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Social Equity Policies Could Shape Diversity In The Legal Cannabis Industry

Many in the legal cannabis industry are calling for more social equity policies.

According to Forbes:

In the United States, less than 20 percent of legal cannabis business owners and founders are minorities. This reality, combined with the negative consequences of cannabis prohibition on minority communities, has led many advocates to call on elected officials to address this disparity. With legal cannabis projected to meet over 40 percent of our country’s annual demand by 2025, the policies state lawmakers choose to implement over the next few years will likely play a significant role in the makeup of this quickly expanding and highly profitable industry.

While there is no one solution to promoting a diverse and healthy cannabis market, some states with legal cannabis have enacted various social equity policies with varying success. Though different in each state, most of these policies seek to address criticisms that the legal cannabis industry is profiting from the same substance that put many Americans from historically underserved communities behind bars.

For example, in Illinois, where cannabis became legal in 2020, lawmakers passed a provision prioritizing dispensary and grow licenses for applicants who meet specific social equity criteria. Applicants previously arrested or convicted for an expugnable cannabis-related offense, business owners who employ those previously arrested or convicted for such an offense, and residents who live in designated communities disproportionately affected by these types of arrests and convictions, are all eligible.

More recently, in early March, as part of the state’s new Seeding Opportunity Initiative, New York made the decision to grant its first couple hundred dispensary licenses to residents who have been convicted of cannabis-related crimes. This effort aims to give communities that have been negatively affected by cannabis prohibition an avenue into the state’s promising multi-billion-dollar legal cannabis industry.

By providing these applicants with more opportunities to enter into the legal cannabis marketplace, Illinois, New York, and other states with priority licensing policies, hope to create a diverse industry capable of uplifting many of the same communities that suffered from the consequences of criminalized cannabis.

Like Illinois’ licensing policy, Massachusetts grants “economic empowerment priority” to individuals most affected by marijuana prohibition and disproportionate incarceration. However, the effective implementation of these policies is not always easy. For instance, in 2018, only 27 of 122 applicants initially given priority by regulators in the state ended up applying for licenses, and only eight received said licenses.

Since then, Massachusetts has continued to improve upon its priority licensing program while also offering free skill-based training for eligible individuals through its Social Equity Program. This program seeks to provide participants with the skill set needed to succeed in the legal cannabis industry, including entrepreneurship, managerial-level workforce development, re-entry and entry-level workforce development, and ancillary business support.

While states like Illinois, New York, and Massachusetts have been committed to social equity policies and streamlining processes, other states are deciding how to navigate similar waters.

The Virginia Senate recently filed Senate Bill 107, a bill seeking to amend the state’s recently passed adult-use legalization law by doing away with previous language allocating 30 percent of the industry’s tax revenue to a cannabis equity investment fund. Proponents of the bill would rather see this money redirected to Virginia’s General Fund alongside the state’s revenue from individual income tax, corporate income tax, and sales tax and distributed during the normal budget process to where it’s needed most.

Virginia’s current debate regarding its social equity policies illustrates the decision elected officials across the country will need to make as more states legalize cannabis. Lawmakers will need to decide whether these social equity policies will help their constituencies, and if so, how best to implement them. It is more than likely the decisions made in the next few years will have notable implications, and the policies put in place today may affect the diversity and health of this promising industry for years to come.

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