Application and licensing fees are prohibitive for many prospective cannabis entrepreneurs
The people of the United States are finally waking up from the long nightmare of cannabis prohibition. For almost a century, fear mongering and misinformation have been used by those in positions of power to demonize one of the most useful plants that the Earth has provided and to criminalize its users. This smear campaign has been so successful largely because it has stoked racial prejudice — even though evidence of cannabis’ safety and medical uses have been known at least since the 1944 LaGuardia Committee report, which systematically contradicted claims of a variety of societal, physical and mental dangers of cannabis.
It’s only in the last 25 years or so that the factual effects of the disastrous drug policy, with roots of social injustice, have been able to slowly filter into the media and evolve public opinion. This is certainly a positive development, but the damage done by the War on Drugs has been devastating, particularly to minority and immigrant communities, whom it was always intended to harm.
The current trend among voters is clear: the legalization of cannabis is happening. And it’s going to be incredibly lucrative. In my own state of Maryland, sales of more than $100 million in just the first year exceeded projections, and that is expected to grow substantially. The development of the cannabis industry has the potential to be one of the greatest new sources of wealth since the tech boom of the 1990s. And for those communities most harmed by prohibition, it promises a way out of crippling poverty. Unfortunately — and predictably — early indications show that cannabis industry opportunities are mainly going to white men and already-wealthy entrepreneurs.
According to a 2017 study by Marijuana Business Daily, the current representation of minorities in the cannabis industry — particularly female minorities — on a national scale is disappointing. Of the owners and founders of cannabis businesses, including growers, processors and dispensaries, more than 80% reported as white. Among cannabis industry executives, only about 5% reported as women of color. Of the 20% of founders and owners who reported as a minority, 6.7% identified as Hispanic and only 4.3% as African-American, with the remaining 7% identified as “Other.”
Initially, these numbers may seem to be encouraging. A 20% minority stake is certainly higher than most industries in the United States, but this is somewhat misleading. These numbers reflect the percentage of respondents that have any ownership stake; the number of businesses that are more than 51% minority-owned is likely significantly less. Furthermore, the majority of minority owner and founder respondents were ancillary businesses of the cannabis industry, such as marketing firms, law offices or technology companies.
Overall, it is clear that there is a problem with minority participation in the cannabis industry, and there are numerous factors that contribute to this, such as the exceptionally high cost for starting a cannabis business. While starting any business requires significant initial investment, starting a cannabis business requires going through expensive application and licensing processes without access to traditional funding sources. In Maryland, which has some of the highest application and licensing fees in the country, the cost for a two-year grower license is $250,000. To be sure, that is prohibitive to most Americans, but those with the means to handle such fees are typically white. And perhaps most detrimental is the requirement by some states that participants in the cannabis industry have no criminal record. This typically applies to all employment levels, from owners to dispensary workers. In a country where 33% of adult black men have a felony conviction, this makes it impossible for many.
There is an incredible opportunity to make use of decades of cannabis knowledge that is being missed due to these prohibitive policies. For the entirety of prohibition, minority communities primarily were the cannabis industry, and now that we’ve decided to flip the other direction, the skills and expertise of thousands of Americans are being wasted. Even more compelling, cannabis prohibition is a significant reason why 33% of black men have felony convictions in the first place.
As we move toward legalization, it’s imperative that we do what we can to heal the mistakes of the past by providing opportunities for minorities in the cannabis industry, instead of letting them continue to fester.
Jacquie Cohen Roth is the founder of CannabizMD and Tea Pad. Tea Pad is a professional level networking and resource group dedicated to breaking down barriers to entry in the cannabis industry for women and minorities. For more information, visit teapad.co.