The Holy Trinity of Social Equity
Cannabis social equity and economic empowerment programs are an effort to bring racial parity to an exceedingly inequitable situation.
People of color have paid a heavy price over the past half century when it comes to cannabis-related crimes, with arrests on average being four times more common for African Americans than Caucasians. When it comes to legalization however, those very communities of color are nowhere to be seen. It’s a white, male-dominated industry and it is communities of wealth, not those decimated by the War on Drugs, that are reaping the rewards. This is where social equity enters the scene.
Social equity, however, is about as fragmented and chaotic as the cannabis industry itself. Although there is hardly uniformity across the emerging markets, I have come to find at least three common denominators – I call these the Holy Trinity of Social Equity.
1. Social Equity Licenses
First and foremost, the cannabis industry is built around licensing. Although every state is structured differently, the hallmark of legalized cannabis hinges upon regulation, and regulation begins with licensing.
When most people think cannabis licensing, they think cultivation (growing) or retail (dispensary). Certainly, these are the bread and butter of the industry-- but they aren't the only types of business opportunities available. There are also manufacturing licenses, testing licenses, delivery licenses and a whole host of other areas within this hyper-regulated market which requires a license to operate. Bottom line: social equity programs address inequality by allocating a certain number or ratio of licenses to social equity applicants in some, or all, of these license categories.
Some of these programs allow for social equity applicants to give a certain percentage of equity away to a non-social equity partner to receive funding or operational expertise. Others allow for a joint venture, but not equity, and others call for an incubator/accelerator model. Each scenario, and each type of license, brings with it a whole host of challenges and complexities. Nonetheless, every social equity program starts with ensuring that people of color be provided a pathway to become owners of cannabis companies, and that starts with licensing.
2. Social Equity Employment
Over and over again in my work within social equity, I meet with African-Americans and Hispanics who use one term to describe what they are looking to achieve within this industry -- generational wealth. They believe that in order to transform their family's situation, they need to not only provide, but build a solid financial foundation upon which their children's children can begin their lives.
The obvious danger with providing an opportunity for an individual license holder to succeed is that only that individual and their family directly reaps the benefits of business ownership. Rewarding one social equity owner a license results in leaving behind the masses of people also looking to create a better life.
This is why most social equity programs require, or at least encourage, a social equity employment component. With this, a certain percentage of employees working for the dispensary, cultivation or delivery company must also fulfill the social equity criteria. This requirement expands the value of social equity programs within its communities and offers a whole host of benefits that employment brings with it. Cannabis, like no other industry, can only be learned at this moment in time through on-the-job training.
There are already more than 200,000 cannabis-related jobs within the United States and the fast-growing industry continues to require skilled employees. These skills, learned this early in the industry, will provide today’s employees upward mobility and future opportunities for generational wealth, just like the social equity license holders.
3. Social Equity Community Betterment
Lastly is the most elusive of them all -- community betterment. For there to be true equality, we cannot simply set the stage for helping individuals succeed. Their communities, as a whole, must also succeed.
Imagine the following scenario. Someone from South Central Los Angeles, ground zero during the War on Drugs, opens a social equity dispensary in Beverly Hills. According to the current regulations, licensees are determined by where the applicant resides, not where their shop is located. In theory, they will make millions while their community will potentially receive nothing. Worse yet, they may very well pick their family up and move them out of that neighborhood as they begin to generate wealth -- leaving behind the community which made this possible.
For this reason, nearly every social equity program has some component of local giveback or community betterment. Even if it is not required (which is a sensitive and complicated topic), it is expected in every community by all the stakeholders. The whole purpose of this concept is to level the playing field and benefit more citizens who may have been adversely affected by the War on Drugs. How that happens and what it looks like is subject to debate. A percentage of profit from legalized cannabis should be used to benefit these communities. This is not a social equity necessity but an industry necessity, with hope that it will inspire other industries to follow lead and create more pathways for economic empowerment for all.
When executed properly, these three common denominators are an amazing force for good that can better the lives of many.