Overpoliced, Underrepresented: Racial Inequality and Cannabis Capitalism

By Katie Weiner

Marijuana legalization in states like California, Colorado, and Washington represented more than a shift in American drug culture: For the black and brown communities that have been targeted and stigmatized, and particularly for the millions of people of color who have gone to jail on marijuana charges, it heralded the beginning of the end of America’s disastrous, racist War on Drugs. But an emerging cannabis market is abandoning the values of racial justice that in large part motivated those initial calls for legalization. White entrepreneurs are crowding out black and brown ones, with legislation in many parts of the country failing to provide for an inclusive, representative legal cannabis industry.

With more than 80 percent of legal cannabis companies under white ownership, black and brown Americans are struggling to break in. And while the exclusion and underrepresentation of people of color are certainly characteristic of the American economy more broadly, marijuana’s historical significance makes this inequality particularly troublesome.

How Weed Became White
For Steve Hawkins, executive director of the Marijuana Policy Project, fighting for representation in the cannabis industry is about both recognizing the injustices of the past and investing in a better future. Policies aimed at encouraging black participation in cannabis companies “should be seen as a form of restitution, and a recognition that poor communities of color bore the terrible brunt of this war that cut people’s lives short, limited their opportunities, limited their educational and career advancement, all of that,” he explained in an interview with the HPR. And even small gains in representation, he believes, can trigger a sort of “multiplier effect, where when a business is run by people of color, they tend to hire other people of color, and they tend to bank or do business with other people of color.”

The opposite, however, is also true — and that is what is happening now. White entrepreneurs in this industry typically work with white venture capitalists and cater to white audiences, creating few entry points for people of color. Federal restrictions compound this dynamic: “Because of the federal illegality, there are no bank loans in this area, there’s no small business administration coming in, there’s no commercial banking, and so its left to venture capitalists and private asset managers, very few of whom are people of color,” Hawkins said. Federal restrictions and local regulations also make cannabis a relatively complicated industry to navigate, raising barriers to entry for anyone without significant training or legal expertise.

This problem both reflects and perpetuates a fundamental dissonance in how black and white drug use are perceived in American society. “When people of color use cannabis, we’re seen as using it as an intoxicant, whereas when white people use it it’s perceived as a wellness tool, which is such a hypocrisy,” explained Amber Senter, an advocate for a more racially inclusive cannabis industry, in an interview with the HPR. This hypocrisy is what allows white cannabis users like the “marijuana moms” to go viral for the very behavior that is stigmatized and even criminalized for their black counterparts.

In large part, Hawkins blames the police for this incongruity: “The Madison police know just as many drugs are being dealt on the campus of the University of Wisconsin as in the downtown area, but are they going to go throw the kid whose dad is a local banker in jail, or are you just gonna round up the black kids downtown?” Unequal application of the law creates a culture that vilifies black drug use while embracing white drug use, which means white cannabis entrepreneurs may face less stigmatization and mistrust when starting legal businesses.

One legacy of this unequal policing, Hawkins said, is that the black Americans who have accumulated the independent wealth that would be needed to finance a cannabis startup are reluctant to do so. “Anybody who understands how the disparity has worked with respect to how the War on Drugs was waged is gonna be a little bit gun-shy about exposing the assets that they’ve spent their lives accumulating in an area where there could be discretion as to who gets targeted — and that’s not an irrational way to see it.”

The Policy Piece
Perhaps the most obvious priority here is designing racially inclusive cannabis policy. Cities like Oakland, San Francisco, and Los Angeles have developed locally tailored equity programs aimed at carving out space for black and brown participation in the industry, while places like Los Angeles and Massachusetts prioritize license requests from marginalized applicants. In Oakland, equity applicants are eligible for special trainings, workshops, and consultations aimed at supporting entrepreneurs during the difficult early phases of creating a startup. A popular proposal in Connecticut would give minority applicants a three-month head start on their cannabis company license applications.

For Senter, what matters most in designing these programs is flexibility — the cities “are moving in uncharted territory, and the most important thing is that they’re pivoting along the way and they’re making changes to the programs when they see something’s not working.”

But supporting entrepreneurs of color, while crucial, is only one small piece in a much larger toolkit of policies available to cities and states interested in using the cannabis industry to begin repairing racial inequalities. While the conversation has so far typically focused on ownership of these new companies, policies aimed at improving representation in rank-and-file cannabis jobs have the potential to impact millions more people than those that focus only on the executives.

The high taxes imposed on cannabis products, furthermore, provide states with large sums of money that they can then commit to reinvesting in communities disproportionately impacted by the War on Drugs. This money can fund programs specifically targeted at increasing black and brown participation in the cannabis industry, particularly in the areas of workforce development and mentorship. But it can also ensure that even the members of these communities who do not use or work with cannabis receive a form of restitution for a history of over-policing and discrimination.

