Photo Credit: LA Cannabis News
“Social equity programs are supposed to allow people equal opportunities to make change and not charity…not only to be workers but to be owners and to [have a seat at the table]” -Sal Ali.
The visionary idea of social equity is to create an opportunity of fairness, justice, and add equality within the cannabis industry. In other words- social equity programs are subliminal “reparations” for the minority community that suffered the damages from the war on drugs.
Majority of social equity programs work with people with prior convictions/or served time for consumption, possession, and/or distribution of cannabis and/or a resident of a disproportionately impacted area; however, each program varies.
Overall, the purpose of social equity programs is to regulate the ownership of cannabis businesses across the country, and ensure that the minority communities such as African American, Hispanic/Latino, Asian, Pacific Islander, and other races have the chance to have their place inside the cannabis industry.
Unfortunately… it is not what it looks like then again… it is what it looks like! The Marijuana Business Daily reports more than 80% of cannabis businesses are owned by white people, and a little over 10% owned by black and hispanic people.
Cannabis History- The War on Drugs
Let’s take a look in history to explain social equity deeper, and to show the importance of these programs. In 1970 the Controlled Substances Act (CSA) was passed. This is the federal drug policy that regulates controlled substances. Cannabis was placed on the list of controlled substances.
This happened because President Nixon stated that drug abuse “public enemy number one” and drastically increased federal funding for heavier law enforcements, unlawful searches, and increasing prison sentences targeting the black and brown communities.
The CSA is Why Social Equity is Important- But is it Working?
Social equity programs are opportunities to change our country’s dark and unhonest past with cannabis into a future with more green for everyone! In a statement to Ganjapreneur, the founder of JW Firm, stated “I feel that it is my responsibility to play an active role in eliminating barriers to entry for individuals that have been disproportionately targeted by the War on Drugs.”
To me,in many ways, social equity programs in cannabis are saying “hey… yeah sorry about breaking up your households by taking you away from your children, ruining your chance of ever having employment and making it harder for a second chance at life but easier to revert back to our prison cells!”
Wild, founder and chief investment officer of JW, said “the legal cannabis industry can only grow to its full potential when all stakeholders have a seat at the table.”
Even with social equity programs:
- White people dominate more than 80% of the cannabis businesses
- Black and brown people are 3.7 times more likely to get arrested
- Black and brown people make up less than 10% of the cannabis businesses.
In that same piece in Ganjapreneur, Wild, founder and chief investment officer of JW, said “the legal cannabis industry can only grow to its full potential when all stakeholders have a seat at the table.”
An Overview of Social Equity Programs
Photo Credit: Ganjapreneur
Social equity programs operate in various methods, with terms that are not regulated by the nation or state. Each state’s social equity program may differ and each city’s qualifications can differ as well. Research is needed!
The most popular social equity programs resemble:
Large Investor– finding partnership with person(s) a large company financial help to Social Equity Applicant.
Incubator– a partnership where Social Equity Applicant provides strategy, operation, and business plan with an Incubator that provides the rent or technical needs for operation.
Managerial– partnership where Social Equity Applicant operates license but uses partner’s intellectual property.
Usually, social equity requires an applicant to own a minimum of 51% of the company, so if your partner is allowing you to own 100% of the company take a closer look at the loan agreement.
Here are a few Social Equity Programs in California- which has programs by city:
- City of Palm Springs:
Household income cannot exceed 80% of Riverside County Area Median Income
Net Worth under $250,000
Meet at least 1 of the following 2 criteria:
Classification 1. A current or former resident of Riverside County who previously resided or currently resides in a low income household and was either:
Arrested or convicted for a cannabis related crime in Riverside County between the years 1980 and 2011; or is
An immediate family member of an individual described in subsection (a) of Classification 1 or Classification 2.
Classification 2. A current or former resident of Riverside County who has lived in a low-income household for at least five (5) years, between the years of 1980 and 2011 in the following zip codes: 92262, 92263, 92264.
2. City of Long Beach:
In the last year, your annual family income was at or below 80% Los Angeles-Long Beach-Glendale Area Median Income
Have a net worth below $250,000
Satisfy at least 1 of the following 3 criteria:
Have lived in a Long Beach census tract for a minimum of 3 years where at least 51% of current residents have a household income at or below 80% of the Los Angeles Area Median Income.
Was arrested or convicted for a crime relating to the sale, possession, use, or cultivation of cannabis in the City of Long Beach prior to November 8, 2016 that could have been prosecuted as a misdemeanor or citation under California law.
Is a Long Beach resident currently receiving unemployment benefits.
3. City of Los Angeles: Has 3 tiers
Tier 1: Must be low-income AND have an arrest or conviction for a cannabis offense prior in CA prior to November 8, 2016 OR have been resident in certain impacted areas for 5 years.
Tier 2: have been resident in certain impacted areas for 5 years or 10 years.
Tier 3: Most provide Tier 1 and Tier 2 business licensing, compliance support and access to property.
Social Equity Considerations- Hear from a Cannabis Industry Executive
Social Equity programs can also be seen as dating for a business! Social equity applicants must find the best partner for their cannabis business. For example, it’s important to take time to get to know the people and the business: business partners, investors, and incubators.
It’s important to research potential investors and consider their perspective on the war on drugs. There are stories about burned bridges within the cannabis industry. For example, some investors use social equity programs as a “face” to push the agenda of accepting more minority business owners; but in reality, they are only using a social equity applicant as their opportunity to have a cannabis business.
Sal Ali, cannabis industry executive, feels differently about his personal journey of applying to different states’ social equity programs:
“I was unaware of how social equity programs worked and started learning about them nationwide. I was seeing that nothing really worked and how tough it was to help social equity applicants.”
Sal chose to find his seat in the cannabis industry by a different route. Seeing that social equity isn’t really working, Sal teamed up with his close friend and created a cannabis ancillary business. Through this business, they help people of color find employment with his cannabis staffing agency in various states, and help business owners apply for licenses in various states.
Sal’s experience while applying for the social equity program in Los Angeles was not easy. During our chat, he shared how the social equity program was a mess and questioned if the city was trying to just save face with “racial inclusion”. There was not an increase of black and brown business owners within the cannabis industry, but there was plenty of manipulation.
During this time, Sal experienced denial from Los Angeles and Massachusetts social equity programs. He wasn’t approved in the first round of 200 social equity applicants, between a range of two to four years.
I learned from Sal, part of the issue with social equity. During the social equity application process, some programs require applicants to continue to pay their fees and keep their real estate contract awaiting to pass the next round. Many people of color don’t have those types of resources- sort of the reason why social equity programs exist.
It seems pretty simple- fix the prejudice within the program and stop with licenses caps/maximums. New York legalized cannabis with what many describe as- the most comprehensive social equity program. The hope is to fix the issue of equity in social equity.
Written: Thee Lady Haze
Edited by: Veronica Castillo
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