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Social Equity in the Cannabis Space: Towards Solution-Based Thinking

Social Equity in the Cannabis Space: Towards Solution-Based Thinking

The more I continue to learn about cannabis (the plant itself), the more I become aware of what it can do for the world. The demand for cannabis is exponential and global. Whether legal or illegal, cannabis is grown and consumed in every country. Extensive research and the personal experiences of cannabis users indicate that the plant has medicinal properties and is a versatile, eco-friendly crop.

I wholeheartedly believe that the cannabis industry, if built right, can help us bridge the socio-economic disparities created by the war on drugs created. In my opinion, one way to achieve this is through an innovative approach to social equity programs that focuses on entrepreneurial education, research, tech, and capital investments beyond cannabis.

I have been studying and navigating the regulated cannabis space for the last five years, and I we have the opportunity to build an industry that can help our environment in a radical way, contributes to health and wellness in a revolutionary way, and creates sustainable-financially- viable economies across industries. All of these can be started through the implementation of initiatives that create solid business models that support the industry from within, attract a diversified pool of high-quality investors, professionals, and operators.

Despite the highs and lows of the cannabis business environment, it continues to thrive and evolve (even throughout a pandemic). The regulated cannabis space achieved multi-billion-dollar industry status with only a handful of fully legal states and a few operational companies. Yet, social equity is still underfunded, disregarded, and belittled.

So, what is social equity in cannabis? A social equity program in this industry is meant to create pathways for those communities that have been disproportionately affected by cannabis prohibition, to benefit from the financial success achieved by the regulated cannabis through the facilitation of ownership, business development, and educational opportunities.

Social equity does not equate “diversity”. Social Equity is also not limited to race, it goes beyond and can serve as a pillar of the regulated industry if employed effectively. Most importantly, social equity programs in states where cannabis is legal are not yielding worthwhile results. This is an unfortunate state for the industry to be in, given how much growth it has experienced in the last decade alone.

The Problem

To date, all stakeholders of the cannabis industry have pushed for each individual state to come up with these programs. Why do we rely on the entities (the government!) that created the problem in the first place to provide us with the solution? It’s counterproductive, not to mention, an undeniable conflict of interest.

The other issue is the industry landscape. The cannabis industry may be tough, but it is full of opportunities to both, make money AND pioneer a movement towards sustainability, wellness, and entrepreneurship. It is unfortunate to witness so many companies in “big cannabis” become influential giants in the space by glorifying the patient and social justice as a startup, then divert from the core values of the cannabis community and culture after exceeding a certain status and eventually failing as a business. Such a pattern adds to the stigma and tarnishes our collective legitimacy as a thriving industry.

Thus far, every state in the US is doing its own thing with respect to addressing social equity. In California, for instance, each city has been granted the freedom to independently create their own version of cannabis regulation, ban cannabis, or completely disregard it by not addressing it. Despite being the largest cannabis market, about 30% of CA cities have implemented a cannabis program, and only a handful have addressed social equity or social justice within their ordinances. Every state that has tackled the challenge of implementing a social equity program, including Ohio, California, Oregon, Colorado, and Massachusetts, has been criticized by the lack of results, unclear objectives, and untraceable progress.

Illinois, a state with a gnarly cannabis prohibition history in areas like Chicago, made a bold move by basing their cannabis legislation around social equity. Although it is still early to measure the Prairie State’s program ROI, the fact that their implementation was more intentional in their approach to remediating the effects of prohibition than the approach of the older legal states, serves as evidence that they have taken a step in the right direction.

 Nevertheless, it is no secret that operating a licensed cannabis business is the most challenging, costly, and risky path to entering the cannabis industry. Most cities require the real estate to be secured in order to qualify as an applicant. As if that wasn’t enough, the regulations often have strict zoning rules. These requirements alone make the initial investment a hefty one, and at this point, the license application hasn’t even been submitted. Other requirements include having liquidity of at least $250k or having no prior federal convictions (including cannabis-related ones).

Being successful with a licensed cannabis business requires a solid team with good intentions, a sound and compliant business model, genuine relationships with the community, and access to capital. A lot of cannabis operators run out of money during the application and compliance stage because of how lengthy, and costly the process can be. These circumstances may apply to anyone who chooses this path, whether you are a social equity candidate or not. Past this path, capital infusions are also required for build-out, compliance management, and operational purposes.

