Black Americans Are Having Trouble Getting Into The Cannabis Industry
The legal cannabis industry has skyrocketed in recent years and during the COVID-19 pandemic, but those who were most arrested and jailed for cannabis are having trouble getting in.
According to Leafly’s 2020 Jobs Report, the industry accounts for more than 321,000 full-time jobs across the 37 states. This year, while the hotel and restaurant industries continue to struggle to find workers, the cannabis industry added 77,300 jobs and U.S. sales combined were more than $18 billion.
However, for Black Americans, who are almost four times more likely to be arrested for cannabis use or possession, getting into the industry is a struggle to get into.
One of the biggest barriers for Black entrepreneurs trying to get into the cannabis industry is the licensing process itself according to Megan Fox of the National Cannabis Industry Association. The licensing process has a cap that narrows the number of eligible social equity applicants with competitive lotteries for a small number of licenses.
Another issue is access to capital. Launching a cannabis dispensary or cultivation business can cost anywhere from $750,000 to $1 million. Additionally, there are licensing fees, which some states have lowered to give social equity applicants easier access.
“Very few applicants are well-funded and well-connected to deep financial networks. Almost all social equity applicants have issues with access to capital or even getting a license,” Fox told the Guardian. “It often comes down to who can hire the best consultants to put together the best application, and if someone can sit on real estate or keep paying a lease until they get approved. And that can open the door to predatory partnerships that can strip away control of businesses from the people these programs are meant to help.”
Despite the struggles for Black entrepreneurs in the industry, some states are trying to right previous wrongs by using the tax revenue from cannabis legalization to help repair communities that were negatively impacted by anti-cannabis laws.
Illinois has a $32 million revolving loan fund for social equity applicants financed by cannabis businesses established prior to adult legalization. Additionally, 25% of the state’s tax revenue will go towards the Restore, Reinvest and Renew program, helping communities that were impacted by drug laws.
In Virginia, the social equity criteria includes anyone who graduated from an HBCU in the state, anyone who has a marijuana conviction and anyone living in an area determined to be disproportionately policed for marijuiana crimes. Additionally, a cannabis reinvestment fund will distribute tax revenue from the sale of cannabis to create scholarship programs for marginalized communities and no- interest business loans for social equity applicants.