Equity means fair and impartial, but in many states across the country, the actual and factual definition seems non-existent in social equity programs. In the United States cannabis industry social equity scene, social equity seems more of a tool that allows those that already have money and access to have more money and access off the backs of those most impacted by the war on drugs.
What is Social Equity?
When we hear “social equity,” a couple of ideas come to mind to explain exactly what it is and how it impacts the cannabis industry. The term is supposed to imply impartiality and fairness, specifically in policy, with special attention to systems and the types of outcomes that derive from them. The term, unfortunately, has become a bane in the reality of cannabis, with many non-white and marginalized business owners often left holding a nug with no lighter and no fire in sight.
Similar to the civil rights movement (or any movement meant to assist disenfranchised members of this country in seemingly any aspect involving wealth and money, which equates to freedom) the language has been used, the dates set, but the action has not been carried out in true integrity, for sake of its name. Equity eludes those to whom it is promised. At the same time, the whiter or richer end of the spectrum profits and elevates astronomically to the top of the cannabis earning charts, driving a further divide in wealth disparity across the United States. This translates to staggering numbers and reports of a system failing its proposed beneficiaries once again.
The MCBA Social Equity in Cannabis Report
On February 10, 2022, the Minority Cannabis Business Association released “Social Equity 2.0”, an extensive, 38-page report detailing the truth in numbers. Many of us had surface knowledge of social equity and little understanding of what was actually taking place between cannabis license hopefuls and the process to licensure. The social equity report and interview are enlightening in a way that helps make sense of the questions most of us have:
- Where are all the businesses that were supposed to flourish under the promise of equity?
- Where are the black and brown faces?
- Why are the same types of candidates constantly winning in the wealth markets?
While there have been a few winners on the “minority” front in cannabis, there have been too many losses characterized and quantified in the details of SE2.0 to confidently say social equity has been working as intended.
A Sit Down with the MCBA President, About the Social Equity in Cannabis Report
The Q & A with MCBA President Kaliko Castille, was led by Dom Hart, and focuses on the social equity in cannabis report.
Social Equity 2.0 is a reporting document compiled by the MCBA, that identifies social equity breakdown in 38 of 50 states that currently have cannabis legalization in either medical, adult-use or both. Written in the language of numbers and political jargon, the document is designed to expose the general public to the realities of social equity while also educating both the public and political persons who should know the cannabis industry in real-time.
The following is a transcription of the interview between Kaliko Castille and Dom “Goddess Dom” Hart, which took place on 2/8/2022. The conversation has been edited for clarity. The bold text = Dom, the italic text = Kaliko Castille.
Peace and Love. Thank you for taking the time to meet with me today! I’m excited to dive into this report!
“Thank you for joining me! Did you get a chance to look over the document?”
I did! There is so much information! As I went through it, I compared my notes to the one-page to make sure I was understanding correctly. So what I gathered is that the systems set in place in the name of social equity are not working, so poorly that it’s almost as if there is no social equity in place. There are still disparities based on race and economic status that have created more barriers to equity in cannabis.
“In general, there are a lot of well-intentioned folks in the movement who are doing the actual work on the ground of social equity political fronts. They are doing their best but are ultimately running up against a political system that for decades has tried not to learn anything about cannabis. And now we are in a short window, not only trying to teach them about cannabis but to teach them how it overlaps with systemic racial issues in America.
Our work is cut out for us. This conversation really started in 2015, when you think about it, so only 6-7 years into the conversation. Whereas before 2015, we were accepting whatever legalization bill we could get through the door because we just wanted to move the ball forward. But now it’s not IF with legalization; it’s WHEN. So now we have to be more methodical about how we write these policies.
Oakland passed the first social equity law back in 2015, and it has done some great work. The very first of its kind… but there are a lot of lessons that have been learned since then. This report gives us a holistic view of the industry and says all of these policies are well-intentioned, but what’s the math? How many states have license caps, which is not good for equity? How many have direct funding applicants? The report looks at not only the social equity provisions but the broader aspect of legalization and all the policies that ultimately impact social equity. We printed the seven takeaways one-pager to help explain why we are doing this on a generalized scale.
We are trying to educate folks. Best intentioned efforts have been awesome. Now, where are we at? Obviously, we all know the cannabis industry is not equitable, that we’re not where we want to be but in order for us to change that with policymakers, we needed to have the data that says, “This is where the states have tried…this is where the states have failed..we see the data, so we know what we want to fix.”
