How do you create equity in the cannabis industry so people of color, low-income communities and those disenfranchised by marijuana laws can benefit from a multimillion-dollar business?
A year into recreational sales bringing new employment and business opportunities to the state, Nevada is still trying to answer that question.
“In my opinion, (the state) has a duty to right this wrong,” says Jessica Velazquez, an accountant for the cannabis industry who sits on the board for the Minority Cannabis Business Association. “Licensing starts at the top. It would be great if they built a social equity component into our framework.”
Sales from legal marijuana amounted to $9.2 billion nationally in 2017, according to Forbes. That number could grow to $50 billion by 2026.
Not everyone has equal footing when it comes to accessing this lucrative industry.
“Ownership has been primarily older, white men,” says State Sen. Tick Segerblom. “It’s counterintuitive and doesn’t take into consideration the people harmed by the war on drugs.”
For people of color and low-income communities, the starting place for entering the marijuana industry is very likely different. Part of that has to do with the war on drugs and how adversely it affected black and brown people.
African Americans are four times as likely to get arrested for marijuana possession despite similar rates of usage among whites, according to the American Civil Liberties Union.
“You have a group that was disproportionately affected by arrests and convictions,” says Shanita Penny, the board president of the Minority Cannabis Business Association. “Now, you have an industry where those people can’t even participate.”
Penny estimates that less than one percent of marijuana businesses nationally are owned or operated by people of color.
Velazquez says one of the barriers is funding to apply for a license. The non-refundable fee for submitting an application is $5,000 fee plus the cost of the license ($20,000 for a retail store, $30,000 for a cultivation facility, $10,000 for a production or manufacturing facility and $15,000 for a testing facility).
“Minorities are almost exempted out of the gate because of lack of capital,” she says.
It’s not just owning and operating.
Under Nevada law, the state can’t give licenses or employment cards to anyone convicted of an “excluded felony.”
That differs for medical and recreational applications.
“An applicant for a medical license or employment would be ineligible if they have been convicted of a crime of violence or a drug-related felony, including for marijuana,” says Kyril Plaskon, the education information officer for the Nevada Department of Taxation. “For retail applications, a person would be ineligible if they were convicted of an offense that would be considered a category A felony (a crime of violence or drug-related felony) or two offenses that would be considered any kind of felony under Nevada law.”
For both medical and recreational, marijuana convictions 10 years old or less would be held against an applicant.
A’Esha Goins, who runs Green Bridge Consulting as well as the marijuana blog Blackabis, says the laws are still confusing and prevent people from applying.
“The issue now is educating people so they aren’t afraid of applying,” she says.
Goins is an advocate for hiring a diverse workforce.
She says she has been “pleasantly surprised” to see more African Americans employed by dispensaries in entry level positions – though she adds she wishes she saw more Hispanics behind the counters.
“There wasn’t one store I went to that didn’t have at least one (black man) working the front counter,” she adds. “I was impressed. I don’t know what changed, but we’ve made progress.”
What is unclear, she says, is if there is a path for advancement to management positions.
“I don’t see a lot of people of color in leadership roles,” she adds. “I think that’s the next step.”
Cities and states have deployed mechanisms to address inequity in the industry, including making record sealing more accessible to those with past marijuana convictions.
“We are starting to see legislation that protects people by eliminating broad restrictions,” Penny says.
In general, Segerblom says record sealing is beneficial for other reasons than just getting jobs in the industry. “(Past convictions) prevent people from getting student loans, housing and other jobs,” he adds.
But expunging and sealing records takes time and money.
“If a license came open today and you still have to get your record expunged, you’re going to miss the window,” Penny adds.
By the time most people have finished clearing their records, businesses have already been established and people are left playing catch up. That’s why some advocates have pushed for a process that would automatically expunge criminal convictions for marijuana-related offenses.
It’s not just a clean slate, but also giving people a fair shot to gain access to the business, Penny adds.
“It’s about equity,” she says. “Prioritizing licenses is just as important, otherwise the playing field isn’t even level.”
Oakland, Calif. set aside licenses for low-income communities, in particular for those with higher populations of people who had been convicted of past marijuana crimes.
In 2017, Nevada passed AB 422, which adds “diversity on the basis of race, ethnicity or gender of the applicant or the persons who are proposed to be owners, officers or board members of the proposed medical marijuana establishment” to the “criteria of merit” considered in awarding licenses.
Earlier this year, Massachusetts became the first place to implement a statewide equity program to help disenfranchised communities gain footing by assisting with training for ethnic minorities and people with convictions.
“This is what the model for state equity should look like,” Velazquez says.
There has been some traction to address this issue through federal means.
On June 14, U.S. Representative Barbara Lee of California introduced the RESPECT Resolution as a stepping stone to remedy the racial disparities that have transpired in the industry.
The resolution advocates for reasonable licensing and application fees, prohibition of license denials based on previous cannabis convictions and an automatic and free record sealing system.
It also calls for the creation of employment and subcontracting requirements to specifically help people of color access the industry.
Nevada Rep. Dina Titus and Rep. Ruben Kihuen are co-sponsors.
“When the legalization movement in Nevada and other states got underway there was a lot of promise for greater representation in ownership from minorities and women as this was a brand-new industry, but unfortunately racial disparity in the marijuana industry is not unlike any other small business sector,” Titus said in a statement. “We have a number of minority owners represented in Southern Nevada’s marijuana industry, but federal prohibitions on financial institutions, inability to access small business tax credits and deductions, and other systemic issues continue to act as impediments. I support the RESPECT Resolution to call attention to the impacts that outdated drug laws have had on minority communities and the importance of promoting the representation of disadvantaged communities in the industry as it grows.”