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The legal cannabis industry is exploding, but overwhelmingly run by white owners
Following is a transcript of the video.
Alana Yzola: In 2018, over 600,000 people in the United States were charged for possessing marijuana. Not for running some massive weed drug cartel. For simply having it on them. And despite making up only 31% of the population, blacks and Latinos accounted for nearly half of all weed arrests.
At the same time, the US cannabis industry was and still is exploding. And between 80% to 90% of the industry is run by white owners. So, not only are blacks and Latinos more likely to get in trouble for selling and having weed, now that it’s becoming legal, they’re nearly shut out of the industry. Somewhere along the line, legal weed became a rich white business.
So, how did this happen?
Cannabis’ history of legality is deep-rooted in racism. Back in the 1800s, the plant was used for paper, textiles, and medicine. But when Mexican migrants sought refuge in the United States in the early 1900s, they brought with them the practice of smoking the plant, which they called marijuana. A xenophobic campaign followed suit. The Great Depression’s widespread unemployment heightened fears of Mexican immigrants, and poor research linked cannabis with violence and social deviance.
In 1936, a film titled “Reefer Madness” depicted the drug as the cause of sexual assault, murder, and basically complete teenage destruction.
[Clip from “Reefer Madness”]: Marijuana, the burning weed with its roots in hell.
Yzola: In 1937, Federal Bureau of Narcotics commissioner Harry Anslinger brought forth the Marihuana Tax Act. Yeah, he spelled it with an H. He used unsupported claims to blame weed for the cause of social destruction and linked it with blacks and Latinos. The 1951 Boggs Act created mandatory sentencing for drug-related offenses. Congress repealed them in 1970, but Presidents Nixon and Reagan reintroduced them in new ways in the later ’70s and ’80s. During those decades, minority communities were hit extra hard by over-policing. One of Nixon’s top advisers admitted that the war on drugs was a tactic to bring down “the antiwar left and black people.” And heavy policing in minority communities is still rampant.
Queen Adesuyi: We know that the case with Philando Castile, part of the justification for the officer claiming fear for his life was because the car smelled like marijuana. How can we in the same breath bring forth an industry that’s making extremely wealthy white men more wealthy without considering how we can repair those harms?
Yzola: Making matters worse, people who’ve gone to prison for weed are barred from selling it. Even legally. That’s a huge problem for someone like Edward Forchion.
Edward Forchion: They’re making it legal for corporations. Guys like me, who went to prison for selling weed, are watching as rich white guys are now making millions doing the exact same thing I went to prison for.
Yzola: Forchion has been a weed enthusiast for decades, seeing its potential long before medical marijuana became legal in New Jersey. He’s opened a weed-themed restaurant with a smoke shop next door. He also ran for the 2019 New Jersey State Assembly under his self-made Legalize Marijuana Party. He got 4.2% of the vote. But he’s been arrested for weed-related offenses in the past.
Forchion: On November 24, 1997, I was arrested. It was a first-degree charge for possession with intent to distribute and conspiracy. Narrator: He took a plea deal, but he was facing 20 years. Forchion: In 2010, I was convicted of simple possession. And, normally, no one goes to prison for simple possession, but I got nine months.
Yzola: Now that medical weed is legal in his state, he’s completely shut out of the business.
Forchion: So, Debbie Madaio’s my partner. Debbie, she has no felonies, I have a felony. Debbie could probably go through the process to get ownership, but just my name, just the fact that I would be on the paperwork, would invalidate her application. Just the fact that I’m a felon, I can’t be on the paperwork.
Yzola: In other words, if his name can’t be on the dispensary paperwork, he wouldn’t have official ownership. In protest, Forchion is selling cannabis illegally out of his adjacent smoke shop, which is right across the street from City Hall. He’s using the hashtag #SellingWeedLikeImWhite, practically daring the city to arrest him.
Forchion: You know, you can’t change laws or move the line without stepping over the line. I’m a big believer in civil disobedience. I welcome whatever challenge the state comes at me with.
Yzola: But what about states that are more weed-friendly, like Colorado? They legalized recreational marijuana in 2014, and by 2017, they passed a law that made it possible for felons with marijuana convictions to get their records cleared. That’s great, right? Turns out getting the record scrubbed clean isn’t as simple as it seems, and that’s something dispensary owner Wanda James knows all about.
Wanda James: For us, it became more of a political statement. There have been members of my family that have been arrested. My brother did 10 years because of a small amount of cannabis, 4 ounces, and for that he ended up picking cotton every day for four years in Texas. This was shocking to me when I learned this. While we’ve always known it was illegal, I’d never known that it was punitive. In other words, everybody that I’ve ever known that’s been caught here in Colorado, i.e. white folks, it’s been mostly, “Give us that, we’re gonna throw it away,” you know, “Don’t let me catch you smoking pot anymore.” You know, it’s always been a warning.