There are not enough licenses available to realistically address social equity in cannabis in a manner that would result in proactive solutions to the conundrum cannabis prohibition created in our social fabric. I believe that by only focusing on awarding cannabis licenses, we are missing the opportunity to pioneer the economic justice movement. The nature of this industry gives us the opportunity to make a radical change for economic equality. As canna-preneurs, canna-curious individuals, canna-consumers, or stakeholders, our first step is to become aware of what we are fighting for by acknowledging the damage.

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Image: JM Balbuena

The Scope of the Damage

Cannabis prohibition destroyed millions of families, ended millions of careers and dreams (other than growing, manufacturing, or selling cannabis), and created a socio-economic exclusion, which hindered the black and brown communities from economic development for several generations.

According to the FBI’s Uniform Crime Reporting (UCR) Program, nine-in-ten U.S. cannabis arrests in the US are for possessing the drug, rather than selling or manufacturing it. UCR reported that in 2018, 92% of cannabis arrests were for possession, and 8% were for selling or manufacturing. The share of cannabis arrests for possessing the drug has inched higher in recent years given that in 2011, 87% of cannabis arrests were for possession, and 13% were for selling or manufacturing it. 

And then there are these numbers:

• Black Americans are four times more likely to be arrested for cannabis charges than their white peers. In fact, black Americans make up nearly 30 percent of all drug-related arrests, despite accounting for only 12.5 percent of all substance users.

• Black Americans are nearly six times more likely to be incarcerated for drug-related offenses than their white counterparts, despite equal substance usage rates. Almost 80 percent of people serving time for a federal drug offense are black or Latino. In-state prisons, people of color make up 60 percent of those serving time for drug charges.

• In the federal system, the average black defendant convicted of a drug offense will serve nearly the same amount of time (58.7 months) as a white defendant would for a violent crime (61.7 months).

• People of color account for 70 percent of all defendants convicted of charges with a mandatory minimum sentence. Prosecutors are twice as likely to pursue a mandatory minimum sentence for a black defendant than a white defendant charged with the same offense, and black defendants are less likely to receive relief from mandatory minimums. On average, defendants subject to mandatory minimums spend five times longer in prison than those convicted of other offenses.

Now compared the above numbers to the most optimistic results any of the currently implemented social equity programs will yield. We can easily conclude that focusing on licenses alone is not going to even scratch the surface.

Solution Based-Thinking

Cannabis is medicine. The cannabis wellness movement and industry were built on the backs of medical patients. All legislation and strides for normalization have relied on the powerful and impactful stories and experiences of people who have treated illness with cannabis. These stories and scientific evidence, have pioneered a movement that has birthed a multibillion-dollar industry. But social justice plays an even bigger part. The fact that people are in jail for something others are freely doing today will always be the elephant in the room for the industry if not actively corrected.

Thus, developing solutions to provide more follow-through support for criminal record expungements and expeditiously releasing those with non-violent cannabis convictions from prison should be a priority, not an ambivalent discord. Furthermore, it is just as important to foster the development of childhood education initiatives, as these are essential in combating decades of D.A.R.E. programming and dismantling relations regarding law enforcement instilling fear into communities.

In order to effectively position people to succeed in communities disproportionately impacted by prohibition, future social equity programs must focus on providing significant, and immediate economic benefits. While there is an emergence of social equity incubators, accelerators, and models of support being built to help, cannabis-only related programs alone will not result in the desired quantifiable outcomes that can remediate the damage caused by cannabis prohibition nor maximize the potential of what we can accomplish with cannabis and hemp for the world.

As a cannabis entrepreneur and advocate, I am done waiting. I am committed to dedicating my businesses, Balbuena Consulting and Synergy, to creating a vertically integrated eco-system of plant-touching and ancillary businesses with an integrated mission to build and support social equity programs that are in alignment with the following objectives:

• Bridging the gap between investors and POC cannabis business operators.

• Educating POC founders to elevate their understanding of capital management and financial models, developing calculated strategies, and building strong teams that focus on execution.

• Developing strategic partnerships to create (not request) social equity and wealth in the regulated industry.

• Fund programs that organize, advocate, and promote efforts to radically change and improve the criminal justice system and reduce incarceration.

• Propose sustainable solutions to redirect cannabis tax dollars to education, innovation, and healthcare reform within communities that have been most affected by the war on drugs.

Social equity programs are meant to help people. For cannabis, an industry notorious for the criminalization of Black and brown folk, it’s about more than just restitution and business. It’s about the opportunity to restore communities from the ground up. What could be better than cannabis in achieving this?