A Quick Guide to Social Equity Cannabis Licensing and Programs

The largest civil rights movement in world history is renewing attention to social equity cannabis programs. The murder of George Floyd in Minneapolis sparked protests against systemic racism and injustice across the globe. Cannabis criminalization due to the War on Drugs disproportionately affects people of color and is a major component of the systemic racism baked into America’s legal system.    

Why Social Equity

According to a 2020 study by ACLU, people of color are arrested for cannabis at four times the rate as white people. In places like Illinois, Iowa, Minnesota, and DC, people of color are 8.5% more likely to be arrested for cannabis than white people. These stats are alarming because white people and black people use cannabis at the same rate. This disparity is one reason why a few states drafted portions of their cannabis bills to include social equity programs. The City of Los Angeles is using social equity “to begin to acknowledge and repair the harm caused by the War on Drugs and the disparate enforcement of cannabis prohibition”

Types of Cannabis Social Equity

Social Equity can take a few different forms. Some states are expunging marijuana arrests and convictions and releasing people jailed for marijuana possession. Few states are also taking a business approach to social equity by providing priority licensing to qualified applicants. There is still much debate about what social equity looks like and how to implement it for real progress.

Benefits of Enrolling into a Social Equity Program

Depending on your municipality, the benefits of a social equity cannabis program can look different. Illinois, Michigan, and Los Angeles have a ratio of social equity licenses to cannabis licenses to keep licensing numbers equal. Illinois requires the original medical licensees to help fund the social equity program for recreational applicants. In addition to priority licensing measures, other benefits social equity licensees receive are low interest business loans, business support, and technical assistance with opening a new business.

Not All Social Equity is Equal

About six cannabis-legal states have social equity written into their cannabis laws. No program is close to being perfect, and there are many complaints regarding their implementation. Illinois and California have been slow to put their programs into action, and those states still feel dominated by white males at the business owner level. Ohio had a racial component to their social equity program which was later deemed unconstitutional. Most states use socioeconomic factors rather than racial factors for their social equity programs. Here are some common qualifications:

Disproportionately Impacted Areas

States identify Disproportionately Impacted Areas (DIA) by zip code or police jurisdiction. DIAs are areas below the poverty line which also see the largest amount of marijuana arrests. Typically, an applicant must prove they live or have lived within a DIA at some point in their life to qualify for a social equity cannabis program. 

Previous Convictions

A previous conviction for a marijuana related offense can also be another factor in determining eligibility in a social equity cannabis program. In Los Angeles, a marijuana conviction can move an applicant into the higher Tier 1. Illinois takes previous convictions to the next level: applicants that have a spouse, child, or parent with a marijuana conviction will also qualify for social equity benefits. 

Income

Proof of income must be provided– usually via a tax form or proof of housing or food assistance. Municipalities define “low income” differently. Typically, it is a percentage below the median income of the municipality and/or below the federal poverty line. San Francisco also takes into account if someone has a previous eviction or foreclosure due to their income.

California

In California, local governments oversee social equity programs. Cities such as San Francisco, Oakland, Los Angeles, and Sacremento have specific qualifications for their social equity programs. A comparison chart is on page 6 of this handout. Recently, Governor Gavin Newsome announced Cannabis Equity Grants which will dedicate an additional $23 million to communities’ social equity programs. Los Angeles has also taken steps to speed up the process for social equity licenses, though any positive progress remains unseen. 

Illinois 

Illinois claims to have the most progressive social equity program in cannabis, but the results are negligible. The law does allow for applicants to demonstrate that 51% or more of their employees qualify for social equity status, rather than the applicant alone. COVID-19 is another issue that also played a role in hampering the state to issue social equity licenses. 

Michigan

Though Michigan has only awarded two social equity licenses as of this writing, they are taking steps to expand and streamline their social equity program. Michigan increased the number of qualified DIAs from 41 to 184 in an effort to drive more applicants. They also reduced licensing fees to those with previous marijuana convictions. 

The Road Ahead

We have seen that while social equity programs are essential to right the wrongs of the past, their implementation is severely lacking. The cannabis industry as a whole must continue to push politicians through advocacy and awareness. The reinvestment into communities destroyed by cannabis prohibition and accountability to social equity must continue forward.