Why Corporate America Should Care About Advancing Cannabis Social Equity

Cannabis legalization and licensing – the big picture

As cannabis legalization unfolds in the U.S. many firms such as Cannabis Advising Partners are taking the forefront in preparing industry leaders for licensing. Licensing is an integral part of standing up a new legal venture.  And licensing is only possible where jurisdictions do not prohibit cannabis. Requirements for licensure depends on government guidelines, but requirements may include: business plans, compliant property, standard operating procedures, community benefits plans etc. Thus far, over ten states have legalized recreational cannabis and over 30 states have legalized medical cannabis. To get ‘get in the business’ business leaders need a ‘license’  to conduct commercial cannabis activity.

Cannabis may indeed be illegal on a federal level, but social equity issues are also seen to be on a federal level too.  The Marijuana Justice Act of 2019 is pushed by several officials, which would strike out criminal records which relate to cannabis.  It would also allow funding to be granted to those communities affected majorly by the War on Drugs. This no doubt signifies tremendous progress, but the adoption of this policy is still not guaranteed. Without the legal authority from the federal level,  social equity continues to remain a problem.

As the industry evolves, there is a lot of formality and compliance requirements that are built into this growing industry. In urban cities and states across the U.S. this has often resulted in companies understanding, strategizing and developing social equity programs.

What is cannabis social equity?

Social equity programs provide an opportunity for affected individuals to secure equitable ownership and to gain employment in the cannabis industry. It also addresses the unbalanced impacts of the Cannabis policies and the War on Drugs in their communities.

The injustices created by decades of failed cannabis policies have resulted in a rapid expansion of social equity programs in the wake of recent cannabis legislation. Social equity aims to correct the injustices faced by individuals affected cannabis offenses which are now legal in states in ties where cannabis prohibition has ended.

Between 2001-2010, over 8 million arrests have been made for cannabis-related crimes. Every year since then, the police continues to make more than half a million arrests for cannabis crimes. Drug war statistics show about 659,700 arrests in 2017 for cannabis alone, which was almost half of the total arrest that year for drug violations.

Why Corporate America should care

This context is vital for business leaders to understand, analyze and engage in action. Corporate America and cannabis industry leaders should place special attention and prioritize social equity programs for many vital reasons. First and foremost, companies should care about correcting injustices from the simple fact of engaging a profiteering activity which at some point was illegal and hurt mostly low-income communities. Secondly, collaborating with a social equity partner may be a requirement for licensing. For example, in Los Angeles you cannot apply for a cannabis retail license unless you partner with a social equity partner and agree to share in 33%-51% of equity in the business. Third, advancing social equity can be a key pillar of a company’s social impact strategy. Fourth, hiring social equity individuals may expand diversity in the company therefore expanding the world view and values of an organization.  Finally, prioritizing social equity may be positively received by the community where the business is located therefore can harness goodwill and support from the community.

Corporate America must show some social responsibility and social equity is a vehicle to accomplish that in the cannabis industry.