• November 28, 2020

New Colorado law aims at boosting minority ownership in the cannabis industry

 New Colorado law aims at boosting minority ownership in the cannabis industry

It’s something everybody in the cannabis industry already knew. But still, the numbers were depressing. 

Denver’s latest report on the state of social equity in the cannabis industry shows that, though it has made some strides, when it comes to minority ownership, the city is falling short. 

According to Denver’s Cannabis Business and Employment Opportunity Study, almost 75 percent of licensed businesses in the city and county are white-owned, with 12.7 percent Hispanic, Latina and Spanish, and black and African American residents with 5.6 percent. “Access to start-up capital was named as one of the biggest barriers to ownership by almost eight out of 10 respondents,” the report says. “Obtaining real estate or a physical location and the complexity of the regulations were each named by more than half of respondents as a barrier.”

Minority ownership problems aren’t confined to Denver, and in the wake of the events of the last couple of months, more attention has been focused on these disparities.

When Colorado’s Amendment 64, the nation’s first initiative to allow adult-use cannabis, was passed in 2012, social equity was not part of the conversation. Over the years, as other states legalized, more people began to realize that black and brown Americans, victims of the drug war, weren’t being allowed access into what is fast becoming a majority white industry.

In Colorado, the state legislature this session passed House Bill 1424, which creates a new definition for social-equity license applicants and would allow them to use an accelerator program being developed to help build their businesses. The goal is to get more minority owners into the industry.

To become eligible for the social-equity program, applicants have to have lived in a designated economically distressed community for at least 15 years between 1980 and 2010, had an arrest or family member arrested or convicted for a cannabis offense, or report income below an amount still to be determined. Another clause allows the governor to expunge the criminal records of anyone arrested for possession of less than two ounces of cannabis, which could prohibit some from receiving an occupational license to work in the cannabis industry. Beyond that, much still needs to be worked out before the accelerator program begins next year, and a state work group has been formed to deal with those issues.

The accelerator program gives new owners a licensed partner to work with so that new entrants can receive critical work space and mentorship. The program is envisioned mostly for cultivation and infused products companies, although it might extend to other businesses, too. 

Art Way, Jr., owner of Equitable Consulting and a longtime state director of the Drug Policy Alliance in Denver, has been involved in cannabis social equity issues for many years. He says that the passage of HB 1424 should help get more black and brown people into the industry, with a caveat: “In conjunction with the accelerator program, it cracks the door open to get in at a lower cost,” he says, adding, “Will current licensees play ball to make that happen?”

Today, every initiative for cannabis legalization now includes social-justice provisions. In Massachusetts, the first state to give minorities priority to obtain licenses in 2017, just began offering those licenses in March, mostly because towns and counties can opt in or out of cannabis businesses within their borders. Commissioner Shaleen Title told Politico, “Some amount of local control is completely appropriate, and certainly every state has some degree of local control,” she said. “But I do think in Massachusetts, the control that municipalities have has gone way beyond what’s appropriate.”

Elsewhere, celebrity efforts to boost minority interests in the cannabis biz continue. C.J. Wallace, the 23-year-old son of the late East Coast rap legend Notorious B.I.G., launched the cannabis company Think BIG last year with an eye to supporting reinvestment in black communities as a core value. Rapper Method Man made supporting black businesses a cornerstone of his cannabis venture. And former NBA star Al Harrington pledged to guide 100 black people through an incubator to market cannabis products through his Viola Brands company. 

So how do we get more minorities into the local industry? Wanda James,co-owner of Simply Pure, the first black-owned dispensary in Denver, says that after eight years, ownership changes are not going to happen overnight. She suggested something akin to a program at Denver International Airport, which has policies to involve minority, disadvantaged and women-owned firms in peripheral airport operations. Perhaps the cannabis industry could adopt similar policies for its expanding delivery services — adult-use delivery begins Jan. 1 — or cannabis-friendly hospitality operations.

The legislation is a small step, but it is a beginning, says Kelly Perez, who has been working for years to help cannabis businesses develop and implement social-responsibility strategies as CEO and co-founder of kindColorado.  “How do we figure out how to get people to participate in the community in general? You do it through relationships. Not many people make real changes without relationships,” she said. 

In the same vein, Sarah Woodson heads Color of Cannabis, a Denver organization that advocates for social-equity cannabis legislation and provides technical business support, mentorship training and partnerships for people and stakeholders negatively impacted by cannabis prohibition. Color of Cannabis is working with other organizations to help implement HB 1424 and creating a 10-week course to help minorities better understand how the accelerator program will work. “Minority people should be preparing now,” she says.

Perez and Courtney Mathis, president and co-founder of kindColorado, have created the Cannabis Impact Fund, designed to raise money for racial justice and a more socially conscious cannabis industry. At least five businesses have pledged 1 percent of their equity, shares, sales and product to the fund, and Whole Grow consultants and Terrapin Care Station have become Founding Members by pledging $10,000 each to the cause.

Cannabis Impact Fund is a serious attempt to overcome obstacles and get more people and organizations involved to help solve equity issues and realize that as an industry, we are all in this together.  All points of view are important, but getting everyone in sync might be the biggest obstacle, Perez admits. “How do we figure out how to get people to think in terms of ‘we,’ not ‘I,’” she says. 

Learn more about kindColorado here 

The Color of Cannabis website is under construction

More about the Cannabis Impact Fund can be found here

Leland Rucker

Leland Rucker

Leland Rucker is a journalist who has been covering the cannabis industry culture since Amendment 64 legalized adult-use in Colorado, for Boulder Weekly, Sensi and now TheNewsStation.com. He covered the popular music industry for years, worked extensively in internet and cable news, and co-authored The Toy Book, a history of OK Boomer playthings. Sweet Lunacy, his documentary film co-written and produced with Don Chapman, is a history of the Boulder music scene from the 1950s through the 1980s. He is author and editor of Dimensional Cannabis, the first pop-up book of marijuana.

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