Social Equity

Policy Recommendations

Advance state and local policy frameworks that reduce barriers to entry to the industry. These policies should include:
Broaden opportunities for market participation through the creation of social equity programs. (These programs should focus on creating diversity within the cannabis industry by reducing barriers to entry and facilitating business and employment opportunities for disproportionately impacted communities).
At a minimum, 25% of all cannabis licenses issued should be allocated to social equity applicants, along with funding mechanisms to assist with the high start-up costs of opening a cannabis business.
Define “disproportionately impacted communities” in terms of socio-economic factors and areas of concentrated over-policing based on outdated cannabis enforcement policies.
Ensure that the licensing criteria either includes granting approvals for disproportionately impacted communities, “by right”, or, in a merit-based criteria, granting additional points for disproportionately impacted applicants.
Adopt reasonable zoning standards and allow for temporary approvals to disproportionately impacted businesses so that they may obtain properly-zoned business premises after approval, so as not to inadvertently increase financial burdens due to rent and leasing obligations.
Allow for a broad range of license categories including those that require a small amount of start-up capital like delivery, microbusinesses, and craft cooperatives

Cannabis Policy Reforms: An Opportunity for Advancing Social Justice, Social Equity, & Community Reinvestment

Addressing the social and racial inequities of the War on Drugs should be one of the primary motivations for adopting comprehensive cannabis policy reforms. The War on Drugs has been an unsuccessful campaign that has done little to stop the illicit drug trade and has disproportionately impacted communities of color. Despite consuming cannabis at the same rates, a Black person is 3.64 times more likely to be arrested for cannabis-related offenses than a white person. Because the FBI’s Uniform Crime Reports do not include information on ethnicity, most drug charges against Latinx people are counted as “white.” The true impact of cannabis criminalization on Latinx communities cannot be accurately measured due to a lack of data, however, it is a fact that Latinx people are arrested at disproportionate rates for cannabis arrests compared to their white counterparts. The War on Drugs also serves as a mechanism for the widespread detentions and deportations of migrant communities. Minor cannabis possession was the 4th leading cause of deportations in 2013, and since 2008 nearly 40,000 people have been deported for drug violations every year. Given the profound damage that cannabis prohibition laws have had on communities of color in the U.S.,the passage of adult-use cannabis policies provides a unique opportunity for advancing social justice, social equity, and community reinvestment goals.

Cannabis policy reforms advance these goals along many fronts. Legalizing adult-use cannabis eliminates a clear pathway into America’s criminal justice system. The passage of expungement policies enables hundreds of thousands of individuals to eliminate cannabis-related criminal records that have adversely affected opportunities for employment, education, housing, and economic mobility. The launch of a multi-billion dollar legal cannabis industry also creates new avenues for community reinvestment through the sector’s proven capacity for tax revenue generation, job creation, entrepreneurship, and economic development.

What is a Social Equity Program and Why is it Important?

Many local and state governments have adopted social equity programs with the underlying goal of creating a diverse and inclusive cannabis marketplace. While the eligibility requirements and benefits of each social equity program vary depending on the jurisdiction, these programs aim to diversify the cannabis industry and create sustainable businesses and career opportunities for disproportionately impacted communities. Those trying to break into the cannabis industry are already at a disadvantage due to a lack of access to traditional banking services, and those disadvantages are exacerbated when factoring in the compounding and generational impact of cannabis criminalization. Social equity programs typically offer a range of benefits and services to qualifying applicants, including but not limited to: priority licensing, a bonus on license applications, reduced or waived application fees, low-interest loans, technical assistance, tax deferrals, mentorship programs, and educational workshops. While these programs attempt to target disproportionately impacted groups through careful definitions and eligibility requirements, many programs lack the resources, enforcement, and oversight mechanisms necessary for successful implementation and to prevent predatory entities from filling voids left by unintended policy outcomes.

While social equity programs are important initiatives to facilitate the market participation of disproportionately impacted groups, they can only be marginally effective if the surrounding policy framework is dysfunctional and poorly regulated. Lack of access to traditional banking services, excessive taxation, and multiple layers of burdensome local and state regulations are examples of barriers that make viability within the cannabis industry difficult. In addition to robust social equity programs, policymakers should seek to keep barriers to entry into the cannabis industry low. All cannabis policies should be examined through a social equity lens, and evaluated based on whether or not they promote or hinder equitable outcomes.

Existing Cannabis Policy Frameworks Have Fallen Short of Desired Social Equity Goals

State and local governments with adult-use cannabis laws have made some progress towards advancing social equity objectives – most recently in Illinois, where the recently-passed adult-use cannabis law contains some of the nation’s most far-reaching provisions promoting social equity.4 However, officials have yet to identify the optimal set of social equity policies. As a result, existing cannabis policy frameworks have largely fallen short of meeting desired equity goals. Chief among these shortcomings has been the relatively low level of market participation among disproportionately impacted communities in the emerging cannabis industry—largely on account of overly-restrictive state and local policy frameworks and the federal government’s prohibition on cannabis that severely limits traditional access to capital.

⁴Illinois General Assembly. Adult Use Cannabis Summary. https://www2.illinois.gov/IISNews/20242-Summary_of_HB_1438__The_Cannabis_Regulation_and_Tax_Act.pdf

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