Settling the Score: New York’s Social Equity Plan is a Model for Legalization

View of New York, home to the “gold standard” of social equity in cannabis. Photo credit: oneinchpuchphotos.

The cannabis industry is not a diverse place. For years, caucasin men have controlled the legal market while largely discriminating against Black Americans, Latinos, and women. New York believes it can change that. With their new social equity cannabis campaign, the Empire State hopes to give women and minorities an equal footing in the cannabis market.

Where is the Diversity?

According to MJBizDaily 2021 Women and Minorities in the Cannabis Industry Report, women only own 19.9% of cannabis businesses. In states such as Massachusetts and Ohio, women only participate in 5% and 10.1% of the cannabis industry respectively.

Forbes reports that 38.5% of the women who are employed in cannabis question whether or not they are fit for the industry.

Furthermore, in states such as Colorado — the first state in the U.S. to welcome adult-use cannabis — only 2.7% of Colorado’s cannabis industry is owned by Black Americans. In Michigan and Nevada, the numbers jump up to 3.8% and 5.1% respectively, reports MJBizDaily. 

As the figures above illustrate, there is a serious lack of diversity in this industry.

The War on Minorities 

Black and Brown Americans have suffered the most from the country’s War on Drugs. 

For example, a 2018 study suggests that Black Americans are four times more likely to be arrested for cannabis-related crimes then white Americans. 

Alarmingly, in 2017, U.S. News found that officials gave 77% of federal cannabis sentences to U.S. Hispanics, despite making up less than 20% of the U.S. population.

Research conducted by the Drug Policy Alliance suggests that Hispanics and African Americans are more likely to have criminal records for the use of cannabis, even though white Americans self-report similar drug use rates.

In New York, Black citizens are almost three times more likely to get arrested for cannabis, a ACLU study found. 

However, a more recent 2020 NYPD study reports that 35.6% of cannabis arrests in New York were Latinos; 57% of arrests were Black citizens. “The city’s population is only about 24 percent Black and 29 percent Hispanic,” reports PIX 11 News.

As cannabis becomes a multi-billion dollar industry, official must work to compensate these communities for the generational trauma caused by cannabis criminalization. Private organizations such as the National Hispanic Cannabis Council have already begun taking steps towards cultural re-compensation. New York is following suit and plans to give these communities free access into this market with their social equity program. 

The Rotten Roots of Cannabis

At the heart of cannabis criminalization is prejudice and racism. Harry Ansliger, the Commissioner of the Federal Bureau of Narcotics in the 1930s, used the racism and xenophobia white Americans felt towards the Black and Latino communities and turned it towards cannabis. 

Through false propaganda, Anslinger promoted the idea that cannabis turned Latinos violent and deranged. He rebranded cannabis as “marihuana” in the U.S. hoping its Spanish name would cause terror in the American population. It did. 

Anslinger also heavily chastised the African American community. In fact, he claimed that cannabis made African Americans forget their place in society and pushed the idea that jazz was the devil’s music.

In 1937, American officials passed the Marihuana Taxation Act. Within one year, Black Americans were three times more likely to be arrested for violating cannabis drug laws. Officials were nearly nine times more likely to arrest Mexicans for the same charge, Business Insider articles reports. 

By 1970 cannabis was a schedule I drug and criminalized across the 50 states. Then President Richard Nixon had officially proclaimed the War on Drugs on the Black and Latino community.  

In 2016 in an interview with Harper’s Magazine, John Ehrlichman, Nixon’s aide said,  “we knew we couldn’t make it illegal to be either against the [Vietnam] war or black, but by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities.”

Today the story remains the same. However, the decriminalization of cannabis across the country is an attempt at lowering the number of cannabis-related arrests. Despite this, studies show that racial disparities in arrests have barely changed.  

As Jeff Hudak, author of Marijuana: A Short History, puts it, “decriminalization is a step in the right direction, but such policies only help fix the present and future. Most of those reforms do little to fix the past.”

This is where social equity must come in. 

Legislation in New York: MRTA

Former Gov. Andrew Cuomo signed the Marijuana Regulation and Taxation Act (MRTA) on March 31st, 2021. The legislation legalizes adult-cannabis use in the state of New York, while also creating the Office of Cannabis Management (OCM), which the Cannabis Control Board (CCB) will govern. The OCM will be in charge of issuing licensing and developing regulations detailing how and when businesses can participate in the industry. 

New York state is home to 19.45 million people. Fifty-three percent of the population are women, 15.66% are African American, and 8.42% are Asian. So when New York state government officials set out to legalize cannabis, they knew they had to balance the scales of the growing market. MRTA does just that. 

“[Our intent is to] generate significant new revenue, and make substantial investments in communities and people most impacted by cannabis criminalization to address the collateral consequences of such criminalization,” reads MRTA’s legislative intent statement.  

The state’s legislature found that, “existing laws have been ineffective in reducing marijuana use and have instead resulted in devastating collateral consequences including mass incarceration and other complex generational trauma. […] Existing marijuana laws have disproportionately impacted African-American and Latinx communities.” 

New York is Doing it Differently

In other states where adult-use cannabis is legal, cannabis retail licenses are scarce. As of August 2021, the only state to issue more than 900 licenses is Oklahoma, according to Canix. 

The New York Law Journal suggests that those organizations that have been given licenses are mostly established multistate operators, causing the cannabis market to turn into a monopoly. 

New York aims to change that. The state plans to grant over 1,000 cannabis licenses to ensure that officials grant 50% of those licenses to socially and economically disadvantaged groups. 

MRTA defines a social equity applicant as a person of color, a woman, a disabled veteran, cannabis farmers in financial distress and persons from communities that have been immensely impacted by the criminalization of cannabis. 

Additionally, MRTA also prohibits vertical integration in the cannabis market. This means that officials will put barriers in place to restrict operators from controlling the supply chain.   

While officials have arrested over 110,000 residents for possession of cannabis since the start 2013, New York is favoring those applicants with cannabis-related offenses on their records. Furthermore, the state is expunging criminal records for citizens that would not be criminally convicted under MRTA’s new regulations. MRTA also gives priority to applicants who earn 80% or less than their average county’s income. 

What to Expect of the Social Equity Programs 

According to Marijuna Moment, New York will generate over $20 million in taxes from cannabis sales in its first year. In 2024, the state stands to make $245 million dollars. 

Regulators will allocate 40% of the state’s revenue to fund incubator programs for small businesses and social equity applicants. That calculates to around $98,000 dollars by 2024. Participants will receive low-and-zero-interest loans, reduced or waived fees, and assistance preparing applications. 

Additionally, the state will also help fund non-profit organizations that serve communities which cannabis criminalization disproportionately affected. These organizations will focus on job placement, skill training, financial literacy, nutrition, substance abuse and mental health. 

Additionally, the New York Law Journal reports that non-social equity applicants will have to create a social responsibility program. Adherence to the program will greatly impact licence renewals.  

Cannabis is a growing industry. Everyone should have a fair chance to enjoy the benefits of this rich market. New York’s legislature believes in that. With their social equity program, the state has taken a step in the right direction becoming a model for all other states to follow.