poverty, starting with slavery, institutionalized racism, and the vast number of incarcerations and deaths caused by the disastrous War on Drugs.
There are neighborhoods in NYC where the black or Hispanic population is 10 or 20 percent but they are 80 to 90 percent of the arrests.
Furthermore, people with felony drug convictions permanently lose many of their citizenship rights, including the right to vote. Felony convictions aren’t limited to major dealers or distributors of harder substances. In several states, simple cannabis possession can lead to a felony conviction. Arkansas still imposes a felony for a second conviction for possession of a small amount of cannabis. Growing just one plant in Louisiana can lead to a felony conviction, a $50,000 fine, and a 5-year minimum sentence.
Even in some states where cannabis is legal, disenfranchised people of color find themselves barred from plant-touching cannabis businesses due to a previous cannabis conviction. Until all states expunge cannabis-related records, we will never be able to approach an even playing field in the cannabis industry.
When Ohio legalized medical cannabis in 2016, state legislators required that at least 15% of all licenses be awarded to companies at least 51% owned by a racial minority. Unfortunately, a state judge ruled that Ohio’s “racial quota” for cannabis businesses was unconstitutional after two lower-rated minority-owned companies were chosen over higher-ranked white applicants.
The state of Massachusetts, anticipating backlash from the anti-affirmative action crowd, set up their licensing requirements differently. Instead of directly requiring inclusivity based on race, Massachusetts set up a cannabis program that benefits communities who have been most impacted by the War on Drugs. Massachusetts’ social equity program is available to people who:
- Have a previous cannabis conviction
- Are the children or spouses of someone with a past cannabis conviction
- Reside in neighborhoods that have been disproportionately harmed by cannabis law enforcement
Qualified applicants receive reduced licensing fees and free business training.
Maryland required licensing agencies to consider race from the beginning of the state’s recreational cannabis legalization. Despite this mandate, the state awarded all 15 of its initial cannabis licenses to businesses that were not minority-owned.
Evermore Cannabis Company, the only indoor grower in Baltimore City.
Illinois lawmakers took a similar approach as legislators in Massachusetts did. The state’s adult-use cannabis program uses a points system to award businesses that are at least 51% owned by a qualifying social equity applicant. While Illinois’ diversity initiatives look promising, the program leaves room for corruption. Unqualified businesses can theoretically set up agreements with qualifying applicants who merely own 51% on paper, but not in practice.
Despite states’ attempts to redress the inequities of the War on Drugs, minority-owned cannabis business entrepreneurs are yet to see results from legislative efforts.
The War on Drugs has shown us that we can’t rely on the legal system to solve racial equity issues. The private sector, recognizing the shortcomings of state legislative efforts to include affected groups in the cannabis industry, has stepped in to pick up the slack. Community groups and larger cannabis businesses have set up incubators and equity programs to help people of color take their rightful place in the booming cannabis market.
Incubators help new businesses by providing free services such as training and office space. Some examples of incubator programs working to help Latinos and African-Americans enter the cannabis industry include:
- The Hood Incubator empowers entrepreneurs through its Cannabis Business Accelerator Program, offering apprenticeships, community organization, and policy advocacy.
- Chicago’s Cresco Labs has created an incubator program that provides people of color with financial and technical assistance for launching craft growing and infusing businesses.
Tucky Blunt was arrested in Oakland in 2003 for selling weed. Fifteen years later he owns his own dispensary.
The city of Oakland, California, has launched a cannabis social equity program that can serve as a model for New York. Oakland’s equity program offers dispensary permits to Oakland residents who have had a cannabis conviction in the last 22 years or have resided in a disproportionately affected community for at least ten years. African-American founders have recently opened the first dispensary under Oakland’s equity program.
While government, community, and private social equity programs are crucial to creating a fair and accessible cannabis industry, not everyone will be able to secure licensing and funding through these programs. The capital to start dispensaries, growing operations, and extraction businesses is still largely unavailable to marginalized ethnic groups. However, people of color can get involved in the cannabis industry by launching businesses that don’t require huge amounts of investment capital. Let’s take a look at a few options.
White Label and Private Label Products
White label and private label opportunities significantly reduce the amount of initial capital needed to start marketing cannabis products. White label products rebrand the exact same product for marketing to a different audience. White label products allow individuals to forego the expense of extensive research and development needed to manufacture a cannabis product from scratch.
Private label products provide an even more exciting opportunity for minority business owners. Private label programs allow participants to work with the parent company to create specialized formulations to offer their target markets. African-American and Latino business owners can co-create custom cannabis products to meet the needs of their communities.
Cannabis uses vary from smokable dry herb, cooking oil, edible pastries, and lotions to name a few.
Cannabis businesses like Hemp Farms of New York have set up white and private label programs that can help members of the Black and Latino community participate in the Green Rush. Businesses that offer these programs can take the concept one step further by creating internal social equity programs and offering discounts.
Cannabis Branding and Marketing
Cannabis branding and marketing careers need relatively small amounts of cash to start. The primary investment is learning. All you need is a laptop, a few software subscriptions, and a whole lot of dedication. You’ll find plenty of freelance and permanent jobs in the cannabis industry, such as:
- Graphic design
- Video and other and multimedia production
- Content creation
- Social media management
- Virtual assistance
Cannabis brands can foster social equity by considering members of minority groups to fill some of these positions.
Graphic design, branding, multimedia, and digital marketing services are in high demand.
Cannabis Event Marketing
One of the principal ways cannabis companies build brand awareness is by holding regular events. Cannabis brands need reliable event marketers and managers for trade shows, in-house, and community events. Event marketing is a lucrative and in-demand service in the cannabis industry. People of color can start a cannabis event marketing agency with little more than a computer, a website, and some training.
Brand Ambassadors are vital to introducing customers to new cannabis products and their uses.
Cannabis Transportation and Security Services
Both transportation and security services are in high demand in the cannabis industry and require little capital investment to start. Many cannabis consumers have medical conditions that make it physically challenging to visit a dispensary. The post-pandemic world may open even more opportunities for cannabis transportation businesses.
Cannabis businesses are forced to handle large amounts of cash each day due to banking restrictions. Security services are crucial for dispensaries, grow operations, and other cannabis companies.
Every dispensary should have a comprehensive security plan while periodically being in contact with local law enforcement.
As you can see, we are far from creating a socially equitable cannabis industry in the United States. But hopefully, we can learn from the efforts that have gone before and help make New York a role model for a cannabis industry that uplifts the most vulnerable communities damaged by the War on Drugs.
If you would like to get involved, here is a list of groups who are striving to redress some of the devastating effects of cannabis prohibition on communities of color.