Social Equity Programs: An On-Ramp for Cannabis Entrepreneurs
In cities and states where cannabis is legal in some form, governments are introducing social equity programs to address the lack of diversity in the cannabis industry. Local and state lawmakers are weaving social equity programs into legislation, thereby enabling minorities and those impacted by the war on drugs to pursue cannabis business opportunities.
The cannabis industry has perpetuated inequity since cannabis first became legal for medical use in California in 1996. Certain populations have lacked access to affordable medical cannabis, prohibitive business application and licensing fees, and overall funding.
In their bids to become cannabis entrepreneurs, African Americans, Latinos, women, and veterans don’t always have the same opportunities to hire consultants and lawyers to navigate the narrow and competitive path to a license.
For decades, advocates for cannabis social equity and justice have pushed to create equal access and fairness in the cannabis industry. As with most social change, results take time.
Here are some of the measures states have taken to grow cannabis social equity programs, and where they still fall short.
Social Equity Programs & Drug War Triage
Residents of designated communities where the fallout from the war on drugs has been especially harsh may benefit from perks when applying for licenses.
Several states and cities will expunge certain cannabis arrest records and convictions through their social equity programs. Others provide discounted cannabis application, licensing, and renewal fees to those with records and/or their impacted family members.
A license alone can’t do all the heavy lifting, though. Jessie Grundy, a social equity applicant and cannabis brand founder in Oakland, CA, said “If you don’t have a large savings, or [aren’t] enrolled in a program like Oakland’s that offers a $100k interest-free loan, it will be an obstacle that many of us will not be able to overcome.”
As a result, many aspiring cannabis entrepreneurs will still need to find alternative methods to fund their businesses.
Staking a Claim & Partnering
Several city and state social equity programs reward qualifying individuals who have at least a 51% stake in their proposed businesses. Illinois is currently the only state that requires both 51% ownership and control, thereby ensuring more applicant agency within any business arrangement.
Many programs encourage win-win partnerships between license applicants who have experience operating dispensaries and grow operations and those who have the experience and resources to make a go of things.
Some states and municipalities require all license applicants to provide a social equity plan on their applications, and some award points for including social equity applicants in their businesses.
4 Corners of Social Equity Programs
Ideally, social equity programs begin with public policy discussions at the local and state levels to learn what help communities need and bring those needs into existence.
Many applicants have no mainstream business experience and therefore need business development tools and training. Interest-free loans, grants, and free space may be essential to the success of aspiring entrepreneurs without access to financial backing or suitable partners
Community outreach and education teach people how to take advantage of opportunities in the cannabis industry through social equity programs. Further, learning accelerators and mentorship ensure those who get licenses are able to keep them.
In marginalized communities, social equity programs promote social justice by creating business licensing and ownership opportunities and encouraging residents to share their knowledge with other community members.
Social Equity Down on the Farm
Florida is among the states where farmers are eager to grow hemp now that the USDA has implemented its Hemp Production Program. Hemp seeds must be USDA certified to ensure that they have good germination potential and low vulnerability to certain diseases.
It’s difficult to find such seeds now, and minority farmers don’t always have access to the sources of information that could allow them first dibs on the supply.
Originally, the University of Florida, a land-grant agricultural school, was exclusively awarded the task of certifying hemp seeds. Minorities for Medical Marijuana helped make the case that another college, Florida Agricultural and Mechanical University (FAMU), a historically black institution was also a land-grant agricultural institution.
Now, FAMU is participating in the certification of seeds in the advent of Florida’s hemp industry.
3 Strikes (or Less) & You’re Out
The legal cannabis industry has created a social justice paradox. Licensed entrepreneurs stand to make millions from cannabis while others languish in jail for selling it. Even a minor cannabis infraction can impede someone’s access to jobs and housing and adversely affect child custody decisions or immigration status.
According to the Center for American Progress, “Black Americans are four times more likely to be arrested for marijuana charges than their white peers,” and six times more likely to be arrested for drug-related offenses. Prosecutors are twice as likely to push for a mandatory minimum sentence when the defendant is black.
Evidently, we still have work to do when it comes to supporting those who have been charged with cannabis-related crimes.
Not all cannabis social equity programs are created equal, and depending on the program, results may vary. Cannabis legalization in itself is a step toward social equity that has legitimized cannabis as medicine. We must now remove the stigma around its recreational use.
Lawmakers’ appetites for draconian sentences involving non-violent drug offenses, especially for pot, are diminishing. Meanwhile, legislation aimed toward decriminalization and curtailing unfair arrest and sentencing practices have been floated at the national level.
As the saying goes, he who has the gold makes the rules. But with limited cash and consistent grassroots efforts, lawmakers have come a long way in cannabis legalization. And as more states push for legalization, social equity programs will keep gaining momentum. We have to stay in the race to win it.
Want a more in-depth look at how social equity programs apply to you and your cannabis business? Feel free to reach out to us at Higher Yields Cannabis Consulting to schedule a free consultation.