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Published in Nonprofits
Participants in Grand Rapids-based cannabis company Fluresh’s business accelerator. More than 80 percent of the incubator’s inaugural cohort in 2021 were Black, Indigenous and People of Color (BIPOC). Participants in Grand Rapids-based cannabis company Fluresh’s business accelerator. More than 80 percent of the incubator’s inaugural cohort in 2021 were Black, Indigenous and People of Color (BIPOC). COURTESY PHOTO

City-created nonprofit to help achieve cannabis equity goals faces pushback

BY Sunday, May 22, 2022 06:17pm

GRAND RAPIDS — A proposal that would allow a newly created nonprofit to help Grand Rapids cannabis companies meet their social equity pledges is facing pushback from some business owners and city officials who see it as diluting social justice efforts.

In July 2020, the city’s Cannabis Justice Workgroup recommended that the city commission approve the formation of a nonprofit to help carry out the city’s equity goals it hopes to achieve in the cannabis industry. The overarching goal in Grand Rapids and statewide is to embed equity in the nascent industry after the legal system long disproportionately penalized people of color.

The city commission approved the formation of the nonprofit, referred to as the Community Reinvestment Fund, in February 2022. City officials are in the process of filing legal documents to form the nonprofit, said Deputy City Manager Kate Berens.

However, city commissioners have not yet reached a clear consensus on how the Community Reinvestment Fund will operate and use funding following overly broad initial guidelines for the organization. As well, funding has not yet been formally allocated.

A Cannabis Justice Workgroup presentation to the city commissioners suggested using program funding for “investing in the social equity work” currently happening in the community. It is “anticipated that these investments will directly benefit local groups currently doing this work,” according to the presentation.

City leaders initially envisioned that the nonprofit would primarily be funded from the city’s cannabis industry-related revenue, grants and private donations. The nonprofit’s structure could include a board of directors that is initially appointed by the city commission but would not be managed by the city.

 

Widespread non-compliance

Meanwhile, MiBiz recently uncovered the widespread non-compliance among cannabis operators that are not fulfilling equity pledges they made to gain an advantage in obtaining their initial city license. 

Members of the Cannabis Justice Workgroup suggested late last month that the city’s nonprofit could act as a vehicle to help these operators meet their pledges. Specifically, one suggestion would allow operators to donate to the nonprofit as a way to fulfill their equity goals.

Third Ward Commissioner Senita Lenear criticized the proposal, saying during an April 26 meeting that she prefers the city to enforce existing policies without modifications. 

“I believe that equity cannot be purchased,” Lenear said. “It’s reminiscent of a slave block to me, that someone with the means can place a bid and get out of doing what’s right for people who look like me. That is disheartening: It’s disheartening to see it in a policy, it’s disheartening to see it written.”

Other commissioners joined in criticizing the nonprofit, with no clear consensus on how it should be used going forward.

Grand Rapids adopted two social equity programs for medical and recreational cannabis operators. The Marijuana Industry Voluntary Equitable Development Agreement (MIVEDA) and Cannabis Industry Social Equity Voluntary Agreement (CISEVA) involve a point-based system in which business applicants pledged to meet various goals that gave them priority in the license application process.

Created for medical marijuana operators in April 2019, MIVEDA was meant to help achieve social equity in the cannabis industry through voluntary commitments involving supplier diversity, local ownership and local employment at cannabis businesses. 

However, only three out of 11 cannabis dispensaries are fully complying with their voluntary social equity commitments made in the MIVEDA program, MiBiz reported this month. City officials expect similar non-compliance among recreational cannabis operators.

Earlier this month, the city commission approved a 90-day grace period for noncompliant operators as officials consider their options.

  

Operators push back

That also places the cannabis nonprofit’s role in limbo. 

The Cannabis Justice Workgroup — a group of city officials from planning, legal, equity, oversight and accountability, and economic development departments — have provided some examples about how nonprofit operating funds could be used. These include creating business incubators, entrepreneur training, job and wealth creation strategies, economic incentives, and expungement assistance designed to increase opportunities for traditionally under-resourced communities. 

However, several Grand Rapids cannabis companies are already engaged in these activities, and some local operators see the new nonprofit as potentially taking away their control of how they choose to give back to the community.

Executives with Pharmhouse Wellness Co. and Fluresh LLC say both companies are already contributing to local nonprofits and causes that achieve the stated goals outlined by the Community Reinvestment Fund.

“We’ve taken savings that Pharmhouse Wellness gets through the state and on the local level from me being a social equity applicant and investing that back into the West Wealthy community,” said Pharmhouse Wellness owner Casey Kornoelje. “We’re doing outreach with neighbors, artist calls for murals, streetscape enhancements and tree planting. I’m proud to lead by example in the sense that we’re already doing a lot of the things that would be done through the nonprofit, but doing it voluntarily.”

Kornoelje also prefers that Pharmhouse Wellness receive credit for its philanthropic work in the community if contributing to the new nonprofit becomes mandatory.

Other cannabis operators say the nonprofit would potentially “dilute” their existing giving strategies.

“I’m not a fan of the nonprofit,” said Shoran Reid Williams, general counsel and chief regulatory officer at Fluresh. “I don’t want to dilute Fluresh’s efforts by giving to this nonprofit and having other people decide how we have an impact. That, to me, is a recipe for disaster.”

Reid Williams added that Fluresh focuses on giving back to the community in the city’s 49507 ZIP code where the business operates.

“If someone else chooses to help a different area of the city that has been underserved, that’s fine, but we put our building where we wanted to and that was our intent,” Reid Williams said. “Why do our plans to invest in our own neighborhood have to be undermined because other people aren’t doing what they said they would do?” 

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