Social Equity won State Legilatures in 2021.

Social Equity was the 2021 buzzword now that the Multi-state operators (MSOs) have solid foundations in legal states. But what is Social Equity? For the sake of brevity, I will use the definition that The National League of Cities adopted in 2003: “Creating equitable and inclusive communities with opportunity for all can lead to a level playing field where everyone has a chance to succeed. . .Divisions by race, class and geography have decreased access to much-needed jobs, adequate health care, affordable housing, and quality education. . .”[1]

 California brought the idea to cannabis markets way back in 2017[2], while the recreational legal pathfinder Colorado just got around to creating their own social equity laws last summer[3]. Illinois, Connecticut, and New York all included social equity when their legislatures wrote their recreational cannabis laws. Even Nebraska got an expungement law into the halls of their unicameral (Of course, it experienced death by floundering).  The New York Chief of Police, on the other hand, issued a memo telling the city’s police force to allow people 21 and up to legally “smoke marihuana almost anywhere that cigarette smoking is allowed…As a result, smoking marihuana in any of these locations is not a basis for an approach, stop, summons, arrest, or search[4]

Even Congress is throwing bills at cannabis legalization. The first Republican-led bill was introduced by Nancy Mace (R-South Carolina) earlier this year. It is the first legalization bill that was brought forward by a Republican. It also had an expungement feature to it[5]. Senator Corey Booker also introduced the Cannabis Opportunity and Administration Act[6] (CAOA) which included a community reinvestment program. This program would have provided aid for people to expunge records, among other things. It succumbed to a competing bill, the SAFE banking act, which the House has passed five times in the last 8 years. It is currently in the Senate, where it will undoubtedly languish on Senator McConnell’s desk without a second thought. A big problem with it is that the SAFE Banking Act only addresses banking and not much else that is necessary to create a national cannabis industry[7]. That, and of course, the Senate.

Despite the obvious hurdles in Congress, Senators Booker and Warren are pushing the Justice Department to deschedule cannabis. They wrote a letter to Attorney General Garland urging him to “initiate the process to decriminalize cannabis. Doing so would be an important first step in the broader tasks of remedying the harmful racial impact of our nation’s enforcement of cannabis laws and ensuring that states can effectively regulate the growing cannabis industry, including by assisting small business owners and those most harmed by our historical enforcement of cannabis laws,”[8]

So, as the country stands divided on cannabis (just like everything else), the financial and social issues of cannabis are coming into focus. According to the Marijuana Policy Project, recreational cannabis sales have reached $8 billion in tax revenue for the states that have legalized it[9]. Unemployment has gone down in these states as well. In fact, since 2019, cannabis dispensaries in Colorado outnumber Starbucks and McDonalds combined.[10]

A recent IZA Report on Labor Statistics noted that there is a “4.5% increase in the number of employees” and also that “the opening of recreational cannabis dispensaries is associated with a decrease in the demand of unemployed people…[11]”. The authors were also quick to note that,

because there is such a huge demand to work in the cannabis industry, the labor side is negatively affected.

There is no need to pay their employees, let alone treat them with respect, so wages are low. As the MSOs grow in market share, there is no reason to be competitive in employee retention. Therefore employers can keep wages low and profits are siphoned to the class that needs the money the least. Which is why social equity programs are so important to include with recreational laws. It is expensive to start a cannabis business in this environment. The barriers to entry are quite substantial when the startup fees can surpass $1 million[12]. The competition is stiff, however. Arizona just announced that they received more than 1,500 applications for 26 spots in their social equity program[13]. Less than 2% of those who applied will win the coveted social equity permit. Clearly there is a long way to go to rectify the problems of the drug war, but people are finally doing it.


[1] https://icma.org/sites/default/files/SOCIAL%20EQUITY-%20THE%20FOURTH%20PILLAR%20OF%20PUBLIC%20ADMINISTRATION%20Wooldridge%20%26%20Bilharz.pdf

[2] https://www.oaklandca.gov/topics/equity-program

[3] https://hoban.law/2020/07/how-colorado-continues-to-cultivate-cannabis-equity/

[4] https://nypost.com/2021/04/01/nypd-gives-cops-new-orders-to-let-people-smoke-weed-in-public/

[5] https://www.bloomberg.com/news/newsletters/2021-11-22/republican-nancy-mace-came-to-cannabis-after-a-personal-tragedy

[6] https://www.safeaccessnow.org/caoa_summary

[7] https://www.forbes.com/sites/lewiskoski/2021/12/03/the-safe-banking-act-what-is-it-and-where-does-it-stand/?sh=6100def22baf

[8] https://www.booker.senate.gov/news/press/booker-warren-call-on-doj-to-decriminalize-cannabis

[9] https://www.mpp.org/news/updates/legal-marijuana-states-have-generated-nearly-$8-billion-in-tax-revenue-since-recreational-sales-launched-report-finds/

[10] Colorado Department of Revenue, Office of Research and Analysis. (2019): Marijuana sales report. https://cdor.colorado.gov/data-and-reports/marijuana-data/marijuana-sales-reports

[11] Chakraborty, Avinandan, Doremus, Jacqueline and Stith, Sarah. “The effects of recreational cannabis access on labor markets: evidence from Colorado” IZA Journal of Labor Economics, vol.10, no.1, 2021, pp.-. https://doi.org/10.2478/izajole-2021-0005

[12] https://www.theguardian.com/society/2021/sep/07/cannabis-industry-black-americans

[13] https://mjbizdaily.com/arizona-receives-more-than-1500-applications-for-cannabis-social-equity-licenses/

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