As the National Cannabis Industry Association rolled out a plan Thursday on Capitol Hill to address the lack of diversity and equity in the legal industry, one audience member had a question.
As NCIA members make the rounds on Capitol Hill for its annual “lobby days,” lawmakers were consistently raising concerns about those so-called equity problems, she said. And she didn’t have a good response. So, she asked, what should industry members do to answer lawmakers questions about equity and get involved in seeking solutions?
The question—and resulting answer —echo the political position of the moment in the Democrat-led US House of Representatives: the industry needs to hold itself to a higher standard when it comes to equity, while pushing lawmakers for stronger laws and more resources to address disparities.
Some Democrats, notably presidential candidate and New Jersey Senator Cory Booker, have become increasingly outspoken that they will not support plans to end prohibition, or more incremental reforms, that do not address equity issues.
It is against this mounting pressure that the NCIA and Minority Cannabis Business Association (MCBA) event took place.
The cannabis industry can’t be “just a few massively capitalized players,” said Kurshid Khoja, an attorney who serves on the board of both the NCIA and MCBA. Khoja said the NCIA’s primary legislative priority, the Secure and Fair Enforcement Banking Act (SAFE Banking Act), would help since early entrants into the industry—which have been largely white and male—have access to private equity capital. Most small business owners, particularly in disadvantaged communities, don’t have access to those funds.
“They don’t have that same access to capital outside the banking system,” Khoja said. “A lot of our businesses from those communities are already dead in the water.”
To address Democrats’ concern about the lack of equity provisions in the SAFE Banking Act, its sponsors added an amendment before it received a committee vote in April. The change requires federal regulators to study and produce a report that measures “barriers to marketplace entry, including in the licensing process, and the access to financial services for potential and existing minority-owned and women-owned cannabis-related legitimate businesses,” according to the bill.
Shanita Penny, MCBA’s president, introduced NCIA’s “Increasing Equity In The Cannabis Industry: Six Achievable Goals For Policy Makers” report. Those six areas the MCBA wants local governments to prioritize:
- Criminal justice reform, including automatic expungement for non-violent cannabis-related crimes, according to NCIA spokesman Morgan Fox and the report. Local governments, the report said, should resentence those already serving time and eliminate “other penalization,” such as those on parole for cannabis-related crimes.
- Create more equitable licensing structures by barring officials from using past convictions as a reason to deny a license application and eliminating broad felony restrictions for those who want to own a cannabis business;
- In states and counties where there are business license caps, establish criteria (such as prioritizing applicants who have an income that is less than 80% of local median household income and those formerly incarcerated) to allot more licenses to business owners impacted by the war on drugs;
- Lower license and application fees to ensure they’re not a barrier to joining the industry;
- Creating incentives for larger companies to use minority subcontractors and using tax revenue to fund people of color entering the industry;
- Invest directly in communities harmed by prohibition by helping people pay for costs related to expungement, job training or infrastructure, such as community centers.
“Black and brown people in this country are still on average four times more likely to be arrested for cannabis possession,” Penny, the MCBA president, told the crowd. Cannabis remains the fourth leading cause of deportation. She said MCBA statistics show less than one-fifth of business owners identify as minorities and only around 4% are black.
“Legal cannabis presents significant business opportunities,” she said. “But onerous capital requirements, restrictions on licensing for drug felons and other factors have limited opportunities and success for minorities and other disadvantaged groups in the legal cannabis industry.”
Representative Ruben Gallego, a House Democrat from Arizona, said California and other states have an opportunity to correct past wrongs when new industries start up. “I’ve been lucky enough to grow up in the tech era,” he said. “But the whole tech revolution skipped over black and brown communities.” He said the industry should ensure that doesn’t happen with cannabis. Representative Lou Correa, D-California, encouraged members to keep pushing Congress for smarter public policy on cannabis, including encouraging research.
As for what industry members could do to be stewards of the equity effort, Penny encouraged them to join the MCBA. Ultimately, she said, those with social justice advocacy goals and industry should push for change together.
“The only way we can do that is by working together — work, collaborate and show our elected officials a united front,” she said.