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Published in Economic Development
Cannabis industry advocates say the state’s effort to address inequities in business ownership is a start, but more work could be done particularly at the local level. Cannabis industry advocates say the state’s effort to address inequities in business ownership is a start, but more work could be done particularly at the local level.

State pursues cannabis industry racial equity, but advocates say more work needed

BY Sunday, January 31, 2021 06:25pm

Michigan cannabis businesses have overwhelmingly white ownership despite the state’s 2018 voter-approved marijuana law encouraging participation by people who have been “disproportionately impacted by marijuana prohibition and enforcement.”

Data collected in December 2020 by the state Marijuana Regulatory Agency (MRA) shows ownership of licensed recreational establishments is just 3.8 percent Black or African American, and 1.5 percent Hispanic or Latino.

The findings reinforce the MRA’s move last year to establish a Racial Advisory Workgroup to create policy ideas and recommendations to address disparities in the industry. 

The workgroup released final recommendations on Jan. 19 after meeting from July through December 2020 with subcommittees that focused on social justice, business development, local equity, process and pathways, and resource deployment and strategic partnerships. 

Workgroup recommendations include increasing studies and research on cannabis, creating a crowdfunding platform that would support local investors and those in disproportionately affected communities, creating educational resources for municipalities and partnering with land banks to increase access for social equity applicants getting into the cannabis business.

The MRA is also facilitating a standing Diversity, Equity and Inclusion Workgroup that will meet once a month to continue to advance the proposals of the Racial Equity Advisory Workgroup. 

The MRA’s racial equity recommendations are the first time the state has added clarity around what “equity” means in the industry, said Denavvia Mojet, founder and executive director of the Black and Brown Cannabis Guild. She also served on the Racial Equity Advisory Workgroup. 

“We can finally recognize the elephant in the room,” Mojet said. “In government there are these beautiful buzz words like social equity with the thought that it will come back to people of color when instead it should have started with people of color.”

If nothing else, Mojet hopes municipalities will take the lead after the MRA put the focus on equity and race, clarifying commonly used broad terms like “social equity.” Under many municipalities’ social equity programs for cannabis businesses, incentives can apply to women, local residents, people with prior cannabis convictions and veterans who are white and not part of communities disproportionately affected by prohibitionist laws. 

Mojet has been leading the Black & Brown Cannabis Guild since founding it in 2019. The guild operates as more of a community organization, and creates a network for people of color who are passionate about cannabis, as well as offering expungement resources.

“I’m excited about a lot of (the recommendations) and think it will help change the industry to be more inclusive around the ownership and licenses,” Mojet said. “The cannabis industry can bring opportunities, and whether you’re Black or white, there is a part you can play in equity in the industry.”

Mojet sees the workgroup recommendations as a positive start to the industry becoming more equitable, and she emphasized the importance of the MRA establishing a more permanent workgroup.

“We need to continue this relationship between the MRA and people of color,” Mojet said. “If we’re really serious about racial equity, we should have people of color speak directly with them.”

Tax increase, lack of specifics

The Michigan Cannabis Industry Association (MiCIA) supported the Racial Equity Advisory Workgroup’s recommendations overall, but strongly opposed two that would increase the excise tax on adult-use products and another that would levy a tax on medical cannabis. The tax increase received the least support among MiCIA members.

The MiCIA unequivocally opposes any tax increases on the retail and medical markets. We should be focusing on reducing costs and this proposal will only serve to drive patients to the illicit market,” Anquinette Sarfoh, MiCIA board member and member of the Racial Equity Advisory Workgroup, said in a statement on the recommendations. “As a cannabis patient with multiple sclerosis, the idea of creating another financial barrier between patients and their medicine is abhorrent.” 

The recommendations that came out of the MRA’s workgroup will generally be helpful, but they lack specific quantitative goals, said Darel Ross, a director at Grand Rapids-based Start Garden. Ross also runs consulting firm Forty20 Cannabis LLC that helps businesses seeking to enter the cannabis market.

“The lack of the specific quantitative goals and unwillingness of municipalities to just state the outcome, or specific number of Black-owned cannabis businesses they want to see, makes it very difficult to get to that,” Ross said. “This is a time for municipalities and the private sector to set up some policy with their rhetoric. We’re not going to create financial equity with aspirational goal setting. You can’t wish your way to equity.”

Emerging opportunities

According to a 2020 national study from the American Civil Liberties Union, African Americans are 3.64 times more likely than white people to be arrested for marijuana possession, despite similar usage rates. The increasing number of states legalizing or decriminalizing marijuana has not reduced national trends in racial disparities, according to the study. 

Part of the problem is municipalities should look at the issue from an economic lens instead of just a social equity lens, Ross said. There is a market for Black-owned dispensaries and other cannabis businesses, he added.

“We have to collectively admit that if there is no diversity within dispensary ownership in the next 12 months, then it’s by design,” Ross said.

Despite the lack of diversity in ownership in the recreational cannabis market, opportunities are still just starting to emerge, Ross said, adding that most cannabis business operators also want to be part of the equity solution, but there is not a clear structure to get there.

“A lot of times they’re just being asked to fill out an equity survey and fill out promises,” Ross said. “We are at a place where it’s becoming inexcusable to not have equitable outcomes.” 

The municipalities and businesses that truly stand by their equity mission statements are the ones who act on them, Ross said. Through his consulting firm, Ross is working with 3Fifteen Cannabis, which is working to launch two black-owned dispensaries in Michigan.

“I think everybody has the right idea and right intentions,” he said. “However, history has shown us intentions alone do not move the needle.”

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