Why Are Black People Excluded From the Legal Cannabis Industry?
What Can We Do About It?
I attended a legal cannabis event for the first time a few years ago. It was in New York City.
I noticed a few unexpected things. Among them were the large percentage of people wearing suits and the high number of women executives in attendance. Bravo! But the thing that surprised me the most was the fact that, among more than 300 attendees, there were only five black women and ONE black man in attendance. Yes, just one.
Interestingly, the day the writing of this article commenced, I got a text from a good friend, Marvin Washington,Super Bowl Champion turned cannabis activist and entrepreneur: “Attended MJ Biz Con Next in New Orleans last Saturday. 7 blacks in attendance Saturday. I counted them.”
Not a lot had changed since that first investor event I attended four years ago.
This phenomenon was confirmed by a story relayed by Al Foreman, co-founder and chief investment officer at cannabis investment firm Tuatara Capital. “Recently I was scheduled to speak at an industry conference in Los Angeles. In the weeks leading up to the event I was introduced to another senior black professional who I made plans to meet for the first time at the conference. Needless to say we were both taken aback by how easy it was to spot each other in a sea of 1000+ people as we were two of the only three black men there at the time,” he said.
What’s the Real Color of Cannabis?
Weed and cannabis culture have often been associated with black people, both in positive and negative ways.
Let’s take music as an example of a more upbeat association: Over time, we’ve heard many of the most prominent black artists sing pot’s praises. The herb is mentioned in countless Bob Marley songs, in Dr. Dre lyrics, in many of Peter Tosh’s albums, in Ray Charles’ most controversial tunes, in De La Soul’s hip hop records, and in some of the most entertaining Spanish-language music you’ll ever listen to. Cannabis has both inspired and been the subject of black art and culture in general, with music the most notable of many examples.
On the other hand, we’ve seen black communities heavily targeted by prohibition policies like the infamous War on Drugs, started by President Richard Nixon in the early ‘70s. This sort of targeting has furthered the connection between blacks and weed in popular imagery – although this time, in a negative way.
As very clearly evidenced in this ACLU slideshow, for every 10 white people arrested for marijuana possession, 37 black people were arrested – even though consumption levels were pretty similar. In other words, blacks have been almost four times more likely to be arrested for cannabis possession than white people.
‘The Blind Side’
While black people (and arguably Latinxs) paid the highest price of cannabis’ illegality, they also got the short end of the stick when weed was made legal.
As Jodie Emery mentioned in a recent “Wonder Women of Weed” show, “Unfortunately, we are seeing that the same old boys network, the big money from the grey hairs are moving in and kind of putting in a ‘grass ceiling’– instead of a glass ceiling.”
This is very clearly illustrated by the numbers: it has been estimated that only one percent of legal cannabis dispensaries and 4.3 percent of all cannabis businesses are owned or founded by black individuals.
CEO Sumit Mehta of cannabis investment banking platform, Mazakali, explains that the black community was unfairly punished by the war on cannabis, and are now unfairly underrepresented in its industrialization in a post-legalization environment.
“African-Americans represent fewer than one percent of cannabis business owners despite representing 17 percent of the U.S. population,” he notes.
So, the question here is: What’s going on? And what can we do about it?
The ‘Grass Ceiling’
Tiffany Bowden is the co-founder of the Minority Cannabis Business Association (MCBA) and co-owner of Comfy Tree Enterprises, one of the few cannabis businesses actually owned by a black woman.
“This topic requires we take a sort of critical race theory; a systemic approach, as you suggest,” she said as we introduced the subject. “There’s a history of racism in the United States, which has relegated people of color, especially black people, to the bottom of the society – pretty much across the board. As a result of that, we have been incarcerated [at a higher rate] than others … and have also been excluded from economic opportunity in general, when it comes to accessing higher paid jobs.”
This, of course, has a ripple effect that ends up limiting opportunities among black people when it comes to starting a business. Due to this economic discrimination, black people tend to have less savings and tend to be surrounded by less affluent people.
Furthermore, we could argue that entrepreneurship is also cultural. People who grow up being told they can achieve whatever they set their minds to, including starting a business of their own, are seemingly more likely to give entrepreneurship a shot. But, if nobody ever told you that you could start a business, chances are, you will never even think of it – I know I never had until I met people who owned their own businesses despite not being raised in affluent households.
