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Black entrepreneurs struggle to join legal weed industry

Many African Americans are concerned that a lack of access to capital and systematic economic racism will exclude them from the burgeoning marijuana business.
Obama Admin. Unveils New Policy Easing Medical Marijuana Prosecutions
Dave Warden, a bud tender at Private Organic Therapy (P.O.T.), a non-profit co-operative medical marijuana dispensary, displays various types of marijuana available to patients in Los Angeles, California on Oct. 19, 2009.David McNew / Getty Images file

Now that corporate interests and large investors have targeted the mushrooming marijuana industry, some African Americans wonder if racial inequities will prevent them from participating in the leafy economic boom.

Since 2014, when Colorado opened the first regulated weed market, at least 11 states (Illinois being the latest) and the District of Columbia have jumped on the recreational band wagon, ostensibly to ease access to medicinal marijuana, but also grab a share of the estimated $40 billion, legal and illegal, cannabis market.

There are 33 states and D.C. where medicinal marijuana is legal, and there are estimates that 55 million Americans regularly use marijuana.

But despite these developments, many African Americans across the country are concerned that a lack of access to capital and systematic economic racism will exclude them from the burgeoning marijuana business the way they’ve been excluded from other business opportunities in the past.

“One of the things that we have definitely learned since the establishment of equity is that a license doesn’t go as far as need be,” said Jacob Plowden, co-founder and deputy director of the Cannabis Cultural Association, a New York-based nonprofit that helps “marginalized and underrepresented communities” compete in the legal cannabis industry.

The numbers are disturbing. Less than a fifth of the people involved at an ownership or stake-holder level were people of color, a 2017 survey found; black people made up only 4.3 percent.

New Jersey has proposed a bill mandating that 25 percent of all legal licenses be set aside for people of color; black legislators in New York emphatically said they will not vote for any legislation that doesn't redirect some profits from legalization to communities of color; and Massachusetts added social equity programs to their legalization efforts.

Still, the number of African Americans involved in the legal marijuana trade remains low.

Massachusetts has had next to no blacks or Latinos apply for licenses. The financial barriers are obvious, but for many would-be marijuana entrepreneurs, there are personal reasons for having no interest in even applying for a license.

"They're scared of the government, man," Sieh Samura, a cannibis rights advocate, told NPR. "This is still a new thing.”

Samura cited taxes and government as two things that make minorities distrustful of the process. “Just because people say it's legal,” he said. “It's not welcoming for everybody."

Many African Americans are feeling locked out of the process.

“It’s not just equity in terms of ownership but equity in terms of the supply chain, so looking at things like ancillary businesses like hemp, like media, like law, like marketing, like compliance. Those are the other structures in which we kind of see legalization taking place,” Plowden said. “And if you don’t have a huge $100 million investment to do a cultivation or a cannabis grow, there are other spaces especially for us, because we know when licenses go out, we know who’s getting displaced -- us.”

Beyond that last barrier, there is also no national uniform legal code to ensure that there is social equity in the market, but some communities, joining pioneers such as Oakland, California, have decided to implement their own laws and rules to address it. The Chicago suburb of Evanston voted in December to tax the sale of weed and use the proceeds to fund race-based reparations for black residents.

“Our community was damaged due to the war on drugs and marijuana convictions. This is a chance to correct that,” Robin Rue Simmons, a black alderman who represents the city’s historically black 5th Ward, told The Washington Post.

In New York state, which has seen one neighbor, Massachusetts, legalize recreational use and another, New Jersey, fast track its legalization, Gov. Andrew Cuomo, in his 2020 State of the State proposals, promised a regulatory push through an Office of Cannabis Management.

Tracey Henry, an independent publicist and medicinal user in New York City, who has done work for several social and cultural groups that are involved in the cannabis industry including Women Grow and is currently working for National Expungements Week.

“In the beginning there was the feeling that the rush was to legalize and people felt that the social justice and equity elements would be added after the legislation had passed or that these organizations or companies would do the right thing,” she said.

“We’re seeing that is not the case,” she added. “This is all tied to economic justice as well. There are a lot of Jim Crow Cannabis laws, that either by design or by circumstance, keep certain communities out of the industry. Depending on the state you might need a license to cultivate, a license to extract, a license to sell. These fees run into the thousands. Also, in some states, if you have a cannabis conviction or felony, you can’t be a part of the industry.”

Aside from overseeing medicinal and recreational use, the office will “administer social equity licensing opportunities, develop an egalitarian adult-use market structure and facilitate market entry through access to capital, technical assistance and incubation of equity entrepreneurs.”

Tauhid Chappell, 29, a media professional and member of the Philadelphia Association of Black Journalists, is a medicinal marijuana user who is involved with educating communities of color on how to get into the business, which he said is flawed.

“The fact is that minority ownership in this space is going to be very low until there is more access to capital, more access to low interest loans and more access to better banking practices,” Chappell said. “Some companies have to show what their diversity plan is before they can apply for a license to sell, but there is no enforcement around that.”

So can African Americans actually get a foothold in the legalized marijuana business? Some black emerging entrepreneurs aren’t so sure.

Chappell likens the marijuana business in the 21st century to the California gold rush of the 19th century, when the folks making the real money were those selling the pickaxes and the tools that the prospectors needed.

“So many states are already making it so cost prohibitive that it’s not even worth trying to spend six figures to apply for a license,” Chappell said. “A lot of the talk now is how do you become more of an ancillary business. An example would be a wellness center that signs up medical marijuana patients or provides educational programming for people who have not seen a doctor but want to become medicinal marijuana patients, or creating curricula for universities.

“There are lots of ways to get into the business without having to touch it.”