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Cannabis Administration & Opportunity Act Comments - NU Project

Cannabis Administration & Opportunity Act Comments

Cannabis Administration & Opportunity Act Comments

You can’t address a race-specific problem with a race-neutral solution and racist institutional practices.

CAO sounds good in theory. CAO deschedules cannabis with criminal justice and equity considerations. In practice, the legislation distributes money and resources through institutions doing exactly the inequitable work they were designed to do and creates additional regulatory layers that increase hurdles for undercapitalized owners.

CAO is not community-driven legislation. If it were, it would work backwards from the most important question: Who’s most impacted? The answer: Black people. The CAO’s summary findings misquote the ACLU’s two landmark studies showing cannabis arrest rates state-by-state across the U.S. The bill says enforcement of cannabis disproportionately impacted “people of color who are almost 4 times more likely to be arrested for cannabis possession than their White counterparts, despite equal rates of use across populations.”

The ACLU studies published in 2020 & 2013 were very clear that Black people, including Latinx people identified as “Black” by an arresting officer, are the people in the U.S. arrested at 4 times the rate of White people.

Who will the bill’s equity provisions serve as-is? Let’s take a look at the federal social equity license. It’s absurd to think many people impacted by the War on Drugs will launch a licensed cannabis business under the equity license provision in the bill. You must have a cannabis conviction or have an immediate family member who’s been convicted AND have an income of roughly $60,000 for most of the last 10 years. Almost no one making $60,000 can start a cannabis business exactly because they don’t have the capital or access to capital sources needed to start that business. Procuring a license in any state requires upfront capital easily reaching $100,000, plus now you need a federal license. How does someone at $60,000 income maintain a roof over their head and start a licensed cannabis business on the side? It will happen so rarely the federal social equity program feels like a figment. The bill does incentivize states for having social equity programs with federal tax dollars to fund those programs. All programs are funded equally. From faulty equity programs (like IL’s program) to good programs with thriving Black- and brown-owned businesses, all states receive the same money regardless of equitable outcomes. It’s easy to create an ineffective “lipstick” social equity program and, sadly, the incentive via CAO is the same either way.

Wouldn’t it be nice if the bill were as pointed and effective as police forces were when they arrested Black people at 4 times the rate of Whites for simple cannabis possession? The bill should be as pointed and effective as Harry Anslinger and Richard Nixon when they crafted the War on Drugs with the intent to harm Black communities. The bill could be pointed and effective using race-specific language to grant federal social equity licenses. Outside of slavery, if there was a situation in the U.S. where you can draw a bright line from policy to the targeting of a particular race and the economic impact of those targeted practices, cannabis prohibition as part of the War on Drugs is it. And as cannabis taxes bring in multi-billions for states and the Federal government, wouldn’t it be nice if we did real justice at this moment? Race-specific language is possible if we are willing to do the hard things and be bold. For more on using race-specific language, including the legal requirements to withstand a challenge, see NuProject’s guide on using race-specific language in cannabis equity legislation.

One more absurdity in the CAO is using the SBA to fund social equity cannabis businesses. These folks making $60,000 or less with a cannabis charge (or relative with a charge) highly likely won’t qualify for an SBA loan because 1) Loans on new businesses require owners to have collateral, which is the same as saying “wealth.” Loan applicants need a home, cars, parents with a home, etc. to serve as collateral if the loan defaults. Black people, with less than 10% the wealth of their White counterparts on average, don’t usually have the collateral to qualify. Likely, our fictional $60k/year equity licensee hasn’t amassed any collateral or wealth either. 2) SBA loans require “good character,” which means a background check, and a criminal record will get your loan denied. Over-policing of the Black community is another reason Black people are underserved by SBA loans. It’s ironic the problem the CAO is trying to address uses system’s that deny people for the very problem the bill attempts to address.

It’s widely known the SBA network of lenders has historically underserved Black businesses making fewer loans and smaller loans. It’s absurd to send a glut of tax dollars to only the SBA’s small network of approved lenders who almost never lend to Black businesses and call it reparative justice. Simply disbursing the money to more agencies, Dept of Commerce’s Economic Development Administration for example, would help. Disbursing the money to minority-led, small community lenders, like NuLeaf Project, completely outside of the SBA’s network would have the best reach to Black businesses. Small lenders, who do not rely on collateral or credit score to approve loans, have better success lending to Black and all underserved entrepreneurs.

President Barack Obama said, “Hard things are hard.” Undoing economic degradation of the Black community is hard. You need new systems and processes to flow money. You need to craft race-specific policy and have it stand the test of the courts. That would be the pointed, effective and thoughtful legislation we can call economic justice.


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