The Value Social Equity Programs Have For The Cannabis Industry

What Is Social Equity?

With cannabis legalization already occurring in the majority of states, the cannabis industry has begun to tackle more difficult social issues. From presidential candidates to industry leaders, social equity is taking the forefront of the cannabis industry, but what exactly is social equity? Social equity is an evolving concept but it is generally understood as making reparations to communities and individuals harmed by the War on Drugs. Years of systemic racism and harsh drug laws has disproportionately affected communities of color, low-income neighborhoods, and has left generational impacts. Social equity programs are designed to help remedy decades of injustice but, due to their novelty, are still developing effective ways to help harmed communities.


Why Do Social Equity Programs Matter?

Social equity programs do many things to help individuals regain liberties we normally take for granted. For example, in California, a felony can be grounds for not hiring an individual and damage an individual’s ability to receive a loan. One of the goals of social equity programs is to expunge cannabis convictions to allow individuals to find meaningful employment and obtain a mortgage for a house. Additionally, social equity programs work to give qualified social equity applicants ownership in the cannabis industry. Each locality has different requirements for qualifications, but, once qualified, social equity applicants can apply for a license and own a cannabis business. The program is also designed to support applicants throughout the process of applying and running a business. In part, social equity programs educate individuals on how to run their business and provide assistance in filling out their applications.

Social equity programs not only help individuals but also communities. Regulations usually require social equity businesses to operate in areas harmed by the War on Drugs and hire locally with an emphasis on hiring transitional and social equity workers. In addition to hiring practices, some programs also use part of the taxes earned from cannabis sales as a fund to reinvest in communities. Reinvesting can take many forms from fixing roads to subsidizing school lunches for children, social equity programs work to positively change the lives of as many people as possible and nourish communities. While one of the purposes is to provide social equity applicants a proportional share of the cannabis industry, social equity programs are also aimed at providing education to help bring more opportunities to rejuvenate communities.


The Los Angeles Case Study

Los Angeles is in the midst of implementing their own social equity program. Recently, my colleague and I conducted a case study of their program that found the program was not meeting expectations scoring an 85/140. The program, although well-intentioned, received such a low score because shareholders, interest groups, and certain government officials have used the program as an instrument for personal gain rather than to be used as a source of support and help for communities harmed by the War on Drugs. For example, regulations require social equity applicants retain at least 51% equity in their business. A surprising result from the case study was some businesses that partnered with applicants demanded 49% equity and then attempted to further gain equity illegally through deceptive practices to maximize their profits when regulators had approved their partnership and moved onto the next applicant.

As for social equity organizations, the case study found some organization fought to be the only “voice” for social equity. Such organizations have refused to work with others and, in one instance, an organization actively sought to prevent the case study from occurring through threats and spreading misinformation. Infighting is justified by these organizations because if an organization gains legitimacy as the “voice” of social equity it would have immense leverage and power over other organizations causing a culture of fear and distrust among the very organizations who promise to help develop social equity programs and help social equity applicants.

Transitioning to the government side of the report, the research from the case study heavily suggests politicians at the local level such as within the Los Angeles City Council and state-elected officials from the Los Angeles area have perverted the regulations to benefit their friends and have used the social equity program as a guise for personal gains. The most prevalent allegation, which has yet to be confirmed, stated approximately three city council members were able to prioritize social equity applicants whom they had financial connections with over others in the licensing process. Overall, the case study found that while the initial framework for Los Angeles’ program was sound, key players in the industry have abused the program resulting in a warped framework leaving communities harmed by the War on Drugs behind as these key players continue to seek personal gains and power.


For comments or questions, Chris Nani can be reached through his LinkedIn found here.

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