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Social Equity And Cannabis - What's the Real Deal?

The recent outpouring of grief and protests across the US and the global community in general, has brought to the fore again, how the historical police brutality, racial disparity, and most especially the "War On Drugs" have adversely impacted black and brown communities in the United States.

Although white people consume cannabis at the same rate as Black and Latinx people, Black and Latinx people are arrested for drug law violations at a much higher rate of 46.9 percent, even though they make up just 31.5 percent of the U.S. population.

The Black cannabis community is heavily impacted and discriminated against continuously, which explains the number one reason for our struggle and the various movements that have been created to help stamp out; once and for all, the inequality and inequity that racial discrimination and disparity has generated over the last century.

One tool that’s been added to our fight, or proverbial toolkit, and also adopted by a few cannabis legal states to address and redress this historical injustice to People of Color, as the use of cannabis becomes legalized in most states in the US, is Social Equity.

Social equity as it relates to the cannabis industry is a policy aimed at promoting "equitable ownership and employment opportunities in the cannabis industry to decrease disparities in life outcomes for marginalized communities, and to address the disproportionate impacts of the War on Drugs in those communities."

Thus, the Social Equity Programs (SEPs) were organized to support people who have been unduly affected by the prohibition and discriminatory laws as well as War On Drugs and to ensure that these very people can partake in the cannabis industry in any capacity they intended without any prejudice.

Social Equity Programs (SEPs) content and implementation will differ from state to state; however, they do have a few common criteria:

  • Must own at least 51% of the business and control by one or more individuals who have resided for a certain number of years in a disproportionately impacted area;

  • Must be a person previously convicted for nonviolent cannabis offenses and is eligible for expungement under the Cannabis Regulations and Tax Act;

  • Or is a person who is a member of an impacted family;

  • And so on.

What Is A Social Equity Applicant?

A social equity applicant is a person who meets the above criteria and based on the state in which he/she resides, may have been sentenced on cannabis charges but qualify for expungement. They might have a parent, sibling, or a child who’s been arrested or sentenced to prison for selling, possessing, using, manufacturing, or cultivating cannabis. Finally, he/she might live in a disproportionately impacted community or locality for a minimum of five years. This definition of a social equity applicant will change based on the state adopting the term.

How To Obtain a License In the Cannabis Industry?

The cannabis industry is heavily taxed and regulated which makes it a barrier to entry for social equity applicants. Expectedly, compliance requirements are different from one state to another. Nonetheless, social equity applicants can apply for a license by paying a predetermined application fee (based on the requirements of each state) and must meet the basic legal requirements:

  • Provision of Business Information,

  • Federal Tax Identification Number,

  • General Business License,

  • Doing Business As (DBA) Filing,

  • Sales Tax Permit

  • And so on.

Depending on the state, limited or multiple licenses can be given out to social equity applicants. There are multiple licenses to apply for, like retail, cultivation, delivery, manufacturing, and processing.

The few cannabis legal states that have social equity programs in place wanted to ensure that communities that were most affected by the War Of Drugs were able to benefit by reducing the licensing fees and allocate a certain number of licenses, offering grants, and issuing low-interest rate loans.

Social Equity Cannabis Programs in states like Illinois and California were developed to address some of these inequities, like lack of access to capital, exorbitant licensing fees, and to facilitate expungements for low-level cannabis offenders.

Not all of the states have implemented social equity programs. States like Oklahoma and Pennsylvania offer medical cannabis but didn't consider a social equity program. Oklahoma had such low barriers to entry and very low licensing fees with an unlimited number of licenses, so anyone could participate. Maybe they felt that a social equity program didn't make sense for the model they approved? Either way, it led to a very diverse applicant pool. Neither Oklahoma nor Pennsylvania have expungement initiatives. This should no longer be the norm.

Hawaii, Vermont, and Washington have initiatives in place to address the issue of nonviolent cannabis expungement. Alaska, Maine, Mississippi, and North Carolina, expungement initiatives are pending. Other states with expungement initiatives pending are Missouri, New Hampshire, and New Jersey. Delaware, Minnesota, Missouri, New Hampshire, New Jersey, New Mexico, New York, North Dakota, and Rhode Island have enacted expungement initiatives as well.

However, in states like Maine and Washington where cannabis is legal for adult use, there are no policies in place to address social equity.

Sadly, the quest for racial equality, equity, and justice are far from being over despite the social equity programs that have been implemented in some of these states. There’s still discrimination against people with previous convictions who are still being denied the opportunity of owning or working with cannabis businesses. This can no longer be the norm.

That being said, if the racial disparity and injustices are to be fully corrected in the black community; then the social equity and expungement initiative programs must be fully implemented across the country; and the stricter regulations and application requirements must be more flexible.

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