This will be rolling into us relaunching our new model legislation. We did our first state model legislation in 2017, and we are going to update that now for the first time after all of these learnings. So we’ll be able to take all this data and roll it into a tangible policy that we can get introduced to statehouses and say, “Hey, if you want to do legalization the ‘right’ way, this is the way you do it in order to have more equitable outcomes.”
So this isn’t just for information; your work is going towards writing another bill that can hopefully replace the one currently in place. The numbers are for policymakers because that’s the type of information that will grasp their attention. You’ve done the work that they don’t believe will be done, so now they have no choice but to make changes, hence the public release of the bill.
“Right, Everyone wants to reinvent the wheel, but if we can save them time and say listen… And I’ll use an example stat from the report I want to highlight, not even about ownership but talks about access to the industry.
Only 34 of the 38 states that have legal cannabis, whether medical or adult use, 34 states currently bar candidates for ownership from having felony convictions. It literally goes for the core of what we are trying to do, which is get people from the “legacy market” involved in the regulated market place and 34 states are banning those folks from ownership. So, if we ever want to get to an equitable place while trying to transition legacy to the regulated market, we have to do away with things like that that are ultimately keeping people out of something that we now consider legal.
There’s the aspect of trying to transition legacy market businesses owned by people convicted for cannabis crimes, but there’s also the aspect of funding. Many of these people are not coming from traditional business backgrounds; they don’t have access to traditional bank loans as cannabis business owners, and even if they did, Black people are less likely to procure loans over white entrepreneurs.
Further, only 8 of the 38 states that have medical cannabis (out of 50 states) provide access to application and fee waivers. If we are trying to [empower cannabis entrepreneurs] who come from non-traditional backgrounds and don’t have capital or startup funds or bank access, one of the simple things to do is waive fees for people so that there’s one less barrier to entry into the market.”
This is going to blow folks out of the water if they don’t already know what’s going on. A few of the companies I have interviewed have spoken about the social equity aspect of their journey and how getting into the market is difficult; there is often no direction. (Some parts of this, with the blocks to entry and the access to information and funding, remind me of parts of the civil rights movement, like prior to the voting rights act).
“In an abstract way, you can liken it to parts of the civil rights movement. You can compare the licensing structures & fees to a poll tax. It’s very much about access and keeping people out simply because they don’t have the money.
If you think about it from a political standpoint, conservatives always talk about wanting to be pro-business. But a lot of what we are dealing with hurts small businesses. We are making it harder for small business owners to get involved in the economy. Remove race from the conversation for a second; just talk about making it easy for small businesses to get involved. We shouldn’t be making it hard by having fees that make it hard for any general business owner to get into the industry.
Everyone should have access to the tools that help to provide generation wealth for their families. Now add on the extra layer of race on top of it. There’s absolutely no excuse for us to keep those barriers in place. What we are literally doing is attempting to repair some of the damage from the War on Drugs; some of the ways these laws are written are just extending that by a different name.
The same way Michelle Alexander wrote about the New Jim Crow, we call this “Social Equity 2.0” because we want it to actually change rather than just another War on Drugs 2.0, which is us continuing to crack down on the legacy market operators. California and Oregon, traditional export states, people send their weed over. Now that there are limited states, there’s more weed than they can do with because the limited legal market makes it harder. The market here has always grown crops in the west and sold back east. Thinking about the economy, we should make it easier for people in any state to do whatever business wherever they want to do it. It should be a truly free market.
For example, license caps; a lot of companies (will lobby to) get a cap written into the law so that a certain number of companies get the licensing. Take New Jersey, which will only allow about 50 licenses to go through, none of which will go to a black entrepreneur. What’s happening is they are ARTIFICIALLY creating a necessity for license caps.
There’s no cap on the number of coffee shops that can be opened in New Jersey. Caffeine is a drug that kills more folks than cannabis, but there is no cap on the number of coffee shops that can open state to state. But in cannabis, there is a limit, which means the licenses become more valuable. If you have 1 million people with cannabis businesses and only 50 people get the licenses, then those 50 businesses become more valuable, which brings in the large capital to invest in those people, and ultimately moves all the black and brown folks out because they don’t have access to that market.
