Inside Cannabis - July 21st, 2017 | Inside.com

Inside Cannabis (Jul 21st, 2017)

Special Edition: The Diversity Issue

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Dear readers:

Starting next week, the Friday editions of Inside Cannabis will only go out to premium subscribers, as will special editions like today's Diversity Issue. If you want in-depth and frequent analysis and updates on the cannabis industry, upgrade to premium now!

Best,
Tessa Love
Editor, Inside Cannabis


THE DIVERSITY ISSUE

As the U.S. inches toward widespread legalization of recreational adult-use cannabis, the money-making potential for the nascent industry is growing astronomically. Last year, legal cannabis sales – both medical and recreational – reached $6.7 billion in the U.S., a 30 percent increase over 2015, according to Arcview Market Research. By 2026, it's projected to be worth $50 billion. But as entrepreneurs across the country scramble to get a piece of the action, one demographic is woefully underrepresented: people of color. The vast majority of cannabis businesses are white-owned, and while no formal statistics exist, the Drug Policy Alliance estimates that less than 1 percent of cannabis businesses are owned or operated by people of color.

While lack of diversity is a problem in and of itself, it's made worse by the fact that the criminalization of marijuana, otherwise known as "the war on drugs," has overwhelmingly impacted communities of color. Though studies show all races are equally likely to have broken the law by smoking, growing or selling cannabis, people of color are much more likely to get arrested and persecuted. According to the ACLU, blacks are 3.73 times as likely to be arrested for marijuana possession than whites. And to make matters worse, many laws in the states with legal cannabis markets ban people with criminal records from working in the industry.

Additionally, the barriers to entry in many marijuana markets favor the wealthy, and therefore the white. The chief operating officer of Green Rush Consulting, Sarah Cross, estimated that it costs around a quarter of a million dollars to start a legal cannabis business. In some states, an application alone can cost $1 million. People of color, who have an average of ten to 13 times less net worth than whites, are far less likely to be able to come up with this kind of capital. After getting the short end of the stick during prohibition, now people of color can't tap into the economic benefit the rest of the country is cashing in on. 

But there is a silver lining. As the industry finds its footing, individuals, organizations, cities and states across the country are working to build reparations into their practices and policies. Here's a roundup of what's happening on the diversity front.


OAKLAND, CA

Last year, the Oakland city council became the first in the nation to make drug war reparations when it passed the Equity Permit Program. It's been a bumpy year for the controversial proposal, but it is beginning to take shape. As the city prepares for the rollout of California's recreational cannabis market, the Equity program will reserve 50 percent of all permits to those affected by the war on drugs. This includes Oakland residents arrested within the city for pot crimes dating back to 1996, and residents that have spent at least 10 of the past 20 years in police beats torn apart by the war on drugs, of which there are 21 across the city. Additionally, to qualify for the permit, an applicant's income must be below 80 percent of the city’s average median income. 

The city is also setting aside $3.4 million in cannabis business license tax revenue and $200,000 to hire a consultant to offer no-interest loans and other assistance to help equity permit holders open their business.


MARYLAND

Maryland Gov. Larry Hogan recently ordered a study of racial disparities in the state’s medical marijuana industry after the initial 15 licenses awarded last year were given to a group of mostly white-owned companies. This is the latest development in what has been a tumultuous rollout of the medical market. 

The 2014 law that legalized medical marijuana in the state had provisions aimed at cultivating racial and ethnic diversity in the industry. But during the review for applications for the first cannabis business licenses, commissioners did not consider the race of applicants, citing advice from the attorney general’s office that evidence of racial disparities is necessary in order for such a preference to pass constitutional muster. Hence the study.

Before Gov. Hogan ordered the study, however, a bill to give minority-owned groups a shot at five additional licenses failed in the General Assembly session that ended April 11. Lawmakers have talked about reconvening in a special session to try again to pass a bill, but have not succeeded. 


WASHINGTON D.C.

Two years after recreational cannabis was legalized in Washington D.C., the city's council is advancing legislation to give local minority-owned companies a preference when applying for licenses to operate medical marijuana businesses. The District currently has eight cultivation centers and five dispensaries. Only one cultivator is black.

Not many details have been released about the measure, and D.C.’s Mayor Muriel E. Bowser said she’s still reviewing the legislation, but her administration is taking steps to implement it.

Additionally, late last year the District lifted its prohibition against felons entering the industry whom have been convicted of possession with the intent to distribute, citing racial disparities in how the law was enforced.


LOS ANGELES, CA

At a roundtable discussion about the launch of the adult-use industry in Los Angeles last month, 150 residents gathered to demand that diversity be a top priority in the rollout of legislation and permits. While the meeting brought no solid outcome or policy recommendations, it's the first step for the city toward building an equity program. 

LA city officials have been working closely with Virgil Grant, co-founder of two cannabis trade groups, to develop an equity program at the local level, but the city’s current draft regulations don’t include any details about the program. Grant emphasized that the equity program must be incorporated from the get-go.

“We don’t want it to be an afterthought,” he said.


NATIONAL

In addition to specific jurisdictions, individuals and organizations across the country are banding together to help create opportunities for minorities in the cannabis industry.

One such organization is the Minority Cannabis Business Association [MCBA], a nonprofit aimed at getting more minorities into the industry. While they provide education, advocacy and community, the organization is also working to create template legislation, regulations, and rules to distribute to states and local municipalities that address issues of inclusion. This model legislation could then theoretically be immediately implemented in every new state to legalize medical or recreational marijuana. 

MCBA has also partnered with the National Cannabis Industry Association to create a minority business council to further this mission. 


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