U.S. Cannabis Social Equity Programs, what are they and how do I qualify? 

Every year it seems like a wave of new states approve some form of cannabis legalization. With over 37 states currently having medical cannabis legislation, the opportunities for business owners to embark into this emerging industry continue to grow. Among this booming industry, it’s extremely hard to not recognize the inequalities that haunt the history of cannabis incarceration and the racial disposition of cannabis prohibition. According to the ACLU, Black individuals are 4 times more likely to be arrested for cannabis-related offenses with arrest rates being higher for black individuals over white individuals in all U.S. states.

In addition, these inequalities continue within regulated licensed cannabis environments. According to Leafly’s Job Report, published in 2021, less than 2% of cannabis businesses have black ownership. In an industry that prides itself on social justice and starts from grassroots movements addressing wrongful incarceration, the lack of minority representation creates an identity crisis for this industry.

Social Equity Programs within the cannabis industry aims to address the inequalities seen in legalized cannabis programs as well as the historical inequalities associated with cannabis prohibition. Currently, 13 states that have adult-use cannabis legalization also have some form of a social equity program to promote equality within that state’s legal cannabis industry including Illinois, California, Massachusetts, New Jersey, New York, New Mexico, Virginia, Michigan, Vermont, Arizona, Connecticut, Colorado, and Washington. Due to the separation of each state’s cannabis industry, each social equity program is unique. Below highlights a few programs.

New York has recognized the impact caused by the war on drugs and is using adult-use cannabis as a jump start on investing in the communities disproportionately impacted by cannabis. The state aims to award 50% of all licenses to social and economic equity applicants and recently announced that they plan on awarding the first 100 to 200 adult-use licenses to those who have been impacted by cannabis incarceration and related offenses. Additionally, Gov. Hochul plans on committing $200 million to support social equity applicants in building their businesses.

Illinois was one of the first states to introduce social equity as part of its adult-use legalization bill. The state allotted a specific amount of retail licenses for eligible social equity applicants as well as other license types. In addition to license allotment, the legislation created a training and development program for industry-related skills as well as access to financial resources. As a part of an effort to ensure access, the state created specific zones for license allotment.

California doesn’t offer a typical social equity program through the state; however, the state has allotted funds for cities that implement a social equity program within their local licensing process. Larger cities such as Los Angeles, San Francisco, Sacramento, and Oakland have some form of social equity licensing.

     It is an undeniable fact that the prohibition of cannabis had a disproportionate impact on communities of color, unfortunately, supreme court law does not allow for government assistance programs to include or exclude individuals based on race which has posed an issue when trying to address cannabis social equity inclusion.

This has caused issues in states like Ohio which originally planned on allocating licenses to racial minorities which were later found unconstitutional. As a direct result, each state has specific requirements for program eligibility aimed to include individuals or groups most harmed by cannabis prohibition. To see the specific eligibility requirements for each state, visit the state programs website. Some of the more common eligibility requirements include:

  1. The individual resides within a specific zone that the state has designated as a disproportionately impacted area. These areas are mostly defined as areas with a specific percentage of the poverty rate and/or a higher percentage of cannabis convictions. Generally, eligibility requires that the individual resides in this zone or zip code as a resident for a defined period prior to applying to the social equity program.
  2. The individual is part of a minority group that is disproportionately affected by cannabis convictions or underrepresented in the legal cannabis market in terms of business ownership.
  3. The individual or collective owners have a combined income less than the amount specified by the specific program. For a state like Arizona, this amount is 400% less than the poverty level as an example.
  4. The individual has been directly impacted by cannabis-related offenses.
    1. The individual has been convicted of a cannabis-related offense
    2. The individual’s child, parent, guardian, or spouse has been convicted of a cannabis-related offense

To learn more about these Social Equity Programs contact Cannabis License Experts.

Sources

https://cannabisindustryjournal.com/feature_article/the-great-social-experiment-social-equity-in-new-york/

https://www.latimes.com/california/story/2022-01-27/california-pot-industry-social-equity-broken-promises

https://www.forbes.com/sites/roberthoban/2020/08/31/the-critical-importance-of-social-equity-in-the-cannabis-industry/?sh=5d51b1e1a6db

https://cannabisindustryjournal.com/feature_article/where-are-we-now-social-equity-in-the-us-cannabis-industry/

https://www.theguardian.com/us-news/2021/nov/04/cannabis-california-black-businesses

https://www.nacb.com/social-equity#:~:text=The%20goal%20of%20social%20equity,the%20new%20legal%20marijuana%20industry.

https://www.aclu.org/gallery/marijuana-arrests-numbers

The author, Grant Emoff is a seasoned licensing expert, bringing over 5 years of experience in cannabis licensing. As a veteran in cannabis consulting, he has deep market expertise across the United States and each function within the cannabis supply chain. He prides himself on tailoring each application to the unique needs at the intersection of client and target market. He has worked in over 10 states and successfully obtained over 65 cannabis licenses for his clients in part due to his collaborative, consultative approach throughout the process.