Yzola: The shock of her brother’s arrest and sentencing inspired her not only to open a dispensary, but to help other minorities trying to break into the business. Out of the over 2,000 licensed dispensaries in Colorado, James estimates that less than 20 are owned by blacks and Latinos. And, as the first African American to own a dispensary in the state, James says one of the biggest roadblocks is getting weed convictions cleared.
In 2017, Colorado passed a bill that could seal records of misdemeanor cannabis use and possession convictions. But sealing the records wouldn’t completely erase them. It would just make them unavailable to the public. In other words, a potential employer could see that you were convicted of a misdemeanor but wouldn’t know why. Colorado’s Turn Over a New Leaf Program allows those with past convictions to apply to have their records vacated, which would dismiss the charges and seal the record.
But Colorado’s processes are in no way automatic. Out of the 17,000 people eligible, only 71 people have cleared their records as of October 2019. The process requires digging into all of your records, which can be difficult to track down. Not to mention, any cases that don’t specifically consist of marijuana charges would be ineligible. So, if your charge is for drug paraphernalia possession and you can’t find the record that says “marijuana” paraphernalia possession, the record itself would be unclear and you could have a hard time getting the record erased.
Adesuyi: The biggest issues faced by people of color in the industry is that when people are rolling back prohibition, there hasn’t been a focus on censoring of communities most impacted.
James: All of those people that want to have their records expunged or sealed have to go through a process to do so. You have to hire an attorney; you have to meet with the AG of the state that you are in to see if they will seal or expunge your record.
Yzola: Legal fees are just one of the many costs associated with starting a legal cannabis business. For communities that haven’t benefited from generational wealth and support, securing the necessary capital is difficult. Throughout American history, minority communities have been heavily policed, denied equal pay and job opportunities, forced into neighborhoods through redlining, and then forced out of those same neighborhoods through gentrification.
Amber Littlejohn: What we see as the biggest stumbling block is actually access to capital and necessary to fund the exorbitant costs of participating in this industry.
Yzola: Since weed is still illegal on the federal level, prospective dispensary owners can’t get a bank loan to open a business. Meanwhile, big hedge funds have been investing in weed since before it was even officially legal. And this has set up the biggest players in the game for success.
Take MedMen, for instance. MedMen is a high-end dispensary operating mainly out of California, where recreational cannabis is legal. It prides itself on basically being the Apple store of weed. Attentive staff, sleek paraphernalia, glass display cases, and a superhigh price tag. MedMen was founded back in 2010, eight years before California allowed licensed shops to sell recreational weed.
Before the company went public, it made $110 million in private placement investments. When profits dipped because of high taxes and dispensary restrictions, it was able to secure a $100 million loan from a cannabis-focused investment company.
Today, the $1.6 billion company is continuing to expand at rates faster than the legal system. Out of the six states it has offices in, only three of those states have made recreational cannabis legal.
If we look at small minority businesses as a whole, they’re statistically less likely to receive investments. Out of all venture-capital-backed businesses in the US, only 1% were black-owned and 1.8% were Latino owned. This makes it hard for owners to hire more employees, expand, or deal with unexpected profit losses. For the weed industry, charges pile up long before you’re even approved for a license. By the time your application goes through, you’re looking at costs within the millions.
Littlejohn: Starting simply from the point of application, we have some states where the application fees themselves, for a single facility, are tens of thousands of dollars. Now, that doesn’t include the additional capitalization requirements that many states have that can enter into hundreds of thousands of dollars per location and per license.
James: When you’re giving out less than 60 licenses in a state or five licenses in a state, it’s going to cost you anywhere between $50,000 and $250,000 to have a technical writer write your application for you.
Yzola: While the application is processing, you’re also required to either own or rent a commercial property. This means, for the time it takes for you to get approved, you’re paying rent or mortgage on a space you can’t even legally use for profit yet.
Littlejohn: I talked to a woman who lost her home because she was trying to finance her cannabis business and had to wait so long.
Yzola: Current owners, activists, and nonprofits are working to eliminate these roadblocks. But it all starts with people in communities of color at the forefront of policy change.
James: The reason why it’s extremely important that we have black and brown ownership is because this industry was built on our back. So when you have 800,000 arrests a year and 85% of them were black and brown and we were targeted by police departments to work in privatized prison systems as slave labor, we are owed these licenses. We are owed the opportunity to be owners in this industry. And states need to make that so.
EDITOR’S NOTE: This video was originally published in December 2019.
Blacks and Latinos made up nearly half of all weed arrests in 2018 in the US. At the same time, the mostly white legal cannabis industry is growing.