Study: Cannabis Equity Programs Succeed When They Provide 'Wrap-Around' Support

Ensuring access to (1) non-predatory capital, (2) education, and (3) business services are the most needed and effective measures to support the participation of equity applicants in the regulated cannabis industry, according to the “Social Equity Legislation in Cannabis: A National Study of State and Local Approaches” report, published by The Initiative.

The study is accompanied by a database of existing and proposed social equity programs. It offers the first cataloging of equity programs at the state and local levels, the first step in the process of understanding what models have come closest to achieving the goal of opening up businesses owned by individuals adversely affected by the War on Drugs.

The Importance Of Equity

Social equity legislation and programming are vital as the cannabis industry moves closer to legalization. As the first industry to attempt to legislate this type of social change, and with committed corporate and non-profit partners, the cannabis space has the opportunity to lead the way for other sectors, while creating evidence-based best practices to support meaningful and documentable success. 

The team of researchers and drafters at The Initiative compiled a clearinghouse of all state and local social equity legislation as well as a database of the primary social equity organizations focused on business growth and entrepreneurship. This included outreach to state and local governments, private programs and a number of operators who provided direct input and feedback.

The research team is women-and-indigenous-led and the work has been peer-reviewed by numerous diverse industry leaders, professionals and participants. As a result of the research, interviews and review of social equity survey responses, the following issues are clear: 

1. Access to Capital: The need for capital was the most significant issue cited across the board. Every single person engaged put this at the top of their list. Nothing else mattered if there was no funding. 
2. Access to Licenses: A number of people said that social equity legislation did not take into account the real-life situations of applicants, that is to say, those from impacted areas, marginalized communities and victims of the failed War on Drugs. While setting aside a certain number of licenses for applicants is a positive first step, the requirements to apply for and gain access to those licenses should not be so costly or so bureaucratically onerous that it becomes impossible for individuals to ever qualify. 
3. Access to Business Services: This industry is challenging for even the most experienced operators. If the goal of licensing social equity applicants is to create wealth, provide business opportunities and level the playing field there needs to be training, mentorship, ongoing learning opportunities and access to low or no-cost business services such as accounting and legal support. 
4. Standardization and Collaboration: There is currently a patchwork of state and local social equity legislation that has resulted in disparate approaches across the board. State and local governments need to focus on creating legislation based on community needs and real data points that are the most likely to result in the greatest success for the greatest number of people while also recognizing that communities are not monolithic. Similarly, private programs need to work collaboratively when there is a shared mission. Unfortunately, until there is more funding for these groups, many feel that they are competing among themselves for the scarce resources. 
5. Social Equity Legislation Should Not Result in Exploitation: One of the key issues raised was that legislation often resulted in large operators exploiting social equity entrepreneurs, which was enabled by the structure of the legislation as well as the capital and experience requirements. Every piece of social equity legislation needs to be evaluated through this lens, before enactment, to ensure that this is not an unintended result. 
6. Federal Reform: Until we see federal reform of 280E, access to safe banking and bankruptcy protections, at a minimum, it is nearly impossible for all but the most well-funded operators to succeed. The federal government must act. 

Holistic And Ongoing Support

The research made one thing clear: the best equity programs, with the greatest chance of success, are those that provide an ample selection of services including holistic and ongoing support. This concept of “wrap-around” support is not new and should be strategically employed when creating legislation, either state or local.

This will often imply partnering with vetted corporate or non-profit partners to provide the tools and resources, both on the skills and funding side, that the government cannot. 

“This report and accompanying database are a crucial first step in understanding existing needs for social equity applicants as well as how to meet those needs through legislation and programming," Kareem Kenyatta told Benzinga. Kenyatta is co-founder of the Initiative Data Project and co-founder of the Minority/Majority Group, which is dedicated to diversity and inclusion in Illinois. "By looking at current and pending local and state legislation holistically we were able to get the complete picture of what is happening nationally instead of looking at each state or local jurisdiction in isolation.”

Amy Margolis, founder of The Initiative, added to the discussion. “In order to draft this report, a diverse team of authors did extensive research, recording and outreach to programs, participants as well as state and local governments. Upon completion of the first draft we engaged in a peer review and editing process while leaning into stakeholders, applicants and participants from impacted communities," Margolis said. "We approached this process as collecting data and not with a particular conclusion in mind. Because of this methodology, we feel that the report is unbiased and captures all of the necessary information to catalogue what is happening across the country.”

Encuentra nuestro contenido en Español en El Planteo:

• ¿Qué Es el Hemp o Cáñamo? ¿Es lo Mismo que la Marihuana?
• La ‘Molécula de Dios’: Todo sobre la DMT

Photo: Cannaclusive