Washington’s Cannabis Law Is an Obstacle to Equity. It Doesn’t Have to Be.Hanna Brooks OlsenMay 24, 2017
If I were to go into business as a cannabis retailer in the state of Washington, I’d have a pretty good shot. I’ve never owned a business before, which would reduce my chances of getting a license under the state’s lottery system, but I’ve also never been arrested, never had a misdemeanor or felony drug charge, and never done time for selling pot back before it was legal.
I want to be perfectly clear, though: My clean criminal record has less to do with innocence and more to do with the fact that, back when I was actively committing drug crimes, I was also a white kid in a college town. Which means that, simply put, I was less likely to be profiled, arrested, charged, and penalized for my behavior.
Washington’s legal cannabis experiment is leaving people of color out of the green boom.
Contrary to the Just Say No, lock-‘em-up rhetoric of the war on drugs, white people are in fact more likely to sell drugs than Black folks. They’re just less likely to get arrested for it. And because Washington factors those arrests into the licensing process, the racial discrepancy gives white applicants an edge in Olympia.
It’s one of the ways—but certainly not the only way—that Washington’s legal cannabis experiment is leaving people of color out of the green boom.
Washington’s overwhelmingly white weed industry is part of a nationwide problem. Major news outlets have taken notice, identifying some of the financial and regulatory issues that keep this thriving industry looking more and more like the startup world every day.
The problem is bad. Notably bad. Late last year, Cannabis Global Initiative’s Wanda James said she believed there to be only 10 US cannabis shops—total—that were owned by Black people. More optimistic estimates put the number at about 1%—which is still pretty grim, considering who’s paid the highest price for historical criminalization.
“After 40 years of impoverished Black kids getting prison time for selling weed—and their families and futures destroyed,” Michelle Alexander, author of the explosive The New Jim Crow, noted in a 2014 talk, “white men are planning to get rich doing precisely the same thing.”
Here in Washington—lefty, green, woke Washington—it feels like if anyone should be able to fix it, it’s us. And in fact, under the law, there are some pretty clear places where small policy changes could lead to a meaningful shift in who profits from legal cannabis by assisting, rather than hindering, the entrance into the industry by people of color.
Under the law, a would-be grower or retail owner has to apply for a license to do business. Licenses are limited in number, competitive (new retail applications aren’t even being accepted right now), and they’re not available to individuals with a particularly checkered criminal record.
The Washington State Liquor and Cannabis Board, which regulates cannabis in the state, uses a points system to determine whether or not an applicant’s priors disqualify them from the process. A misdemeanor conviction is four points. A gross misdemeanor is five. A felony conviction is 12 points. Anyone who scores more than eight points is out.
Though it opened the doors to a legal path, Washington’s law did little to make up for decades of racial discrimination.
The points affect a license application for three years after a conviction, or 10 in the case of a felony. That means anyone who had been convicted in the years prior to I-502’s passage was kicked to the back of the queue. That’s no small matter considering that, in the years before and even after legalization, felony drug charges were extremely common and relatively easy to get. Just a few years ago, in 2013, mere possession of 40 grams of cannabis or more was an automatic felony.
What’s worse, those convicted were far more likely to be Black. A 2008 report from UW sociology professor Kate Beckett and the ACLU found that “although the city population is 8 percent black, two-thirds (67 percent) of those arrested in Seattle for delivery of a serious drug in a four-month sample from 2005–2006 were black.”
That’s in spite of the fact, Beckett wrote, that “the majority of those who use and deliver serious drugs in Seattle are white.”
The licensing provision around criminal records may have initially been pitched as a public safety measure, but data reveal it is, in fact, discriminatory. That’s not because people of color commit more drug crimes (they don’t), but because they’re so much more likely to have been caught for it—and thus, docked in the lottery. Fixing this—or at least, making it slightly less strict—could help bring in some of the folks who stayed on the illegal side of marijuana and, thus, begin to make amends for those who have previously been punished for drug crimes and now are looking to cash in on the changing laws.
It’s doable, too. Colorado’s licensing laws are a little more forgiving and based more on “character” than a hard-and-fast points system. Additionally, Colorado permits vertical integration, giving business owners have a lot more flexibility when it comes to marketing and producing, which can help offset costs. And Colorado’s 1,000-foot zoning doesn’t include parks, which means there are more spaces available to set up shop. As a result, Colorado has more high-profile cannabis purveyors of color.
