Legalization is Not the Endpoint: Observations from Nine Years of Marijuana Legalization
By Nathan Bennett
Associate Editor, Vol. 26
In February, New Jersey became the 14th state to legalize adult recreational use of marijuana, followed days after by the Virginia legislature approving a similar measure.[1] When Colorado became the first state to legalize the drug in 2012, then-Governor John Hickenlooper cautioned: “don’t break out the Cheetos or goldfish too quickly.”[2] In contrast, the recently passed New Jersey bill was central to Governor Phil Murphy’s campaign. The Governor praised the legislation’s positive impact on efforts for racial justice, stating “Today, we’re taking a monumental step forward to reduce racial disparities in our criminal justice system, while building a promising new industry and standing on the right side of history.”[3] The different statements offered by two middle-aged white male governors reflects not only the evolving politics of marijuana law, but also the increased focus on racial justice in American politics.[4]
New Jersey’s law—like others in states that have recently legalized cannabis—explicitly seeks to promote marijuana dispensary ownership in communities historically harmed by the War on Drugs. The law devotes state resources to “unified practices and procedures for promoting participation in the lawful operation of personal use cannabis businesses by persons from socially and economically disadvantaged communities, including by prospective and existing minority owned and women’s owned businesses.”[5] Similarly, Michigan’s ballot measure that legalized marijuana required the state to develop “a plan to promote and encourage participation in the marihuana industry by people from communities that have been disproportionately impacted by marihuana prohibition and enforcement and to positively impact those communities.”[6] An Illinois law legalizing cannabis was touted as “‘the most equity-centric law in the nation.’”[7]
A racial-justice focused approach to legalization supported by moderate governors might have been unimaginable even in 2012 when Colorado and Washington started the legalization trend. The change is welcome, but states passing new laws cannot rely on the ambition of their words alone: early assessments of recent, race-conscious marijuana laws show limited success.
In Illinois, dispensaries sold over $900 million recreational and medical marijuana during the first year of legalization.[8] “[B]ut there’s not a single licensed marijuana business that counts a person of color as a majority owner. Legal weed in Illinois continues to be dominated by a small group of white-owned, financially well-backed corporations.”[9] Established medical marijuana companies were able to enter the market quickly, and restrictions related to COVID-19 stymied entry by smaller, minority-owned operations.[10] Concerningly, Illinois law prevents public disclosure of information regarding applications and approval of dispensary licenses, making it even harder to ensure that the program is operated consistent with the vision outlined in law.[11]
Michigan, which legalized marijuana in 2018, has similarly failed in ensuring racial equity in dispensary ownership.[12] Just 3.8% of recreational dispensaries are Black-owned, and just 1.5% are Latinx-owned.[13] The state population, meanwhile, is 14.1% Black and 5.3% Latinx.[14] The trends in Michigan and Illinois reflect broader trends of racial inequity in business ownership and access to capital, but laws designed to provide opportunity for communities of color should be held to an even higher standard. States and municipalities “can’t explicitly favor certain racial groups under U.S. law. So… lawmakers and regulators have crafted social equity criteria using a mix of residency requirements, income limits, and criminal history.”[15] Sometimes well-intentioned systems to promote equity may create more hurdles in an already capital-intensive and complicated regulatory system.[16] New approaches that help Black and Latinx entrepreneurs overcome these barriers may therefore be most impactful.
A 2020 report from the Brookings Institution offers some suggestions for how states and municipalities can better implement legalization regimes to achieve their racial equity goals. Using state marijuana revenue to help overcome compliance costs is one approach.[17] Changes to federal law might also help smaller entrepreneurs in the sector. One change involves reforming section 280E of the IRS Code to allow Small Business Administration (SBA) loans to go to cannabis operators.[18] Additionally, allowing funding earmarked for workforce training to be distributed to marijuana businesses may allow greater access to jobs at all levels of the burgeoning business.[19] Such shifts in policy may be achievable in a Biden Administration that has signaled an open but cautious approach to marijuana policy.[20]
Business ownership is one of three primary policies sought by supporters of racial-equity focused marijuana legalization, along with “removing past marijuana-related offenses from criminal records and using cannabis tax revenue to fund community-development programs in hard-hit neighborhoods.”[21] Activists have increasingly focused on passing legislation that directly addresses these issues when legalizing marijuana. Early results of even the best legislation have yet to live up to the lofty ambitions. Data, funding, and continuous monitoring will be necessary to ensure that marijuana legalization does not create new inequities even as it displaces decades of racial discrimination in the criminal justice system.
