Although social equity as a concept is still relatively new in the cannabis industry – it only truly caught on around 2018 – it quickly became so entrenched that it’s now tough for state regulators to put together new industry models without including some version of equity.
If anything, social equity will only continue having a major impact on who is able to win business licenses in various state markets, along with how cannabis tax money is used to repair and invest in minority communities, policy experts told Green Market Report.
This stems in large part from the long and well-documented history of law enforcement disproportionately using marijuana prohibition against Black and brown Americans.
Social equity has been a significant feature in the rollout and licensure of most of the recent adult-use marijuana markets that have launched, noted DeVaugh Ward, senior legislative counsel at the nonprofit Marijuana Policy Project. As examples, he pointed to social equity programs tied directly to cannabis licensure in:
- New Jersey
- New York
- Rhode Island
In addition, Hawaii lawmakers are also considering social equity as they weigh recreational legalization, he added.
Equity may even come into play once Congress can get its act together enough to agree on some form of federal cannabis legalization. Social equity has been embraced as a cause by several powerful Democrats, such as Sen. Cory Booker and Rep. Jerry Nadler. Both senators have pushed for versions of social equity to be included in cannabis bills they’ve sponsored, such as the SAFER Banking Act and the MORE Act.
“It’s one of those things that has certainly picked up as legalization has progressed. When the fight first started … the hurdle was just getting lawmakers to see that legalization was sound policy,” said MPP’s Ward.
“Since then, the goal posts have moved,” he said. “Now we’re not just debating whether legalization is sound policy; we’re also adding these other policy features that hope to make the industry more equitable.”
Differing Structures, Provisions
Because social equity is so new and because every U.S. state market has its own unique structure, no two states or social equity programs are truly the same.
Part of the problem is that program implementation is often followed by litigation, since such programs need to have qualifying criteria that necessarily leave certain entrepreneurs out in the cold. Those left out of the eligibility pools often decide to sue, and lawsuits can have a variety of effects, from courts ordering that regulators increase the number of available permits to temporarily halting licensing to throwing out social equity criteria.
New York is a prime example of how a well-intentioned social equity program has gone sideways, Ward said. There lawmakers and regulators both set out to establish a recreational marijuana market underpinned by social equity, and the first licenses were given to distressed hemp farmers and “justice-involved” retail entrepreneurs who had nonviolent criminal cannabis records.
The first lawsuit to tangle the rollout was from another social equity entrepreneur upset that he wasn’t eligible because he wasn’t a New York resident. After that was resolved, another lawsuit from several disabled military veterans – another demographic of social equity license hopefuls – wound up throwing into limbo almost all of the state’s 463 recreational permits issued as of August.
“You’re seeing it in New York, where folks are suing. It happened in Illinois, where folks sued. It was threatened in Massachusetts, when Massachusetts was considering making the delivery licenses equity-only,” Ward said.
In addition, social equity advocates acknowledge that a particular shortcoming of most programs has been tying reparations for the war on drugs directly to cannabis business licenses rather than taking a broader approach. Options for that could include state-funded programs for small business loans, technical assistance for entrepreneurs, job training for workers, or simply reinvestment money for minority communities to use as they see fit.
That’s an area where some believe the social equity movement will change in coming years as the concept is further refined.
“I actually think there should be a bit of a shift away from licensure,” said Amber Littlejohn, former president of the Minority Cannabis Business Association who is now an attorney in private practice.
“We have to revisit what’s being done with cannabis dollars, and (with) investing those dollars more holistically in programs that directly affect and can help remedy the consequences of prohibition,” she said. “Whether that be job training, mental health services, small business loans, looking beyond the immediate and helping to restore these communities is going to be important.”
That’s something that the current head of the MCBA, Kaliko Castille, said many advocates are already focused on: diversifying social equity programs themselves and changing the narrative from license-only benefits to other types of support, such as what Littlejohn described.
“The next leap is not having to just have the carve-out for licenses, but for there to be a true low barrier to entry, and for (social equity participants) to be able to get access to low-interest loans and training programs and technical assistance,” Castille said.
Ward said that’s why he and others have been pushing for broader social equity programs in places like Connecticut, where lawmakers wrote business incubator programs, job training funding, and other such assistance into the marijuana social equity program.
That should extend to the expungement of nonviolent cannabis criminal records, he added, which is another topic where the reform movement has had mixed results across the country.
Social equity is, at its core, “restorative justice for folks who were impacted by the war on drugs,” Ward emphasized. “The back end is the community reinvestment, and we consider expungement part of social equity.”
The other reality that social equity advocates have to take into account, according to both Littlejohn and Ward, is politics.
So far, most social equity programs have found support in traditionally liberal states with Democratic leaders. The same has held true in Congress, where it’s Democrats that have taken the lead on cannabis reform and social equity, while Republicans in general have balked at giving any sort of special treatment to a given demographic.
“The political landscape … makes equity challenging,” Littlejohn said.
“It can’t be called equity,” she said. “It has to be wrapped up in a nice brown paper package. Open it up, and surprise, it’s equity, as opposed to coming, right hand fist raised, saying ‘We’re doing this for the people.'”
The same dynamic is true in Congress, where there’s been Republican pushback to including equity-centered provisions in measures such as the SAFER Banking Act, Littlejohn noted.
But it’s also very real on a state level, Castille pointed out, using Florida as an example. While the Sunshine state doesn’t have a social equity program per se, it had to issue a number of medical marijuana business permits for Black farmers as the direct result of a lawsuit.
However, the overall political environment of the state makes pushing a social equity agenda even more difficult.
“Right now, we’re living in a time when Florida is banning diversity, equity, and inclusion,” Castille said. “We’re dealing with a massive backlash … against what people on the right are deeming to be ‘woke’ policies.”
Another major hurdle could also prove to be the conservative-leaning U.S. Supreme Court, Ward said, which earlier this year struck down affirmative action policies in college admissions. The same kind of antipathy toward race-based policies could be used against social equity programs, Ward said.
He’s heard the ruling is already having ripple effects, causing lawmakers and their aides to reconsider both the implementation of social equity and how the programs are structured.
“The state of social equity policies is certainly in jeopardy, with the recent ruling out of the Supreme Court, a lot of folks are worried about social equity programs and the legality and the constitutionality,” Ward said. “I know that policymakers are looking at that ruling. I know attorneys general are looking at that ruling when they’re helping lawmakers craft legalization bills.”
And that’s going to be a very tricky policy situation moving forward, Castille said, precisely because the social equity movement is inextricably tied to race.
“What we’re trying to do is undo 90 years of racially motivated policies, and we’re trying to do it in small time frames,” Castille said. “These racial-based policies need to be undone in non-racial based ways.”