Why Social Equity Needs to Be Front and Center in the Cannabis Space

Six Leaders Discuss the Importance of Social Equity and What It Means for the Cannabis Industry

The war on drugs might seem a distant memory to the casual observer. More and more states are rolling out medical and adult-use programs, and federal legalization seems to be more a question of when not if. But, like any other kind of war, the damage lasts long after the battles are fought. Communities of color and low-income communities, those harmed most by cannabis prohibition, still suffer the consequences of those targeted policies while the legal industry booms around them.

Meet the Thought Leaders

Six leaders in the cannabis industry spoke with New Cannabis Ventures about cannabis social equity and why addressing the harm done by the war on drugs is paramount in the industry now and going forward.

Amber Senter is the Executive Director and Co-Founder of Supernova Women, which focuses on education, advocacy, and network building to help people of color enter and become successful stakeholders in the cannabis space.

Rashaan Everett is the President of Growing Talent and the CEO of Good Tree. Growing Talent serves as an incubator for social equity applicants, while Good Tree is a cannabis brand that can be developed into a franchise.

Shanita Penny is the President of the Minority Cannabis Business Association’s (MCBA) Board of Directors. The MCBA is a nonprofit advocacy organization that works to improve diversity in the cannabis space through policy and education. New Cannabis Ventures supports MCBA through membership in the organization.

Kris Krane is President and Co-Founder of cannabis company 4Front Ventures.

Wes Moore is a Director and social impact subject matter expert with cannabis company Green Thumb Industries.

Charlie Bachtell is the CEO and Co-Founder of cannabis company Cresco Labs.

Understanding Social Equity and Why it Matters

The war on drugs has resulted in disproportionate law enforcement targeted at and incarceration of people of color and people in low-income communities. “The cannabis industry has really been built on the backs of black and brown people going to jail. So it is very important that we address the issues of what the war on drugs has done on these communities and try to repair them,” says Senter.

Social equity is about addressing those harms by giving people of color a seat at the table and using money from the now-legal industry to reinvest in the communities that suffered under prohibition policy. It is also about encouraging employment and ownership opportunities in the industry. “We cannot talk about the benefits of legalization without also talking about the consequences of criminalization,” says Moore.

Challenges to Overcome

Opening up the conversation about social equity throughout the industry is a start, but a number of challenges stand in the way of making effective change. First of all, education remains an issue. “A lot of elected officials don’t quite understand how bad the problem really is,” says Krane. Widespread, effective social equity policies will struggle to move forward if regulators do not understand the history of cannabis prohibition and its harmful consequences.

Organizations like MCBA are integral to providing that education, but large, successful cannabis companies can step up to stress the importance of social equity. “A lot of the reasons so many equity programs are seeing obstacles is because these operators aren’t providing input,” says Everett. Cannabis companies that actively offer feedback and participate in policy discussions and programs can be a vital step toward filling the education gap. Stakeholders in the cannabis industry can amplify our voices,” says Senter.

While social equity policy is still in its infancy, people of color most affected by the war on drugs have higher barriers to entry into the industry. In many cases, people with cannabis-related criminal records are prohibited from participating in the industry, according to Penny. “Black and brown people are still being locked up for this substance. Then you have other folks that are selling companies that are over $800 million,” says Senter.

Even if someone with a criminal record can participate in the industry, unconscious bias remains. Will a company hire someone with a criminal record? Will investors put capital into a social equity applicant’s business? The limited pool of capital in the space – largely made up of friends, family, family office, and cannabis funds – tends to go to businesses with a proven track record, while a social equity applicant’s business is seen as a riskier option, according to Krane.

Even when a social equity program does officially roll out, hurdles remain. How do municipalities and states use cannabis tax revenue to reinvest in communities? “Taking all of the cannabis tax revenue and putting it towards issues that we care about has been a challenge,” says Senter. “A lot of municipalities, like Oakland, are running with a budget deficit. They don’t want to give up these cannabis tax revenues. They want to keep them in the general fund.”

Social Equity Programs and Legislation

Navigating the challenges surrounding social equity is a complex business, but a number of fledgling social equity programs are taking first steps. Places like Oakland, Los Angeles and Massachusetts have programs to promote diversity in the space and direct funds to communities harmed by the war on drugs.

The consensus among the six industry leaders featured here seems to be that these programs are all a work in progress. Each program looks different, and there’s more to be done to make social equity policy truly effective. That means you are not throwing a license at someone or burning through resources in the name of having a program,” says Penny. “We need to see business owners of these communities that are successful.”

