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A new report on the U.S. cannabis industry offers a scathing critique of the various social equity programs across the nation. But it also provides several suggestions on how lawmakers and regulators can course-correct so that the programs have the desired effect of righting the wrongs from the war on drugs.
The report, issued by Los Angeles-based SIVA Enterprises and authored by Avis Bulbulyan, argues that most social equity programs around the nation are “failing” for several reasons, including “overregulation, prescriptive regulations, and flawed program designs” along with a “heavy emphasis on license ownership.”
“The approach to social equity within the cannabis industry has been misdirected. Rather than empowering individuals and communities to seize the opportunities presented by this burgeoning market, government policies have erected additional barriers, complicating the path to success for those they aim to support,” Bulbulyan wrote.
“The issue isn’t a question of whom to provide with the business opportunity. The issue is how to provide it to extend beyond feel-good, yet ineffective policies and in a way that is practical and aligned with the spirit of what this movement was intending to accomplish,” he wrote.
Policymakers aren’t creating systemic incentives for social equity businesses to succeed, Bulbulyan wrote. Instead, they are devaluing the few social equity licenses that exist with regulatory constraints and red tape.
“Currently, there are no incentives to attract investments” to social equity companies, he pointed out, noting that raising capital is often one of the toughest barriers to success in the marijuana trade. This is arguably more true for those already at a socioeconomic disadvantage.
“All things being equal, a license issued under an equity program with all the restrictions and requirements is significantly less valuable than a standard license without the same restrictions and requirements,” Bulbulyan wrote.
Bulbulyan also took the somewhat controversial stance that race shouldn’t be a factor in social equity criteria, which is at odds with many other social equity proponents who hold that such programs need to be race-based in order to correct racial harms from the war on drugs, given that Black and brown minorities were disproportionately affected by prohibition.
Instead, he argued that anyone who was harmed by marijuana prohibition should be considered eligible for social equity benefits.
“The legacy cultivators in Northern California were also harmed and so were many individuals that are not Black or Latino. If equity programs are intended to right past wrongs, they must be inclusive of all individuals and communities that suffered,” Bulbulyan wrote.
Another critical issue with many social equity programs, according to the report, is that they primarily center on who qualifies to own plant-touching businesses.
Instead of focusing so hard on who will win how many number of business licenses, Bulbulyan argued, the goals of social equity would be better accomplished by reorienting such programs so that they prioritize community reinvestment, such as:
Job training
Mentorship
Other avenues of support for those who were hurt by cannabis prohibition.
“Identify business opportunities in the industry beyond license ownership and create a separate program that applicants meeting eligibility requirements could elect to participate in,” Bubulyan wrote. “Not everyone looking to participate in the industry wants to own a license. Many are looking to advance their career” in other ways.
Tax revenue could be used to fund scholarships, grants, health services, or even to help those in disadvantaged communities join mainstream noncannabis industries. The sky is basically the limit when rethinking how social equity could work in ways other than being directly tied to business licenses, Bulbulyan wrote.
“Ultimately, the goal is to foster an environment where social equity in the cannabis industry translates into tangible opportunities for success and community upliftment,” he wrote. “No single policy or handful of licenses is going to be enough to right the past wrongs from the War on Drugs. A system must be created that systematically churns out opportunities.”
STATE of THE CANNABIS INDUSTRY – 2024
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