The medical and recreational marijuana business is booming across the country. In every legal state, entrepreneurs are trying to get cultivation operations, cannabis products, and dispensaries in motion. But the barrier to entry is difficult to hurdle, with licensing, real estate, and financing requiring significant capital and political know-how all factors in the process. 

Because of this, many of the opportunities for lucrative cannabis enterprises have gone to big money, corporate-backed ventures. An overwhelming majority of these cannabis companies are owned and operated by white men with business backgrounds and vast connections.

In fact, although African-Americans make up 15% of the US population, they own less than 2% of the country’s dispensaries and other cannabis-related businesses. In an effort to make the industry fairer (especially considering how disproportionately the War on Drugs affected African American individuals), some states and locales have introduced social equity programs into their marijuana policies. But what do these policies actually do? How do they help? And how does it impact your efforts to open a dispensary? Read on to learn more about true social equity in cannabis.

What is Social Equity?

In general, social equity refers to a focus on justice and redistribution throughout social policy and reforms. It differs from equality in that it isn’t focused on everyone receiving the same treatment. Instead, it acknowledges that different individuals and communities have specific historical circumstances and current disadvantages. Therefore, advocates for social equity recommend structurally increasing opportunities and resources in order to reach a more equal reality.

Why Do We Need Social Equity in the Cannabis Industry?

Marijuana policy and the marijuana industry as a whole are great examples of the need for social equity. Historically, African-Americans and Latinos were, and still are, disproportionately affected by the War on Drugs. Black people are almost 4x as likely to be arrested for marijuana offenses as their white counterparts, despite similar consumption rates.

People of color have always been unfairly policed and incarcerated in the U.S., especially for drug-related offenses. The first order of business to start the rectification process is to drop charges, expunge, and release any prisoners for marijuana-related offenses. Next, to bring about more social equity and justice in the light of decriminalization and marketization, these folks, as well as other underserved Americans, should be given greater access to licensing, startup funding, expedited application processes, waived fees, and technical assistance.

Ultimately, the goal is to increase the number of cannabis businesses owned and operated by people of color.

Which States Have Social Equity Programs?

As of spring 2022, fifteen of the thirty-seven states with cannabis programs have implemented social equity programs. The recreational states include the following: AZ, CA, CO, CT, IL, MI, MA, NJ, NM, NY, NV, VA, and WA. Two states with medical-only licensing, PA and MD, also have social equity programs. 

Who Is Eligible For Social Equity Programs?

It depends on the state. As previously mentioned, in some states it applies to people of color such as African-American, Latino, and Indigenous folks. In other places, it includes women, veterans, individuals from impoverished areas, and those formerly incarcerated for marijuana offenses. For example, Vermont’s Cannabis Control Board has the following language regarding social equity eligibility on their website: 

They are Black or Hispanic, or

They are from a community that has historically been disproportionately impacted by cannabis prohibition and are able to demonstrate to the Board that they were personally harmed by that impact.

They have been incarcerated for a cannabis-related offense or have a family member that has been incarcerated for a cannabis-related offense…

New York uses similar language for applicants, to increase their state’s “racial, ethnic, and gender diversity.”, However, they also include those “who qualify as a minority or women-owned business, a distressed farmer, or a service-disabled veteran.”

Such initiatives must be extended to all those that need them most. Only by continuing to assess the impact and effectiveness of each state’s social equity program will we see any kind of long-term benefits in market share equity for people of color and other historically disadvantaged communities.

What Do These States Offer For Eligible Applicants?

All states with such programs offer waived or reduced application and licensing fees to lower the barrier to entry for social equity applicants. Some states, such as CA, CO, CT, IL, NY, and VA, actually give financial aid to eligible entrepreneurs, with loans and grants to help get their business off the ground.

For example, California’s Cannabis Equity Grants Program for Local Jurisdictions gave $15 million to ten different cities in an effort to increase enfranchisement for individuals who were formerly convicted of marijuana charges. This social equity aid will be used to finance, waive or reduce fees, and provide technical support for business operations.

How To Take Advantage Of These Social Equity Programs

If you have potential eligibility as a social equity candidate then these programs are definitely worth looking into. While some states have certainly done little to streamline the application process to get approved, others actually offer support to expedite the process for social equity candidates. 

Consider looking into your local city or state program to see what they offer. Most government marijuana control board websites have somewhat specific information about what kind of fee reductions, financial support, and opportunities they have to offer. Chances are, other social equity applicants have tried to do something similar. Reach out to the Minority Cannabis Business Association (MCBA), or cannabis consumer goods company Green Thumb’s License Education Assistance Program (LEAP) to see if they know how to provide information or assistance for your specific situation. 

How Have Social Equity Programs Fallen Short?

There are increasing plans to include more social equity requirements and support programs into state cannabis statutes. But many are bogged down in legal challenges, bureaucratic red tape, and logistical errors.

According to the MCBA, social equity programs have not done enough; you don’t have to dig deep to see that most of the money being made from legal cannabis sales is primarily going to a far less diverse group of well-established businessmen.

The MCBA blames a lot of the problems on the lack of race-based social equity requirements amongst state marijuana laws and policies. In other words, there just isn’t enough emphasis on getting Black, Latino, and Indigenous folks into the industry.

What Does The Future Of Social Equity Look Like?

Some cities and municipalities with more progressive local governments have taken matters into their own hands in an effort to close the gaps between social equity candidates and corporate cannabis.

Denver, CO signed a bill into law that  “provides social equity applicants with exclusive access to medical and retail marijuana manufacturing licenses and medical and retail marijuana transporter licenses until July 1, 2027.” Similarly, Portland, Oregon has made a push to make their city more equitable by hiring social advocate Akil Patterson to lead their Social Equity and Education Development (SEED) program and oversee grant dispersal.  

The most effective way that states will see a tangible increase in diversity and equity will be by implementing laws that are similar to such examples in Denver and Portland. In addition, setting aside large amounts of state-raised capital to provide adequate funding for minority entrepreneurs will actually make a real difference in closing the barrier to entry for those that deserve it. New York has proposed a $200 million fund for POC cannabis entrepreneurs that is still in the works. Hopefully, the plan will lead to an increase in opportunities. 

Social Equity Success Stories

To be sure, there have been some success stories that are worth mentioning. Premium cultivators THC Design are women-owned through a social equity license from Los Angeles county. They also extend the progressive energy through their community outreach programs. 

Another great example is Oakland native and lifelong entrepreneur Alphonso Tucky Blunt Jr. In the early 2000s he was arrested for possession with intent to sell. Years later, in 2017, he was approached by a fellow business friend who told him about the social equity opportunities for formerly convicted weed offenders. By November 2018 Tucky opened blunts + moore, Oakland’s first Black-owned dispensary.

Dispensary POS 

If you happen to get approved for a license to open a dispensary you will need a modern, cloud-based dispensary point of sale system to run your business smoothly. KORONA POS provides dispensaries with inventory management, compliance, online menus, and CRM integrations to optimize your business and maximize your sales. Give us a call today to try a demo!