By using tax revenue to fund grants for community service organizations or more traditional workforce trainings, legislators can ensure that the benefits of legalization go to entrepreneurs of color as well as their broader communities.

A Joint Endeavor
Private investors, too, have both the opportunity and the responsibility to make a difference here.

White entrepreneurs can and should listen to these frustrations and commit themselves to fostering greater diversity and inclusion within their own companies. Particularly in places where government responses to the overwhelming whiteness of the cannabis industry have been insufficient, the burden falls on those already working in this field to lead it in a new direction. “How do we challenge every company to have a chief diversity officer, and just make this part and parcel of their movement forward?” Hawkins asked. “Because even if it’s a majority-owned company, that majority-owned company should not be operating in Chicago with 200 people on staff and have only one percent who are people of color — that’s ridiculous.” By demanding better policies from the legislature and better results from the industry, advocates can increase their impact and remind white entrepreneurs of the responsibility that accompanies working in this space.

For Hawkins, private philanthropists have thus far ignored opportunities to get involved in reshaping the cannabis industry: “This is an excellent area for foundations that are willing to step up to say, ‘We’re going to create a social impact investing fund in this space’ … That’s one thing I’d like to see that is just not happening and that would hugely consequential.” Socially conscious investing firms and philanthropies can supplement well-intentioned policies to maximize impact and support the entrepreneurs trying to diversify this market.

But while these wealthy philanthropists have unique resources and access, they are not the only people with the power to make a difference. In 2015, Senter, along with Sunshine Lencho and Nina Parks, watched these inequities emerging in Oakland and decided to found Supernova, an organization focused on providing skills and networks, as well as a sense of community, to women of color entering the cannabis industry. Their organization’s mission goes beyond policy advocacy; through panels, workshops, and social events, Supernova hopes to offer women of color in cannabis a space to “discuss the pain points, triumphs, pitfalls, and experiences of operating in the regulated cannabis industry,” Senter explained.

A Rigged System
Unfortunately, in places without advocates like Senter and Hawkins, the whiteness of this emerging market has often gone unchallenged. Racial justice “has not been a major topic at the national level, or in most of the states that have legalized cannabis,” according to Rob MacCoun, a professor at Stanford Law School whose work focuses on social psychology and drug policy. “An issue like this needs ‘issue entrepreneurs’” — people like Senter, Lencho, and Parks — “to frame the problem and call attention to it, and that’s what activists did during the California rollout,” he explained in an interview with the HPR.

Indeed, policies aimed at creating a legitimate and well-regulated market are often counterproductive.

Every state but California currently prohibits companies from offering cannabis delivery, the lowest-barrier service in the industry. More disturbing are statutes in place across the country which bar formerly incarcerated individuals from owning or even working at legal cannabis companies. Only Massachusetts has flipped the script, giving advantages to those who were incarcerated during the War on Drugs instead of locking them out.

These exclusionary policies are both morally troubling and pragmatically counterproductive.

Given pervasive racial discrepancies in the enforcement of drug laws, those affected by these restrictions are mostly people of color. The injustice of allowing white entrepreneurs to profit off of cannabis while former convicts of color are left out is particularly galling given that the plant is still criminalized at the federal level. White entrepreneurs are still breaking laws by working in this industry, but their entrepreneurship is embraced while their black counterparts are labeled as criminals and excluded from the market.

The ongoing legal ambiguity of cannabis, as well as the legacies of racist drug laws, ensure that any legislation that moralizes past convictions simply produces more racial inequality. And these policies are not only unjust; according to Hawkins, “If you deny [formerly convicted people of color] an opportunity, then it becomes harder to kill off the illicit market, because people will continue to do what they’ve been doing if they’re locked out and they’re still trying to make a living.”

As more states begin to decriminalize and legalize cannabis, and the proposal gains traction at the federal level, states that have already taken the leap can provide invaluable lessons about cannabis capitalism and racial equality. Places like California and Massachusetts offer a model, albeit an imperfect one, for centering racial justice in the creation of a legal cannabis market. And even those places that have legalized marijuana must continue taking steps to counteract the uneven application of existing regulations.

According to MacCoun, “while cannabis legalization has reduced the number of people arrested and incarcerated for cannabis offenses, among those who still get arrested, most states are still finding that people of color are overrepresented. So legalization is only partially effective at solving problems of racial injustice.” For Hawkins, legalization is the first step in a longer process of criminal justice reform: “Police are still going to harass brown and black people on the streets, but [legalization] will hopefully force American policing to change in some ways and remove this arsenal within the police’s discretion.”

But while that criminal justice reform is happening, politicians and activists cannot turn a blind eye to inequalities within the legal market. While this regulated market is still young, America has the chance to acknowledge historical injustices and create a vibrant, inclusive cannabis industry before these private-sector racial inequalities become intractably entrenched.