If you've been following the movement to legalize cannabis, then you've likely heard of the term “social equity.” There's no lack of resources that go deep on this topic, but for the purposes of this article, we're sticking to the basics. Here we'll explain what social equity means in the context of cannabis, why legal cannabis markets should have strong social equity programs, and how some states have approached these programs so far.
What social equity means
At its most basic, social equity is any social policy concerned with justice and fairness. Despite sounding similar, it's not the same as equality. Equality is about ensuring all people receive the same resources, while equity is focused more on ensuring that everyone gets what they need. Social equity factors in issues like race, class, gender, and background to not only combat injustice but prevent it. Social equity accounts for the reality that giving everyone the exact same resources does not necessarily level the playing field.
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In the context of cannabis, social equity is the idea that regulators and leaders in the space have an obligation to right the wrongs of cannabis prohibition.
Why social equity is important
The war on drugs in the U.S. effectively weaponized cannabis against Black Americans and other marginalized communities. Despite being legal for adult use in nearly a dozen states, thousands of people are still getting locked up for it. Adding insult to injury, drug crimes automatically disqualify a person from obtaining a license to operate a cannabis business in many states. And these policies disproportionately affect — you guessed it — people of color.
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As a result, minorities hold just 17 percent of executive positions at cannabis businesses according to a 2017 survey by Marijuana Business Daily. In another report for Marijuana Business Daily, Eli McVey wrote, “The idea that a new, extremely lucrative industry [is] materializing — comprised largely of white males selling a drug that many people of color [have] been arrested and incarcerated for — [is] seen by many as an injustice.”
It's clear the misery of the drug war has been disproportionately heaped on people of color and continues to devastate entire communities. Social equity programs aim to remedy these injustices.
Examples of social equity programs in cannabis
When Oakland City Council approved its Equity Permit Program in May of 2016, it was the first in the country to formally address the disproportionate consequences of the war on drugs. The program promised half of the city's cannabis permits would go to people affected by marijuana-related arrests or enforcement. But by June of 2019, reports surfaced of insurmountable expenses and big businesses taking advantage of social equity applicants. All things considered, Oakland has set itself up to be highly adaptable, which is more than can be said for many other equity programs in the country.
Sacramento set up its Cannabis Opportunity and Reinvestment Program in August 2018 in an effort to help guide and finance social equity applicants. In spite of good intentions and thoughtfulness, reporting by the Sacramento Bee found a sobering statistic: as of October 2019, none of the city's 30 storefront dispensaries were owned by African Americans. “Social equity in Sacramento is limping,” said Adolph Ward, an advocate for cannabis social equity in Oakland and the co-chair of the Oakland Cannabis Business Council.
In its laws, Massachusetts commits itself to ensuring that communities disproportionately criminalized by marijuana prohibition can become a viable part of the newly legal cannabis industry. To that end, the Bay State enacted its social equity program in 2018 to provide training and resources for disadvantaged communities. In reality, though, it's been one of the slowest in the nation to get off the ground. And in spite of being promised prioritization, economic empowerment and equity applicants have struggled to get through the licensing process.
With so many social equity programs failing to hit the mark, what can cities and states do to improve their chances of success?
Best practices for social equity programs
Here are some of the ways social equity programs can begin to right the wrongs of the war on drugs and establish a stronger, more diverse cannabis economy.
Lower barriers for entry
The idea of social equity is to give those who need it a leg up. If the cost to enter the cannabis industry is prohibitively high, only a select few will have a seat at the table. There are ways for governments to help with this. For example, cities and states could build into the taxes enough money to completely cover the cost of a social equity applicant's application and licensing fees, which start at $3,000 and clock in on average around $20,000 in California. These fees are in addition to the exorbitant amount of capital needed to even complete an application.
Provide trustworthy education
A village mentality is crucial for spreading need-to-know information far and wide, but it can be hard to know who to trust in the cannabis space in general. This fact is only complicated further when dealing with vulnerable populations like social equity applicants. The government needs to fill the educational gap itself or vet and set parameters around educational providers after verifying curriculum.
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As Weedmaps' government relations expert Reed Sullivan explained, “There are experts that cost lots of money, but I think it's crucial for governments to find ways to educate people not only how to navigate government bureaucracy but also the consequences of bad policy and how that still affects business operations.”
Safeguard against transfer of ownership
A cannabis company owned by a social equity applicant is uniquely vulnerable to big businesses and bad-faith, wealthy investors looking to take advantage of the breaks built into the system for these disadvantaged communities. State regulators need to remain vigilant to this practice and create safeguards to discourage dishonesty and maintain the ownership outlined in the company's original operating agreements.
Regulators must do their due diligence
No social equity applicant is the same. Therefore, no application is the same. Special attention must be paid in order to ensure no predatory behaviors are slipping through the cracks and diluting hard-won social equity initiatives. In Illinois, for example, when granting the state's first 75 social equity licenses, state regulators will pore over two documents: the company's ownership table, which lists principal operators and their percentage of ownership, and the operating agreement. Precautions like these should be implemented in every social equity program.
Bottom line
Even with the best of intentions, not all social equity programs result in a fairer, reparative cannabis economy. To right the wrongs of the war on drugs, regulators, business owners, and cannabis consumers alike must be vigilant in the pursuit of truly equitable practices.