Social equity efforts growing nationwide

In Washington state, and across the nation, discussions about social equity have been amplified. Although Washington was one of the first states to allow for legal adult use, social equity was not included in the initial legislation, which makes implementation of any social equity program more difficult.

However, in March 2020, Gov. Jay Inslee signed HB 2870, which “creates a new social equity program that provides business opportunities to people from disproportionately-harmed communities so they can benefit economically from the cannabis industry and become a cannabis retailer.”

The Washington State Liquor and Cannabis Board is responsible for adopting guidelines and implementing social equity legislation. So far, the board has met a few times, and recommendations are expected to be announced in 2021. They will also distribute 34 “unused or forfeited licenses” to social equity candidates. Yet another tool at their disposal is a social equity technical assistance competitive grant program, which helps applicants manage the application process.

The board defines a “social equity applicant” as:

• An applicant who has at least 51% ownership and control by one or more individuals who have resided for at least 5 of the preceding 10 years in a disproportionately impacted area; or

• An applicant who has at least 51% ownership and control by at least one individual who has been convicted of a marijuana offense or is a family member of the offender.

A “disproportionately impacted area” means:

• The area has a high poverty and unemployment rate and a high level of participation in income-based federal or state programs; and

• The area has a high rate of arrest, conviction, and incarceration related to the sale, possession, use, cultivation, manufacture, or transportation of marijuana.

Washington state is not alone when wrestling with the notion and implementation of social equity and cannabis programs. Other states including California, Massachusetts, Illinois and New Jersey have all implemented, or will soon implement, some form of unique social equity measures.

Throughout the different programs, some common goals have emerged, including:

• Priority consideration of licenses for social equity candidates and reduced fees

• Access to financing

• Mentorship and ongoing support to handle issues such as application completion guidance, zoning information, legal advice, construction assistance, and accounting input

• Cultivation, processing, product testing, and dispensary operations training, all enhanced by cannabis education

Here are some ways that California, Massachusetts, Illinois, and New Jersey are approaching social justice in their respective states:

California is offering grants, such as a $30 million grant available to communities who were adversely affected by the war on drugs. The state is also offering reduced license fees, workforce training, emergency preparedness planning, and low or no interest loans.

Massachusetts has set aside social equity licenses for those who come from areas harmed by the war on drugs or those who have a child or spouse who has had multiple cannabis convictions. They are also setting aside delivery and social consumption lounge licenses for social equity applicants for 3 years.

Illinois has one of the more robust social equity programs. Automatic no-fee, cannabis conviction expungement is a centerpiece of their program. Illinois also has some aggressive “set asides,” which means that they are reserving 75 licenses for social equity applicants, and 25% of all cannabis revenue received by the state will go to disenfranchised communities. The state is also offering low interest cannabis business loans.

In New Jersey, legislation just passed to allow for legal adult use and two major measures are intended to help social equity applicants.

First, 70% of cannabis revenues will go to communities that were unfairly harmed by the war on drugs, though this funding will probably be subject to yearly approval.

Second, there is no cap on micro-licenses, which are easier and less expensive to obtain. Investment that is going to targeted communities is likely to be used for low cost loans, education and job training, community partnerships, and business mentorship.

While there are many ways to help social equity applicants obtain a place in the cannabis industry, it is better if social equity is a crucial consideration at the outset of the creation of legislation as it is more difficult to add details later. As more and more states institute and try programs, we are learning what works and what is lacking. However, it is essential that we are taking these important first steps.