Sunday, February 24, 2019

How Licensing Makes it Harder for Minorities to Enter the Legal Cannabis Industry

Racial disparities in legal cannabis markets still reflect racial disparities in drug enforcement

After Colorado legalized cannabis through ballot initiative in 2012, the total number of arrests for possession fell 52%; however, Black Americans in Colorado were arrested at nearly twice the rate of White Americans even though Colorado is 84% white. Even after Alaska legalized cannabis in 2014, Black Americans are still arrested for possession at ten times the rate of white Americans. Black Americans only make up 4% of Alaska's population but constitute 29% of people arrested for possession. In Washington D.C. where cannabis is also legal, Black Americans are arrested for possession at 11 times the rate of White Americans; however, white and Black Americans consume cannabis at about the same rate.

As USA Today points out, when states initially legalize cannabis they bar people with criminal records, including convictions for cannabis possession, from starting a cannabis enterprise and give recreational licenses to businesses that were already selling medicinal cannabis. This is why the industry is predominately white. Since Black Americans were and still are more likely to be arrested for possession than white Americans they are also more likely to be excluded from the legal cannabis industry by these kinds licensing regimes. However, some states and cities are trying to level the competition by expunging criminal records of prior convictions for possession and distribution of cannabis and providing financial assistance to victims of the drug who want to start a legal cannabis enterprise.

In California, several cities have created cannabis equity programs to help former drug dealers go legal. The programs include business development, loan assistance and mentor relationships. In September 2018, former Gov. Jerry Brown signed legislation to partially fund such programs. The bill stated it would help ensure that persons most harmed by cannabis criminalization and poverty be offered assistance to enter the multi-billion-dollar industry as entrepreneurs or as employees with high-quality, well-paying jobs.

Over time, a combination of cleaning records and providing reparations to victims of the war on drugs could lead to a more level playing field for black and Hispanic entrepreneurs. Until then whining about the demographics of an infant industry isn't going to make much of a difference.

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