Cannabis Social Equity Programs such as the one pending roll-out in Long Beach, California are intended to address a disparity of representation within the cannabis industry. Despite the fact that communities of color have historically been more likely to be profiled, arrested, and charged for drug-related crimes, they find themselves disadvantaged and discriminated against when they attempt to enter the cannabis market legally.
What this looks like is untold numbers of men and women still sitting in prison for the very actions that are now yielding staggering profits for white business owners. Currently, California, Oregon, Washington, Colorado, Nevada, Michigan, and Illinois are all implementing their own versions of social equity programs, but whether or not these attempts are succeeding or even truly equitable is far from clear.
Social Equity Isn’t Financial Equity
Mae Bereal, CEO of LAV8 and a social equity participant in the city of Long Beach, recently spoke at a Long Beach City Council meeting to address disparities in the city’s social equity program as it is currently conceived. A voter-driven ballot initiative was passed in 2017 that allowed for 32 dispensaries within the city limits. These licenses were disbursed according to a lottery system, with no regard for social equity issues. Emily Armstrong, the assistant to the City Manager of Long Beach and manager of Long Beach’s Cannabis Social Equity Program, describes how the city sought to remedy the oversight by creating the Cannabis Social Equity Program, which allows equity business certain benefits throughout the licensing process. Additionally, on March 16, the City Council voted to approve a feasibility study to allow for eight additional cannabis retail licenses available only to social equity applicants.
When asked why the number of dispensaries allotted to social equity applicants was limited to 8 when there were already 32 dispensaries licensed to non-members, Armstrong responded that “the Councilmember who brought the item forward limited it to eight equity dispensaries, but I am not sure what the thought behind that number was. Within the study, staff will be looking to see if eight is a reasonable number of equity dispensaries or if that number should be expanded or decreased.”
Long Beach’s Cannabis Social Equity Program benefits include various forms of assistance, but according to Bereal, there are serious deficits in the template and equity members will be the ones to pay the price. As a child of divorce having grown up in two cities, Bereal qualifies as a social equity partner in both Long Beach and Los Angeles, where these disadvantages have proven devastating to many individuals attempting to start businesses with program support.
“Once you have a building and it’s properly outfitted, then you get the first installment of money, Bereal explains. “But how do you get the building? How are you able to bring it up to code? Then once you have everything set, you have this license that is worth a crazy amount of money, but you then don’t have the funding to maintain the facility and outfit it with the hundreds of thousands of dollars of equipment that you need.” Bereal is aware of numerous instances where larger companies simply sit back and wait for these businesses to fail, then swoop in to acquire their licenses for a fraction of what they’re worth. “People have lost their buildings, their businesses. I know people who have become homeless, lost their cars, everything.”
Though Long Beach’s social equity program template includes application workshops, fee waivers, and direct technical assistance, Bereal’s testimonial suggests that a far more comprehensive model will be necessary to ensure that social equity partners do not fall victim to predatory companies or investors. Without ongoing support and long-range financial planning, it seems unlikely that aspiring entrepreneurs from the communities most impacted by the War on Drugs will have a truly equitable shot at success.