So, it’s both an issue of having financial resources and knowing how to create or find new ones when your own aren’t finances aren’t enough. However, Bowden stresses the need to inform people about the fact that one can get into the cannabis industry without laying out a lot of money: “I feel like sometimes reporting feeds the notion of the cannabis industry being super cost-prohibitive. Starting a business is usually expensive, but getting into the industry is not.”
Vice-Chair, Larisa Bolivar, of the National Diversity and Inclusion Cannabis Alliance (NDICA), has been involved in the cannabis industry since 2001. In fact, she’s not only participated in the industry for more than 15 years, but also researched it in depth. Her thesis for her master’s degree, titled “Enduring Racial Disparity After Cannabis Legalization,” suggests that the top elements contributing to the racial disparity in the cannabis industry were (and potentially remain) fear, lack of access to capital and previous criminal charges.
“I was really distressed by the lack of people of color, and have my own personal stories that fueled my distress, which led me to research how and why people of color were left out,” she said. In fact, Bolivar notes she agrees with Tiffany Bowden in that, while we are dealing with issues of race, there is also a socio-economic component within racial classes and in the movement as a whole.
“A lot of people do not like to reference slavery and its influence because they find it (from a timeline stand point) irrelevant. However, its impact has evolved and has never fully been eradicated,” Bowden says. “So, generally, when people discuss race issues as it relates to access – that’s the tip of the nose issue. It’s [slavery’s] connection to class that has made it stick. This is also what causes those who have not been in top rungs of society to take out each other in turf wars.”
Khadijah Adams, vice president and chief operations officer at business development company C.E. Hutton seems to be on the same page as Bolivar and Bowden as it relates to the socioeconomic component within racial classes. “To add to that, there has been a stigma attached to blacks and marijuana that has haunted us for at least 80 years and it has infected our community for far too long,” she explains.
“There is discrimination and an abundance of social injustices, but there is also generational brainwashing that must be addressed, cleared and corrected. Although there is a problem as it relates to capital, positioning, and other opportunities in the industry; there is a major problem with the lack of proper education in our black communities, especially in our religious communities,” Adams adds. For her, the key is in re-educating black communities’ religious leaders and equipping them with “the truth about cannabis.”
Finally, we reached out to Mehka King, podcast host and filmmaker working on a movie about minorities and cannabis. In his view, the thing hindering people of color from getting into the cannabis industry after working in the shadows for so long has “more to do with media than anything else.”
“Cannabis consumers are viewed in different ways in the media. For a person of color, whether it’s in a movie, TV show or a news report, we’re normally portrayed from the perspective of the criminal. It might be a cool weed dealer, an ex-inmate or the person arrested. But these are all images we have all seen before, way before any real talk of legalization. There is a criminal aspect to our stories that sticks,” King reiterates.
“When you read magazines or watch shows, where the subject is white, it’s a story of success in an industry, the triumphs over medical problems where the plant was the only cure or the housewife who realized she could make money without actually touching the plant. With most media outlets in cannabis and outside being run by white men overall, it will be hard to see a real portray[al] of a consumer of color,” he adds.
We have only begun to untangle this complex issue. Seeking to provide a more structured perspective Mazakali’s Sumit Mehta suggested that, while there are a myriad of reasons for the exclusion of black people from the cannabis industry, there are three factors that need to be highlighted: risk, cost and education.
The Risk Factor
As mentioned in this article’s intro, blacks are almost four times more likely to face prison time for cannabis “crimes” than whites are. It should also be noted that 88 percent of these cases often involve simple possession, Mehta points out. Thus, it is no wonder that the resultant perceived relationship between African-Americans and cannabis is fraught with risk.
“The prospect of prison is a continued deterrent to business venture. And, perceived risk is a challenge in the African-American community at 3.73 times the Caucasian average,” Mehta says.
When prompted about this issue, Rashaan Everett, founder of Growing Talent and Good Tree LA, two organizations focused on advancing social justice in the cannabis space, said he believes the risk factor is closely related to cultural issues. “For decades, the War on Drugs has ravished families, and the minority community has seen the rise and fall of men who were involved in all parts of the industry. From our perspective, the industry has never been fair to us,” he voices, albeit seeming somewhat hopeful of what the future holds.