[1] See Troy Closson, Marijuana Is Legal in New Jersey, but Sales Are Months Away, New York Times (Feb. 22, 2021), https://www.nytimes.com/2021/02/22/nyregion/new-jersey-marijuana-legalization.html#:~:text=Legislation%20signed%20on%20Monday%20decriminalizes,arrests%20in%20communities%20of%20color; see also Mona Zhang, Virginia Joins 15 Other States in Legalizing Marijuana, Politico (Feb. 27, 2021),https://www.politico.com/news/2021/02/27/virginia-legalizes-marijuana-471840.
[2] Andrew Mach, Colorado governor to potheads: ‘Don’t break out the Cheetos,‘ NBC News (Nov. 7, 2012), https://www.nbcnews.com/news/us-news/colorado-governor-potheads-dont-break-out-cheetos-flna1C6928068.
[3] https://www.nj.gov/governor/news/news/562021/20210222a.shtml (need a citation here)
[4] See Megan Brenan, Support for Legal Marijuana Inches Up to New High of 68%, Gallup (Nov. 9, 2020) https://news.gallup.com/poll/323582/support-legal-marijuana-inches-new-high.aspx.
[5] Senate Bill 21, 202.
[6] Michigan Proposal 1, Marijuana Legalization Initiative (2018), Ballotpedia , https://ballotpedia.org/Michigan_Proposal_1,_Marijuana_Legalization_Initiative_(2018)#cite_note-text-1.
[7] Sanjaana Karanth, Illinois Proposes New Equity-Focused Marijuana Legalization Bill, Huffington Post (May 5, 2019), https://www.huffpost.com/entry/illinois-recreational-marijuana-legalization_n_5ccf7621e4b04e275d4c2e2d.
[8] Tom Schuba, ‘Epic failure’ of Illinois’ Legal Weed Backers in Springfield to Keep Promises on Diversity, Chicago Sun Times (Dec. 11, 2020, 3:40 PM), https://chicago.suntimes.com/2020/12/11/22166603/marijuana-legalization-recreational-illinois-diversity-innovative-industrial-properties-legal-weed
[9] Id.
[10] Id.
[11] Robert McCoppin & Dan Hinkel, Who’s Profiting Off the Millions that Illinois’ Marijuana Business is Bringing in? State Officials are Keeping that Secret, Chicago Tribune (Mar. 3, 2020), https://www.chicagotribune.com/investigations/ct-met-illinois-marijuana-pot-ownership-secrecy-law-20200303-gedgub6w7ndvrdugqcdxc2xy54-story.html.
[12] Kate Carlson, State pursues cannabis industry racial equity, but advocates say more work needed, MiBiz, (Jan 31, 2020), https://mibiz.com/sections/economic-development/state-pursues-cannabis-industry-racial-equity-but-advocates-say-more-work-needed.
[13] Id.
[14] Id.; U.S. Census Bureau, Quick Facts: Michigan, https://www.census.gov/quickfacts/MI.
[15] Sophie Quinton, Black-Owned Pot Businesses Remain Rare Despite Diversity Efforts, Pew Charitable Trusts (Jan. 15, 2021), https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2021/01/15/black-owned-pot-businesses-remain-rare-despite-diversity-efforts.
[16] Id.
[17] Makada Henry-Nickie & John Hudak, It is time for a Cannabis Opportunity Agenda, Brookings Institution (Mar. 23, 2020), https://www.brookings.edu/policy2020/bigideas/it-is-time-for-a-cannabis-opportunity-agenda/.
[18] Id.
[19] Id.
[20] Tim Craig, Biden, Once a Warrior in the ‘War on Drugs,’ May Slowly Retreat, The Washington Post (Jan. 11, 2021), https://www.washingtonpost.com/politics/2021/01/11/biden-war-on-drugs/.
[21] Henry-Nickie & Hudak, supra note 15. (you need an “at” since it’s a quote)
