Cannabis and Social Equity: Challenges and Opportunities
The cannabis industry is filled with discussions about a term that has gained prominence recently, though it should have been a bigger part of our consciousness decades ago. That term is “social equity.”
Social equity is highly prominent in California and Illinois, the latter becoming the 11th state to legalize recreational marijuana in 2020. Illinois’ Adult Use program took it a step further by focusing on social equity to ensure resources would be allocated to pave the way for new entrants in the market.
What is Social Equity?
The primary concept of social equity (as it relates to the law) is allowing those who have been previously arrested for cannabis-related crimes or who live in a neighborhood disproportionately impacted by the war on drugs to more easily participate in the cannabis industry.
“Analytically speaking, these types of areas also tend to be areas where minority demographics reside, but anyone, White, Black, Brown, Veterans, LGBTQIA+, etc., could reside in a disproportionately impacted area,” according to Shawnee Williams, a cannabis employment recruiter whose focus is on empowering people from such communities.
The term “social equity” should not be confused with the terms “diversity” and “equality”, which are more directed at increasing variety and equal status in rights and opportunities. There is also debate about who qualifies for social equity or what true social equity looks like.
Through ownership, employment, expungements, local reinvestment, and other quantifiable metrics however, existing gaps and opportunities within social equity programs can be identified.
This is important so we may determine the most effective way to implement realistic initiatives, manage expectations, and measure how economic empowerment can benefit impacted communities.
There is No Perfect System in Society
Social equity does come with its fair share of problems.
To a great extent, minorities have been adversely and disproportionately affected by the so-called “war on drugs.” As a result, those touched by prejudiced law enforcement live an existence filled with tension, resentment, and distrust.
Without question, it will take time to rebuild trust in those communities, and understandably so. Additionally, education will be needed to help adopt a mindset of acceptance toward the cannabis industry.
Because efforts toward social equity are still in their infancy, many are concerned those who are to be empowered could reap the least amount of benefits, remain vulnerable and feel disconnected or forgotten. This sentiment is evident in conversations among members of The Medical Cannabis Community.
In addition to the disenfranchised being overlooked, there are other social equity concerns facing the cannabis industry.
Social Equity Challenges in The Cannabis Industry
The overall objective of social equity is simple. Create a pathway for businesses and individuals who were previously disadvantaged due to their race, gender, or socioeconomic status. The regulation and enforcement of that objective, however, is more complex due to the increasing number of obstacles facing the cannabis industry. During the field’s current downturn, a few of the challenges for social equity exist.
1. No State in the U.S. has Successfully Implemented a Social Equity Initiative
Few states are talking about legalization and criminal justice reform in the same conversation. This leads to separate policies that neglect to acknowledge the damage caused by cannabis prohibition.
While Colorado, Massachusetts, Oregon, and California have made strides to enact social equity legislation, they have also been criticized by the public who raised questions on whether enough is being done to follow through on the goal and spirit of social equity.
The society and economic damage resulting from the war on drugs still need to be repaired. With so much that needs to be done, which issues are the most pressing? Which concerns should be addressed first and how do we collectively evaluate success?
In Illinois, much of the cannabis legislation focuses on social equity programs. As a result, there is a great deal of pressure on lawmakers to get it right.
2. Obtaining a License in the Cannabis Industry is Only Half the Battle
People from disproportionately impacted communities lack access to resources required to not just get a license but succeed in launching and operating a business. Also, running a business takes more than capital and opportunity. It takes sound business acumen that many in lower socioeconomic areas don’t have because of the lack of educational resources.
When you combine all the different elements of the situation, it’s difficult to guarantee long-term ownership in a highly competitive industry. As with any business, being successful requires financing, real estate, and relationships- three things not readily available to the disenfranchised.
Everyone, especially those who qualify under social equity programs, must still raise additional capital at some point to survive in the industry. Based on the current trajectory of the market, raising capital could be difficult.
With scarce sources of investment available, social equity business owners could experience at best dilution in ownership and, at worst, a buyout or reclamation if they can’t keep up with loans, taxes, execution, and further capital contributions required for the business.
3. Minorities Still Face Significant Levels of Discrimination
Even after starting their businesses. Prejudice toward minority business owners, particularly in the cannabis industry, has led to fear of raids, frozen bank accounts, and criminal charges.
They have also been plagued by stigmas and an unconscious (or blatantly conscious) bias. To an even greater extent, advocates express the need to review the entire model of social equity. The premise is how disadvantaged communities truly benefit from having a select few licensed cannabis businesses available in the area. In doing so, many communities remain poor.
People with criminal records feel particularly discouraged. As they try to find gainful employment, they often don’t know where to start, find support, or how to afford the difficult process of expunging their records. This frustration prevents thousands of qualified people from participating in the cannabis industry. The war on drugs has clearly broken the spirit of many, who are now expected to catch up and compete in an environment where the odds of success are not in their favor.
Breaking the Cycle to Ensure Everyone Gets an Opportunity
Almost 10 years ago, I made the decision to help people improve their lives through cannabis after seeing constant issues with societal stigmas and a lack of equity in the industry. As I consulted my network, I spoke with the Students for Sensible Drug Policy about their thoughts.
