At War with the War on Drugs: Diversity and Representation in the Cannabis Industry in the Burgeoning Era of Inclusivity

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Since it’s prohibition in 1937, cannabis has been used as a means to arrest, detain, and incarcerate millions of Americans. Roughly 30 million of them, to be more precise. Of these millions, a large majority are minorities. Nationally, Black Americans are almost 4 times as likely to be arrested for minor possession, according to the American Civil Liberties Union. In some states, this rises to almost 10 times (Figure 1), despite very similar usage rates nationwide (Figure 2). In 2017, 27% of the people arrested for drug law violations were Black, despite the fact that African-Americans comprise only 13.4% of the national population (for reference, Whites make up 73%).

 

Historically, minorities have also often been portrayed in propaganda and media as more likely to use marijuana, despite this having no factual basis. So, what role do minorities actually play in the burgeoning legal cannabis industry, after being made the face of the illegal cannabis industry in America?

 

 A War on Drugs, or a War on Minorities?

To provide some historical context for the disproportionate incarceration of minorities, here is a brief timeline of marijuana’s legal history in the US:

  • Early 1900’s- After the Mexican Revolution, Southern states saw a large influx of Mexican immigrants, who brought with them the medicinal herb they called “marijuana.” During this time, Americans were already, and had been for a long while, using marijuana in almost every tincture and medication available. However, they knew it by another name: cannabis. The two were not known to be the same thing at the time, and marijuana was demonized as a “Mexican drug.”
  • 1931- Hearings are held to decide the legality of marihuana in El Paso, Texas. Many white people testify that marijuana would cause men of color to “become violent and solicit sex from white women.” El Paso would go on to outlaw marijuana and use it as justification to arrest and deport Mexican immigrants.
  • 1937- Marijuana Tax Act of 1937 essentially made illegal the use and sale of marijuana in all of the US.
  • 1971- Controlled Substances Act is passed by the Nixon administration, beginning what we know today as the war on drugs. Marijuana was listed as a schedule 1 substance; on the same legal par as heroin. This was despite the protestations of the Schafer Commission, which found that marijuana had no addictive properties and brought into question its categorization as an illicit substance.
  • 1996- California legalized the use of medicinal marijuana
  • 2013- Washington and Colorado become the first states to legalize marijuana fully.

In summary, from its inception, marijuana policy has been the long arm of the oppressor, targeting minority populations with propaganda, and with disproportionate rates of arrest and incarceration. In doing so, BIPOC have been historically stripped of their public voice, and this is continuously used to deny them their legal voice in the poll booth, both during and after incarceration.

 

Barriers to Entry for Business Owners of Color

Decades after the Civil War, government agencies began drawing lines around districts that were deemed undesirable for public and private financial investment. The lines of the districts encircled majority BIPOC populated neighborhoods. Those maps were then used well into the eighties to deny inhabitants of the district’s loans for anything from housing to business, as well as education.

This process of loan denial based upon “poor financial risk” is known as redlining, and while it is not legal today, the repercussions are still felt in many large cities. Redlining has severely handicapped BIPOC’s ability to build the foundation of generational wealth, given that college education and owning a home are historically the easiest ways for an American family to build wealth. Due to this, areas that were redlined are extremely prone to cycles of generational poverty. An investigation into the Atlanta housing market showed that even today, banks are more willing to grant a loan to a low income White family, than to a medium to high income African-American family. Lack of investment in neighborhood resources and inability to secure housing loans leads to low property value, which in turn lends itself to low funding for public schools, as public schools are more often than not funded by property taxes.

Even when residents of these areas are able to obtain a college degree, implicit bias ensures that the adversity doesn’t stop there. Job applicants are twice as likely to get a call back when they have a white sounding name, even if their qualifications are exactly the same or less than those of their non-white sounding competitors. In keeping with this, the unemployment rate of African American college graduates is twice as high than the unemployment rate of their white counterparts.