The MCBA is pushing for progress with a new policy recommendation: a Model Municipal Social Equity ordinance. This Model Ordinance, created with input from drug reform advocates and attorneys, is designed for nationwide adoption.

Cannabis may be federally illegal, but social equity has still entered the conversation at that level. Senator Cory Booker (D-NJ) is pushing the Marijuana Justice Act of 2019, which would expunge criminal records relating to cannabis. The proposed legislation would also create avenues for funding communities most affected by the war on drugs. The legislation shows that social equity is visible at the federal level, but adoption of this type of policy is far from guaranteed.

Without federal legalization, the future of social equity policy at the federal level remains uncertain. I think what we have in front of us right now are state-based opportunities to address social equity in cannabis,” says Bachtell.

Municipalities can look close to home and facilitate reinvestment in the communities that need it most. States can support these efforts, make licensing more accessible, provide education, and help open the door to more funding for social equity applicants. These local and state efforts are so important because they will be foundational for future effort. “The state level serves as the preamble for the conversations we are going to have on the federal level,” says Moore.

Taking Responsibility in the Industry 

Formal social equity programs and policy are still evolving, but this isn’t the only way to drive social equity forward. Large, well-funded multi-state operators can use their resources to make progress now. At this time, Senter and Penny aren’t seeing companies stepping up. “I don’t have any particular company I can point to and say ‘They’ve got a great effort at this point,’” says Penny. “We look forward to identifying those companies.”

But, that doesn’t mean change can’t still happen. Cannabis companies can open the door to more funding and throw their weight behind emerging social equity programs. “There is also the ability to mentor small business owners and entrepreneurs, folks coming out of the criminal justice system into what is now a legitimate, growing industry,” says Penny.

Companies can also look at their own approaches to diversity, equity, and inclusion. If a cannabis company is going to work in a community that has suffered the adverse effects of the war on drugs, it can hire directly from that community and promote from within. For example, Cresco Labs takes a community-based approach to development, and 4Front Ventures aims for each of its dispensaries to reflect the community it serves.  Companies can also participate in charitable giving that supports issues like expungement and actively participate in shaping how drug policy will look going forward. Green Thumb Industries has held a job fair in combination with an expungement clinic in Massachusetts.

The Social Equity Opportunity 

Cannabis companies have a clear opportunity to support social equity, but why should they make it a priority? “If we have a situation where you have a number of companies predominately run by wealthy white people, mostly white men, who are now making millions engaging in the exact behavior that has sent generations of young black and brown kids to jail and saddled them with lifetime records, that is a real moral failing of the industry,” says Krane.

Beyond the moral imperative, the social equity conversation is just getting started. Policies and programs are going to take shape and mature. Cannabis companies will inevitably be affected, whether or not they decided to take action now. “You should acknowledge it and develop a game plan for it and incorporate it into your business. That is how you will end up being successful,” says Bachtell.

Policymakers, cannabis companies, and social equity applicants aren’t the only participants in the conversation around social equity. Investors are a part of the equation.

As investors look at opportunities going forward, social equity is going to be a major consideration. “You can’t decouple your financial investment in this industry from the larger societal issues that go along with ending prohibition,” says Krane.

Although impact investing supports a social issue, that does not mean investors don’t get anything in return. “I want investors to know that we can have a conversation about growth and a conversation about social equity,” says Moore.

As investors increasingly understand social equity and integrate it into their decision-making process, cannabis companies have a lot at stake. “Consumers and investors are all looking at the makeup of a company’s board – how diverse they are, their reputation in terms of being a socially responsible company,” says Penny.

“I think the next major national cannabis player is going to incorporate a smart social equity strategy as a part of their competitive advantage,” says Everett. “Whoever figures it out first is going to unlock a tremendous amount of value for their investors and stakeholders.”

4Front Ventures and Cresco Labs are clients of New Cannabis Ventures. Learn more about all of the article’s thought leaders by visiting the Supernova Women, Minority Cannabis Business Association, Growing Talent, Good Tree4Front Ventures, Green Thumb Industries, and Cresco Labs websites. Listen to the interviews with all six leaders:

Are you a cannabis industry thought leader and want to be heard? Let us know your story.

Get ahead of the crowd by signing up for 420 Investor, the largest & most comprehensive premium subscription service for cannabis traders and investors since 2013.

Exclusive article by Carrie Pallardy
Avatar
Carrie Pallardy, a Chicago-based writer and editor, began her career covering the healthcare industry and now writes, edits and interviews subject matter experts across multiple industries. As a published writer, Carrie continues to tell compelling, undiscovered stories to her network of readers. For more information contact us.

Get Our Sunday Newsletter