Amy Hildebrand, Chair of the Board of Directors, stated, “You have to ask yourself how you got here and how the industry got here – generations of activists fought to get us here, while so many of our people, fellow cannabis consumers, languished in prisons.”
She added, “Whether it was medical or recreational or somewhere in between, for a lot of us, me included, beginning to experiment with cannabis lead us on a path of healing – ourselves and our communities. It’s immensely important we don’t lose that connection.”
Fortunately, the issues afflicting the cannabis industry can be solved.
How to Turn Problems With Social Equity into Opportunities
While the future may seem bleak for those newly entering the market, there is hope. Numerous opportunities still exist that will create solutions to help overcome the ongoing obstacles in the cannabis industry:
1. Promote Advocacy, Awareness, and Education
Cannabis education remains a top priority among consumers, entrepreneurs, medical professionals, and elected officials. Until we can get people to understand the history of cannabis prohibition and its harmful consequences, social equity policies will remain hamstrung.
People must continue to learn how to become involved in advocacy and community outreach so they can learn how to raise awareness, build relationships, and participate in matters of policy and legislation. They should also be encouraged to become familiar with how the political process works. Developing resources to help overcome these barriers are increasingly needed, and not just in the cannabis industry.
2. Focus on Medical Benefits and Keep Patients in Mind
For quite some time, the cannabis industry has been built on the backs of medical patients. They helped turn the legislative tides through their powerful and impactful stories and experiences.
Cannabis patients are the first disadvantaged group of people to fight for the opportunity to obtain legal access and have been a driving force in changing the conversation, perception, and laws around cannabis. Through their passion and advocacy, we’ve all been able to pioneer a movement that now brings the opportunity for a multibillion-dollar industry to life. Without patients leading the way, there may not have been a legalized cannabis industry in the first place.
If we want people from disadvantaged communities to buy into the idea of social equity, we can’t turn our backs on the people who were prioritized right before them. By supporting medical patients in their effort to procure safe, reliable and affordable medicine, they, in turn, will be likely to reciprocate support for social equity initiatives.
3. Create More Expungement, Work Development & Community Oriented Programs
A recent report outlined the importance of expungements to help reverse harms from the war on drugs. It noted that, for many, even “automatic” clearing of criminal records could be complicated. Thus, developing solutions to provide more follow-through support are needed.
Finding a job in the cannabis industry requires training, which can be made available through work development programs that seek to equip people with skills needed in the cannabis industry. Programs should help them obtain employment through local hire guarantees and provide additional support to climb up the ladder through management training programs. Promoting a mindset of growth and self-development will also create accessible paths to a career in the cannabis industry.
As it relates to other programs that can be explored, developing childhood education initiatives are also essential in combating decades of D.A.R.E. programming that instilled fear into low-income communities.
4. Hold Organizations Accountable for Social Equity
In order to effectively position people to succeed in communities disproportionately impacted by the war on drugs, future programs must focus on providing significant, and immediate economic benefits. While there are many social equity incubators, accelerators, and models of support being built to help, programs alone will not result in the desired outcomes.
Community members should take the opportunity to become engaged by actively inquiring about program offerings, providing detailed feedback for improvement, and creating a list of organizations committed, or perhaps, not committed to social equity.
Highlighting current efforts would hold organizations accountable and allow the industry to foster improved initiatives similar to Oakland’s Incubator program (which makes it easier to find partners and has reportedly started showing modest results.)
There are also other incubation programs that grant full ownership, including equity, as seen with organizations like the Good Tree brand.
No matter the program, the goal should be to minimize barriers for licensing, and success, in the cannabis industry.
5. Expanding on Incubator Models
Most current programs for social equity provide an incubation option where training, resources and technical expertise are available in exchange for a percentage of equity. Many also provide seed capital in the form of grants and loans to graduates of such programs.
A few ways to expand the efforts of social equity would be to provide these applicants with access to established banking connections, and a portal to connect with predominantly minority investors who are most aligned on values. Training on a few additional topics could also include how to:
- Maintain ownership
- Generate revenue
- Leverage inventory costs and purchasing power via economies of scale
- Become cash flow positive
- Defend against predatory practices that strip control or future profits
Support for social equity can extend into non-plant touching business opportunities on the ancillary side. Outside of growing and selling cannabis, there are more than 100 additional ways to break into the industry. Blue-collar businesses are strongly needed in the cannabis industry as it works to build, operate, and maintain these multi-million-dollar facilities and equipment. Landscaping, construction, HVAC, electrical, plumbing, roofing, etc. are needed services that could prove to be lucrative without the intensive capital costs associated with plant-touching businesses.
White-collar business opportunities are also flourishing between the need for creative, administrative, legal, accounting, project management services, and even the invention of new products or services altogether. Anyone who can create a product that helps people with arthritis easily open cannabis containers, for example, could find themselves filling one of the many voids that exist in the cannabis industry today.
The Road to Social Equity
While the concept of social equity is designed to level the playing field for those disadvantaged by the war on drugs, the process will be long, arduous, and seemingly impossible. Few will have the willpower to put in the rigorous work and take the high risks required to succeed in the cannabis industry, but those with tenacity who refuse to be excluded from the industry will be the ones to reap the burgeoning opportunities that are to come.
What are some other community-driven ideas that can bring social equity and reinvestment back into communities directly impacted by cannabis prohibition?