And that’s where you see the game being played. A lot of people will invest in a social equity applicant or even team up with them and end up screwing them out of the partnership agreement, to where ultimately the white owner ends up coming out on top, but they use that black or brown person to get the social equity license. Then they are able to flip that license for 10x, 20x what it’s worth because of the limited market in the limited license state.
With unlimited licensing, that means if you just have the money and have the skillset, you’d play the game, and some would win, some would lose, and it would be based on your merits, not just connections or because of the cap.”
You’re bringing together so many of the stories that I have heard from companies that have gone into different aspects of the cannabis industry. Obviously, they can’t disclose all the details because of litigation issues, but they’re getting into business with these investors who seem genuine, and then they lose everything, having the rug snatched up from under them. I’ve been hearing a few startup stories like this, and thankfully they follow up with success, but clearly, there are too many that haven’t. It’s frustrating.
“Yeah, absolutely, it’s frustrating, and unfortunately, it’s real life. It happens to plenty of us! Even I started a dispensary in 2013 in the *gray market in Oregon. We had an investor who gave us money, and we ended up losing out on a technicality with our license. The third partner tried to throw me under the bus with the investor and said it was my fault that we lost out on our license. Now I’m the only brown person in this partnership.
Luckily the investor partner came and told me what this other dude was saying. It ended up working out that way, we didn’t get our license, but I also didn’t end up getting tossed out of the business. But that’s the sort of stuff that happens, and other people aren’t so lucky.”
I’m sorry to hear that. I’m just connecting the dots of all that I have heard this past year. Taking all that you are saying in—
“Looking back to this report and speaking of connecting the dots. New Jersey and the northeast are in a position where 17 of 18 adult-use states basically allow for co-location of at least one adult license. This means that if you’re in the medical market fast, the steps taken to get into the adult-use market are shorter. These medical programs are the most inequitable, so if you allow one of these medical cannabis facilities to have first chance at a license, it’s like putting the medical facility on steroids and cementing the inequities in the market.”
It makes it feel like this whole thing is a setup.
“Yeah, well, what we have to understand is that the United States does not operate outside of the laws of capitalism. And this is especially tough for those of us in the cannabis movement because most of us lean a little anti-capitalist or have gotten the short end of the stick. We’d rather see things NOT go the way they always have gone, so we are trying to insert something into the conversation that interrupts the natural order of things.
Capitalism IS limited licensing, merging, and acquisition, with only a few getting the pieces of the pie. That’s the system we are fighting against outside of the political system we are also fighting. It’s hard as a movement to remove ourselves from the capitalism conversation when we are trying to disrupt the natural order of American capitalism.”
This is essentially flipping not only the cannabis industry on its head but other systems in place in the United States.
“If you look at it from a pure political people-powered movement, amidst conversation of voting rights, since we are in the year 2022, the war on drugs. The linchpin of it has been marijuana, which is how it’s been able to help lock up hundreds of thousands of Black and Brown people. That is what has literally cut off the economic ability of those families and communities to build generational wealth and have upward mobility both socially and politically.
So if cannabis is the linchpin to the war on drugs, and the war on drugs has been the number one way we’ve been able to maintain the social order from segregation til now, then flipping cannabis and making it truly equitable means that we are reversing decades of systemic racism because we are giving people access to the economy and access to growing their communities, in a way we are replanting the growth of the black and brown communities that have been purposely and systemically cut off due to the war on drugs.”
Turning the soil.
“When you have economic power, then you have political power. So, if we can get black and brown folks access to economic power through social equity by actually doing them the right way, then the next step is political power. We need people that come from these disenfranchised communities to be elected to offices and accepted into the general economy instead of just cutting off entire generations of folks through incarceration.”
As further revelation equips people with knowledge and understanding, the regulation and equitable change in the cannabis industry is something we can look forward to. May it tend to and help heal the wounds that the war on drugs and other systemic disparities have left on the legacies of Black and Brown people, as well as other disenfranchised groups of people within the cannabis community.
We don’t just want change. We fight for and expect it! We want to see the actual and factual definition of equity- in action- in social equity programs everywhere. We don’t just want to hear about it, we want equity, and we want it now!
Special thanks are extended to Kaliko and the MCBA board and team for putting ideas to work together so that we could all benefit from the revelation of this knowledge.
This content has been co-authored by Dom Hart. Feature Photo Credit: Vernon Clements
For more from Veronica Castillo visit: www.veetravelingvegcannawriter.com
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