The ramifications of racist policies and practices, drug related and otherwise, are still apparent in society today, even decades after the abolition of segregation and Jim Crow. Systemic racism is very real, and it permeates more than one facet of American culture. Lack of access to funding, unequal employment opportunities, lack of representation, and implicit bias are just a few of the barriers of entry for BIPOC to many industries today, including cannabis.

 

Representation in the Legal Cannabis Industry

Having been made the face of cannabis for so long, one might assume that minorities make up a healthy percentage of people employed in the growing legal industry. Unfortunately, this assumption could not be farther from the truth. According to Leafly’s 2020 Jobs Report, the cannabis industry provided 243,700 full-time equivalent jobs. Of these, less than 1/5 (17%) of the people involved at a stakeholder or owner level are people of color, and of those, only 4.3% are Black.

This lack of representation in industry ownership, coupled with limited access to capital investment, scares many potential business owners of color away from applying for licenses. Applying in and of itself accrues thousands of dollars in fees. Oftentimes, licensing boards will require proof of considerable financial backing just to be considered for a license. Some state licensing boards also have “good moral character” clauses, which allow licensing authorities to reject applicants for past criminal convictions. Although a few states, such as Illinois,  require license applicants to produce a diversity plan, there is no enforcement of said plan. The fear of governmental discrimination they might encounter during necessary federal involvement, especially given the disparate incarceration rate of people of color for minor drug offenses, also presents a major barrier to entry.

As Sieh Semura, cannabis rights activist, told NPR “just because people say it’s legal… it’s not welcoming for everybody.”

 

Benefits to Employing Responsibly

Employing responsibly from within the community puts today’s canna-businesses in a unique position to combat this lack of representation. Not only will staffing a diverse team with nearby community members benefit the relationship between a business and it’s consumers, but it also allows them to directly put money back into disproportionately impacted communities. Supporting the community often means that they will support your business in kind, and can slow some of the very real and very negative effects of gentrification. In addition to the social benefits, diverse teams have been shown to make better decisions, faster, according to Harvard Business Review. Research has also shown that teams with a multitude of backgrounds are top financial performers, and are more innovative than homogenous teams. The push for inclusion in today’s society is being felt on many fronts, and the cannabis industry is being given the opportunity to sink, or swim with the rising wave.

At HYC, we are passionate about social equity and working to combat the lasting effect of discrimination in the cannabis industry. We also work with Dionne Carroll, who is active in Women of Color in Cannabis (WOCC). WOCC strives to address the barriers to entry into the cannabis industry facing women of color today.

Mississippi Cannabis Legalization: A Big Bible Belt Win

Amid a harrowing election week, the passage of Mississippi Initiative 65 is one result we knew on November 3rd. With nearly 74% of voters in favor of the initiative, medicinal cannabis legalization was overwhelmingly approved. Here is what you need to know about what’s happening in Mississippi.

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Cannabusiness Get a Second Chance? HYC Offers New Pivot Program

As of this year, there are now 33 states that have legalized cannabis in some form, with 11 of those going so far as to allow adult recreational use. But not all legalization programs are created equal, nor do all markets share an equal potential. Every state has its own challenges as well as its own unique opportunities for your budding cannabusiness.

Higher Yields Consulting Cannabusiness Get a Second Chance? HYC Offers New Pivot Program

For many, this will read as the proverbial 20/20 of hindsight. They call it the “Green Rush” for a reason, and countless aspiring cannabusiness entrepreneurs are now struggling for survival as a result of their haste. Why? Because they failed to properly assess the risks and rewards of their chosen marketplace.

If that hit too close to home, the good news is there’s hope — and it lies within the HYC Pivot Program.

The HYC Pivot Program: What We Do for Your Cannabusiness

The Pivot Program was conceived to assist both new market entrants and struggling veterans alike in avoiding the pitfalls of overly competitive and unstable markets. The program also helps cannabusiness owners leverage their individual skills and experience to ease the barriers of entry into the cannabis marketplace.

