The U.S. is the world’s largest cannabis market, but the use, possession, or sale of marijuana over certain amounts remains illegal under federal law. Still, state cannabis laws are rapidly shifting with 18 states plus D.C. voting by ballot initiative or via the legislative process to legalize adult-use cannabis fully.
For many, the irony of marijuana becoming a big business is cruel due to decades of drug arrests and sentencing that have disproportionally targeted people of color. “While many large companies are making millions, many people remain imprisoned because of the historic classification of the plant as a Schedule 1 drug in the very same states where adult use is legal,” says Stormy Simon, executive director of the board for Mission Green. (Mission Green is part of the Weldon Project — a nonprofit that pushes to free those incarcerated for nonviolent cannabis offenses.) It strikes her as hypocritical that cannabis dispensaries were deemed “essential” operations amid the pandemic in some jurisdictions, yet the drug remains illegal in others.
States Moving to Cannabis Legalization While Racial Issues Remain
According to the National Cannabis Industry Association, as states move toward cannabis legalization, overall arrest rates are dropping, but racial disparities remain. State cannabis programs create significant business opportunities as the underground market transitions into a regulated, small business sector. However, onerous capital requirements, restrictions on licensing for drug-felons, and other factors have limited opportunities for people of color and other disadvantaged minorities to succeed in the new legal cannabis market.
Racial and social justice problems continue with Black Americans now 3.64 times more likely to be arrested for marijuana than white Americans. This is despite having similar usage rates, reports the American Civil Liberties Union. In some counties, the ACLU notes that Black residents are “20, 30, 40 or even 50 times more likely” to be arrested for marijuana than white residents. According to the data, these arrests can lead to life-altering circumstances, such as families being evicted from public housing, parents losing their children due to court orders, and long-term difficulty in finding employment.
Colorado – Focusing on Equity
In Colorado, the first state to legalize adult-use marijuana laws, approximately 87% of business owners identify as white. This statistic is expected to drop with the state dedicating $4 million in new funding to advance industry involvement for communities negatively affected by the War on Drugs.
Originally conceived as the Cannabis Opportunity Program and then renamed the Cannabis Advance Program (CAP), the proposal was co-written by the Colorado Office of Economic Development and International Trade (OEDIT) and the governor’s office.
House Bill 1424, passed in 2020, was the first monumental action towards addressing the inequality inherent in Colorado’s regulated marijuana industry. It legally defined “social equity marijuana” and gave Colorado Governor Jared Polis the authority to expunge criminal records for possession of up to two ounces (he later announced plans to mass-pardon 2,700-plus marijuana convictions).
After the Colorado Legislature’s Joint Budget Committee approved the $4 million to create the Cannabis Advancement Program, Governor Polis commented via email, “We look forward to working with the legislature to achieve our mutual goal of creating a Colorado for all and repairing the disenfranchisement of those who were harmed by the failed War on Drugs.”
California – Social Equity in Cannabis Legalization
Edgar Cruz, a cannabis entrepreneur based in Long Beach, California, works in the industry’s social equity space is personal. At 15, Cruz had his first run-in with the law when he was arrested and charged for illegal possession of marijuana. That charge has influenced his decision to be involved in the now legal market and ensure that entrepreneurs like himself have equal access to the billion-dollar industry. “To see how lucrative the industry has become and who’s profiting from these legalization changes versus who is still suffering because of the history behind it is very frustrating,” says Cruz, who has been trying to get his cannabis brand Ekstrepe off the ground for three years now.
Several other equity advocates in the cannabis space say the lack of diversity in the industry is partly due to the lasting impact of the war on drugs. Cruz, a participant in Long Beach’s Cannabis Social Equity Program, says these programs have often failed due to local government regulations and a lack of resources and capital for budding entrepreneurs.
Other States Join Focus on Racial Justice in the Cannabis Industry
Recent successful state legalization efforts have demonstrated the effectiveness of pro-cannabis reformers in framing cannabis policy as a civil rights and racial justice issue. The structure of the new laws in states likes Virginia, New Jersey, and New York have put centerstage a recognition that the war on drugs was and is a racist institution that purposefully harmed communities of color for decades.
The main focus of New York’s cannabis reform law, titled the Marijuana Regulation and Taxation Act, is racial and social justice. Each part of the Act addresses how reform will benefit communities and people who have been disproportionally impacted by cannabis criminalization.
Drug reform laws are designed to right some of those wrongs and to rehabilitate and empower the victims of the drug war and the communities of color from which they hail. Reform advocates have expanded the policy space beyond criminal justice reform to include economic policy. With the community investment opportunities that new revenues will enable, legalization is just the beginning of a cannabis opportunity agenda focused on equity.
Federal Action Needed
In early June, advocacy groups like ACLU and the NAACP called on congressional leaders to pass the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act. MORE is a comprehensive marijuana policy that would:
- Remove marijuana from the Controlled Substances Act.
- Allow people with cannabis charges to have their records expunged.
- Create a federal tax on marijuana, with the funds going to community reinvestments.
The U.S. House approved it last year, and it is being reintroduced as Senate leaders say they are also drafting up a bill to legalize marijuana.
Lifting the federal cannabis ban could reduce the risk by easing bank lending. It also could bring the law in line with public opinion – in a recent Pew poll, 91% of American adults said marijuana should at least be legal for medical use, and 60% backed recreational use.
Cannabis Legalization and the Pursuit of Justice
As more states move toward cannabis legalization, overall arrest rates are dropping, but racial disparities continue. While new business opportunities are being created, there are still significant restrictions and limited opportunities for people of color and other minorities to succeed in the legal cannabis market. Colorado, California, Virginia, New Jersey and New York are creating social equity programs and rehabilitating and empowering the victims of the drug war and the affected communities of color.
A comprehensive, federal cannabis policy is needed to remove federal penalties for marijuana, expunge criminal records for nonviolent offenders of federal cannabis laws, earmark funding for restorative justice programs, establish tax rates for cannabis products and formally allow states to decide whether to legalize pot.
Cannabis Market Insights Event!
On August 17, Noon, MT, we are hosting Canna Advisors to outline the cannabis market. If you are considering starting a cannabis business in Santa Fe or New Mexico, please register and join us!