The Minority Cannabis Business Association (MCBA) is set to release its National Cannabis Equity Report and National Cannabis Equity Map Feb. 10 to present data it has collected on social equity programs across the country, and MCBA Executive Director Amber Littlejohn said the data paints a bleak picture of social equity in the industry.
“When you start to look beyond these social equity provisions, you start to see how these merit-based and lottery selection systems have the inequities and the barriers to entry baked into them in more subtle and quiet ways,” she told Cannabis Business Times. “We’re really hoping that this is an opportunity for reflection for the industry as a whole on how they can align their values with their actions.”
The National Cannabis Equity Report and National Cannabis Equity Map, made possible with support from the ArcView Group and in association with Weedmaps and Parallel, provide critical data from social equity programs, as well as other policies that impact equity in state and municipal medical and adult-use markets.
Littlejohn said the project was initially inspired by the questions she has received in the two years since she began leading MCBA.
“One of the most frequent questions that I’ve been getting over the past two years since I’ve been with MCBA—almost three years now—is how many social equity programs are there and what do they do?” she said. “The project itself originally started with us wanting to take a look at all of the social equity programs and understand which programs did what and be able to provide an overview so people could see what was out there and what was being done.”
When the organization began conducting the research, however, it quickly realized that the end result was not going to be the tool that MCBA originally envisioned.
“As we actually started to do the research, we realized that if we were only looking at social equity programs and the provisions that are within social equity programs, this tool wasn’t going to be very useful as a tool for change because, as we all know, none of the programs are working to actually create equity,” Littlejohn said. “There are elements of programs that work, but none of them holistically are working to actually create an equitable and sustainable industry.”
The MCBA team then decided to analyze 40 different data points, looking beyond social equity programs and into factors like license counts, opt-ins, premises requirements, and how the expansion of a medical cannabis program into an adult-use market impacts equity in the industry.
David Abernathy, principal at ArcView, sits on MCBA’s board of directors and connected the two organizations. ArcView then agreed to help organize and present the data, while Weedmaps stepped in to assist with a digital component to the research.
“Along with the report, we have a social equity map, where you will be able to click on a state and then look at the provisions that exist within that state,” Littlejohn said.
MCBA has identified seven initial conclusions from the research that it is asking advocates and lawmakers to consider when reexamining state social equity programs:
- The number and efficacy of state social equity programs does not reflect the expressed
commitment to achieving equity through cannabis.
- The use of non-race criteria in the social equity qualifications and definitions has not
yielded diverse cannabis markets.
- Despite evidence to support cited concerns, many states continue to utilize state-level
- Among the few social equity programs that provide funding, fewer still provide access to
timely funding for social equity applicants and licensees.
- Requirements to secure premises prior to issuance of a license or conditional license
continue to present a significant barrier to entry for social equity operators.
- Bans on ownership for individuals with past cannabis convictions remains prevalent in
state-legal cannabis programs.
- Inequities in existing medical markets create inequities in adult use markets.
“I think something that we have overlooked is the way that inequities in the medical market are impacting inequities in the adult-use market,” Littlejohn said. “For instance, the inability for people with so many convictions to own or operate or even work in medical facilities—that carries over. And then on top of that, often, medical operators are getting early access to the market ahead of everyone else, and then we are seeing a pattern of lawsuits that delay the entrance of everyone else and prolong first-mover advantage for the existing medical operators. We are seeing things like exemptions to opt-ins and opt-outs and land use so that they’re essentially creating and facilitating oligopolies because the only people allowed to operate in the adult-use market are entities that were previously existing in the medical market.”
Another example, she said, is bans on vertical integration that exempt medical cannabis businesses.
“These are things that, when you look at it cumulatively, you go, ‘Wow, no wonder it’s a struggle for everyone else,’” Littlejohn said. “The interplay between inequities in the medical market and how that’s affecting the adult-use market was a huge piece [of the report].”
Another surprising area of the data, she said, was that, at their core, not many social equity programs provide licensing priority and funding for social equity applicants and licensees to help them actually enter the marketplace.
“None of the programs that have rolled out have provided funding at the time of the rollout of the adult-use program,” Littlejohn said. “That means that any support for social equity operators comes after everybody else has a chance to enter the market. Even in California, where the funding isn’t dependent on adult-use revenues, that didn’t actually kick in until after the adult-use market had started already. And then, [in other states], the funds are dependent on either providing early access to somebody else or directly on taxes and other fees. So, we are really, seriously lacking in support for operators and entrepreneurs actually looking to get into the industry.”
So, what—if anything—is working well in social equity programs, based on MCBA’s research?
Littlejohn said markets with no state-level license caps tend to offer more opportunities to social equity applicants, as do those with compliance-based application processes that allow anyone who meets the requirements to secure a license.
Merit-based, lottery-based, and hybrid merit- and lottery-based licensing systems in limited markets “are a recipe for exclusion,” she said. "When you start to look beyond these social equity provisions, you start to see how these merit-based and lottery selection systems have the inequities and the barriers to entry baked into them in more subtle and quiet ways.”
Going forward, Littlejohn hopes the industry can use the report as a research and advocacy tool.
“It is something that journalists can use to answer questions and to do their own research to figure out where they should be looking to find answers to questions for advocates to be able to look at what is taking place in different states and really how we can make it better,” she said.
Littlejohn also hopes that others can take the underlying data in the report and use it to build more tools that can help shape policy.
MCBA is in the process of finalizing its updated model state policy to outline what it sees as the ideal solutions for states looking toward cannabis policy reform.
“Over the last couple of years, we’ve had kind of a re-commitment to ensuring that social justice and equity are part of the cannabis industry,” Littlejohn said. “Unfortunately, what we’re seeing is that the stated views and ideas and convictions do not align with the policies being put forth on the state level. If you are advocating for a highly limited market that creates an oligopoly, you are not advocating for diversity and inclusion in the cannabis industry. So, the two are incongruent. We really are going to be calling on industry and calling on our advocates and partners to really hold industry accountable to make sure that what we are saying are our values are actually reflected in the policies that we’re supporting on the state level."