If you fall under the “struggling veteran” category, know that your efforts haven’t been for naught. We’ll work with you to repurpose the structure you’ve already built and the investments you’ve already made to help you access the state regime most conducive to your individual success.

Understanding that there’s no “one size fits all” solution for such a diverse and unpredictable market, we cater our approach to your vision, your budget, and your needs to help you find the perfect pathway for your success, providing continual guidance as you grow.

Cannabusiness Is Complicated: The Devil Is in the Details

There are myriad factors that come into play when assessing the best regime in which to operate, and each unravels with even more intricacies upon closer inspection. For example, a tightly regulated state market with high barriers for entry can and often will be the wrong choice for industry initiates for self-evident reasons. Hence as a general rule, (though there are exceptions to every rule) restrictive states — like Florida, Arizona, Georgia, Illinois, New York, Missouri, and New Jersey — should be avoided.

But it’s not so cut-and-dried as to say that a more liberally regulated market is an automatic win. Otherwise, a state like Oregon would be a sure bet. Unfortunately, their market bottomed out from oversaturation years ago — a direct result of the lax standards and obscenely low barriers for entry.

Meanwhile, Oklahoma has also suffered from oversaturation caused by their similarly low bar for entry. However, the resulting high failure rate is helping to keep the market open to more experienced entrepreneurs with proper backing. It’s all about having a knowledge of the industry that’s both deep and wide, which is why it’s essential to work with a group like HYC who can provide the expertise necessary for lasting success.

The Process: How It Works

Though the program must calculate a seemingly infinite number of factors, we’ve managed to break the process down into three basic steps.

  1. Application Assessment. This is where we leverage what you’ve already built. We look at your experience, expectations, team, work completed, and more to determine your position and the best course of action.
  2. Business Profile. We create a custom profile of the cannabusiness that best matches your assets and criteria.
  3. Consultation. Based on your business profile, we’ll help steer you to the state marketplace that demonstrates the greatest potential for your individual success and continue to provide invaluable expertise and insight along the way to give you the edge over your competition.

The possibilities that can be derived from these steps are nearly as infinite as the factors we calculate to complete them. One option could be as simple as utilizing your momentum to shift to a state like Oklahoma where the barriers are low but the potential is high. Or perhaps you have the capital to buy a business outright. In such a case, we can help you find the ideal acquisition.

Higher Yields Consulting Cannabusiness Get a Second Chance? HYC Offers New Pivot Program

For others, though, direct handling of cannabis may not be the best option — and that’s just fine. There’s any number of ancillary businesses — payment processing, accessories, grow equipment, or security, just to name a few — many of which carry far lower risk. HYC can guide you through these choices and subsequent processes as well.

Whatever the roadblock, we can help you surmount it and move to the next challenge. If it’s an issue of residency, we can help connect you with locals in the state industry in need of investors. If it’s a budgetary concern, we’ll point you to the state with the lowest fees and highest potential. If your vertical is burdened by unnecessary regulations in one state, we’ll steer you to a state with more generous accommodations.

HYC is here for you, to empower you to make the changes to your cannabusiness that are essential to your growth. With our cumulative knowledge, expertise, and network at your disposal, you can move in confidence knowing that our success is your success.

If you’re one of the umpteen players in the cannabis industry who rushed in early and now feels trapped, pause, take a deep breath, and remind yourself that you can still pivot to higher ground.

Contact us today to set up a free consultation and learn more about how we can guide you in a new direction.

Minorities in Cannabis: Social Equity During a Racial Pandemic

cannabis social equity

In any industry, life is more difficult for people of color, women, and other minorities. The cannabis industry is no different. In fact, there’s been an obvious lack of representation of communities of color since the inception of legal cannabis. Here’s everything you need to know about minorities in cannabis fighting for social equity.

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