The Cost Factor
Another factor keeping black people out of the cannabis industry is related to startup costs. Keep in mind that the median family wealth (or basically savings, in plain English) for black families is $11,030. This compares to $134,230 for their white counterparts.
“With the average startup costing over $30,000, it is unsurprising that participation is skewed heavily towards those with needed resources,” Mehta explicates.
In agreement with Mehta, Al Harrington says, “At the end of the day, the way that they’re setting up a lot of these regulations, these requirements for licensing … Black people just don’t have access to the resourced needed – unless you’re an NBA player like myself, or something like that … And there’s something wrong with that. The fact that is: black people don’t really have the opportunity to participate. And then, people who do, often end up in jail.
“So, we have to find a way to change the narrative. I’ll use my platform to speak on it.” – Al Harrington
The Education Factor
Only 23 percent of blacks in America have a college degree, trailing national averages by 10 percentage points, and the rate for non-Hispanic white Americans, by 14 points. “The correlation between education and entrepreneurship is undeniable with half of all business owners having obtained a college degree,” Mehta says.
Down this line, Rashaan Everett adds that the educational disadvantage African-Americans face is particularly prominent in the cannabis industry. “Launching a canna-business requires large amounts of liquid capital, which has always been difficult for minorities to earn.” The problem is compounded by the lack of bank financing available to black people, he adds.
But in the case of cannabis business, this is even harder, as small business loans aren’t available to anyone, no matter their ethnicity. This means all cannabis entrepreneurs need to raise funds through private sources, usually friends and family. But, what does this have to do with education?
As Everett explains: “Without the credentials and most importantly networks that universities provide (to raise funds), it’s nearly impossible for uneducated entrepreneurs to meet people capable of investing in their businesses. Additionally, there’s significant scrutiny from landlords and local governments to ensure that only the most qualified and well capitalized people inherit the responsibility of operating a dispensary in their neighborhood. In fact, most applications are ‘merit’ based and evaluated on things like education and work experience.”
What Can We Do About This?
In order to really see a change as the industry becomes bigger, media portrayals are key, King and Everett emphasize. What we need are more stories that portray black cannabis entrepreneurs in a more positive light.
“Entrepreneurial activity is largely driven by government, finance, culture and education,” Mehta adds. “Despite governmental policy loosening, finance, culture and education continue to play a large role in African-American entrepreneurial determent as it relates to the cannabis industry.”
But there is a light at the end of the tunnel: social equity programs.
Some cities like Oakland, Los Angeles, Sacramento and San Francisco, in California, or states like Massachusetts, have established essential precedent by introducing social equity cannabis initiatives. What does this mean?
Social equity programs are aimed at providing minorities, especially people who were jailed for cannabis-related crimes with the education, training, know-how to raise capital, and protection from better-funded competitors, they need in an effort to start a legal cannabis business.
“Social equity is designed to provide additional opportunities to communities disproportionally impacted by the War on Drugs,” Everett explains, in plain English. But programs are not enough on their own; they need to be accompanied by smart legislation.
CEO, Greg Rovner, of Heally, comments that, since systemic racism in an underlying issue in all other industries, “we can’t expect it to be different in cannabis. Even though prohibition in itself created a stronger medium to hold people of color down and it’s obvious that there should be equity, we still need to take action to make it so.”
“We need to continue creating discussion around these issues, but there are easy things we can do that can make a huge impact,” he suggests, bringing up a program he’s working on, which focuses on helping people with cannabis convictions appeal the decision and get an expungement (or clean slate).
By means of conclusion, CEO Wanda James, of Simply Pure, called for less talk and more action. “We continuously hear from all of these leaders in cannabis [who talk about] how black and brown people have been most impacted by the War on Drugs. Yet, these are the same groups who have less support, access to capital or partnerships,” she said, asking why most big companies do not support social equity measures and organizations. “I would like to see government/business partnerships; I would like to see tax credits; I would like to see the ability to purchase the building our businesses exist in with low interest loans from banks; I would like those loans to be based on the business and not on the owner’s credit worthiness; I would like to see the Federal government get out of our way.”