Buy Back the Block: African American’s Inability to Break into the Marijuana Industry

Elizabeth Morehead, Staff Writer, MPP Candidate, Brief Policy Perspectives

Marijuana won big in the 2016 elections. Measures legalizing recreational and medical use of marijuana were approved in eight new states. 25 states plus Washington, DC currently have laws approving the use of marijuana in some form. Legalization brings growth to the financial and operational aspects of the marijuana industry. As this industry continues to legally grow,  one group of people remains shut out from opportunities: African Americans. African Americans are underrepresented in the legal side of this industry. Of the total 3200 registered dispensaries, fewer than 36 are owned by black entrepreneurs.  African Americans are also disproportionately over-incarcerated for drug-related arrests making up 31% of those incarcerated for drugs. An industry that has operated long-term on the black market  is now denying opportunity to help build the foundation of a legalized industry to the very people who have shaped it. It is time for African Americans to “buy back the block” and become educated on how to take a piece of the marijuana pie.

Why Are African Americans Disproportionately Represented?

The root of this problem lies in the absence of experience-based qualifications required to enter the market. Experience does not mean much and prior criminal history linked to marijuana is a barrier to entering  the newly legalized industry. The industry is very new, therefore most of the people trying to enter do not have much legal experience. Having a past arrest for any marijuana-related charges keeps potential entrepreneurs from entering the industry and it is a bigger problem for African Americans. States have a variety of laws. For example, some states block those with charges completely. In others, like Washington State, those convicted of a felony can not obtain their marijuana license, and those convicted of a marijuana offense can only petition to get licensure. In Colorado it is possible to seek eligibility for a license, if what an offender was originally convicted of is no longer a crime. That does not by any means guarantee licensure though. Massachusetts and Maine are more forgiving in their licensing requirements and disregard charges that don’t  involve distributing to a minor. California’s laws are the most progressive. The state recently allowed those with marijuana convictions to have their record wiped clean, so that non-violent offenders  are eligible to operate dispensaries.

Blacks and Whites use marijuana at about the same rate, but blacks are four times more likely to be arrested for marijuana possession. Black people make up 13% of the US population, but comprise 31% of all drug arrests and 40% of state and federal prison incarcerations  for drug law violations. In Iowa, Illinois, DC, and Minnesota, all  of which have marijuana legalization laws, blacks are 7.5-8 times more likely to be arrested for possessing marijuana – resulting in a permanent criminal record. Any marijuana-related charge can prevent someone from entering the industry. Out of all drug busts, half are for marijuana. Most of these arrests are of people who possessed small amounts. Historically, marijuana possession and use has been criminally pursued, but with the new growing acceptance, this past approach is hurting those who wish to be involved in the new legal market.

Getting a Piece of the Marijuana Pie

Although many African Americans are prevented from legally entering the industry, that hasn’t  stopped the industry from hiring and growing. The question is how those interested and currently eligible can participate in the market. The application process is the first step. It takes money to get a government license and experience to deal with the government regulators. A lack of financing is one of the major ways  African Americans are being blocked out of the industry. High licensing fees, the need for unusual loans, and significant start up costs can make it  tough on those trying to enter the market. Research has shown that it is much more difficult for African American’s to get approved for credit or loans and this often proves to be a barrier in the small business world for black owned businesses. If an individual has a plan, but not the money, it might be possible to turn to an  angel investor for assistance. Angel investors invest in startup companies in exchange for equity or ownership interest, but these investments are very risky and only one in ten startups are successful going this route. There are also venture capitalist groups like Arc View who are interested in specifically investing in cannabis endeavors. Another problem is licensing fees. Some states require individuals to have liquid non-working assets (extra money readily available) of up to $1 million available in case the state wants to make a claim against an individual for violating the marijuana laws. Essentially, it takes money to make money in this industry and considering the wage gap between blacks and whites is at an all time high this is a huge disadvantage.

In addition to money, proximity to legal markets is a major factor for entering the industry. Many states that have voted for legalization have a lower population of African Americans than the national average. Individuals in states that have not legalized marijuana can reach out to their state representative to advocate for  and work towards changing laws. Investing is another way to get involved if state legality is a problem. There are stocks, real-estate for cannabis, and agricultural equipment that can be purchased.

The Policy World at Work

A side not focused on in the media is the behind the scenes work think tanks, non profits, and state legislatures are doing concerning the marijuana industry. Policy work may often be kept at levels of low visibility, especially if raising concerns means the Federal Government gets involved. Marijuana legalization is handled by the states and the federal government has yet to get involved in regulating marijuana. In general, Democrats favor legalizing marijuana and Republicans oppose it, but the partisan margins are minimal and there is potential for for additional states to move towards legalization. There are many organizations working to legalize marijuana for both recreational and medical purposes. The Marijuana Policy Project (MPP) is working to change laws in favor of recreational use, employee people, and monitor how the industry will be affected by the Trump administration. When it comes to African Americans benefitting from  an industry they helped build, MPP has been a good resource for that community. They have overviews of bills and laws being passed and they have major resources describing what is happening with decriminalization.  Decriminalization is a major step necessary for African Americans get their piece of the pie. Many states have passed laws to stop jailing their residents for small amounts of marijuana infractions and advocating for more states to do the same will be a major success for the African American community.

As the marijuana industry continues to grow and expand, it is important for African Americans to stay informed, involved, and advocate for an industry that includes people of color. There are many people hard at work shaping the industry and it is only fair for African Americans to economically participate. It is time for African Americans to buy back the block and take some control of an industry they helped build.


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