Though it opened the doors to a legal path, Washington’s law did little to make up for decades of racial discrimination in enforcement and sentencing. And it’s not just the points system—there are other failings with the law that have helped gentrify the cannabis industry. Many have to do with the nuts and bolts of business ownership, while others hinge on the state’s failure to ensure this new, booming industry has enough seats at the table.
Without an active attempt by the state to help potential cannabis entrepreneurs acquire funding, obtain licenses, and find a place to grow, process, or sell their products, the industry continues to allow people with means to thrive in much the same way the tech and real estate industries do: You have to have money to make money, you have to have a clean record to get any kind of credit, and that probably means you have to be white.
Consider the efforts of Pablo Gonzalez, who left a job in politics to try his hand at running a cannabis shop after I-502 became law. Just barely in his 20s and a relatively new American, he brushed up on the law and knew exactly what he’d need. Part of that was a whole lot of credit. But in an industry that’s still federally illegal, that can be difficult to impossible to secure.
“Banks don’t want to get caught up in the marijuana industry,” Gonzalez said, which means “you can’t get a loan. You can’t get a line of credit.”
Without credit, new cannabis retailers have the unenviable choice of fronting the money themselves or borrowing from friends. And unlike other types of small businesses, they won’t expect to get any of the startup costs back. Not only is Washington less friendly to small business than many other states, but the federal illegality of cannabis means retailers can’t write off business expenses—a sort of double-whammy for would-be business owners. Chairs, shelves, an iPad for transactions—even rent and product have to be paid for out of pocket or filtered through a creative system of LLCs and other licenses.
Lawmakers—including several from Oregon and Washington—have proposed a federal bill that would provide cannabis businesses with access to banking. Unfortunately, many states are still stuck in the Just Say No days of policy, and it’s likely to be rejected. If that happens, it’s the kind of effort the state could take up to make the industry more inclusive (through classes, local tax breaks, or even a state bank), though officials have shown little interest in doing so.
Without access to a loan, Gonzalez had to front the money for the business himself. “I maxed out all my credit cards,” he recalled.
Statistically speaking, even that—maxing out credit cards—puts Gonzalez in the minority, so to speak. Having and using credit is disproportionately the purview of white people. One 2013 report found that 20% of white people don’t have access to credit, compared to 30% of Latinx people and a staggering 47% of Black folks.
And then there’s just the plain-old, everyday systems that maintain the racial income gap. Gonzalez said he saw potential discrimination in the licensing process itself. In his jurisdiction, where just a couple of licenses were available to applicants, he was competing for a license against “a white dude and a white lady,” he said. “I’m sure I was the only Mexican to apply.”
The white woman was awarded a license, he said. Gonzalez was not. But because of his background in politics, he knew what to do: He filed a public disclosure request.
Legalization was billed as a great equalizer of racial injustice, but the system to arise has only reinforced age-old barriers.
In it, he saw that the woman didn’t have a properly documented intent to lease, which the application required. Retail shops need to have their brick-and-mortar location scoped out before they can be awarded a license to ensure they’re not setting up shop too close to a school or community center. This poses another hurdle for people of color: Commercial landlords, like those in residential leasing, are notoriously discriminatory.
The white applicant was missing that information, Gonzalez said, but had been given the license anyway. If he hadn’t fought the decision, he’d have been out of the game, possibly for good.
The amount of footwork Gonzalez put in isn’t typical—most people wouldn’t even know where to begin. But it underscores the lengths that people still have to go to to get into this business, especially if they’re from a marginalized group. Gonzalez now runs his own retail shop but says he’s very aware that his pursuit of a license is the exception, not the rule.
And therein lies the rub: Cannabis legalization was billed as a great equalizer of racial injustice, but the system to arise out of I-502 has only reinforced the age-old barriers and biases that keep people of color out.
Regardless of the sector, Washington state and its various agencies could be better about helping people of color get access to the things they need to start a business. But with regard to cannabis, the prohibition of which took was so monumentally detrimental to communities of color, it seems both more vital and more just.
We could make progress with just a handful of policy tweaks—and lawmakers wouldn’t have to look hard to find suggestions.
In March of this year, the Minority Cannabis Business Association, a national nonprofit industry group that works specifically to “serve the specific needs of minority cannabis entrepreneurs, workers, and patients [and] consumers,” released a model legalization bill that it said would help reduce disparate arrest and incarceration rates and, as a result, encourage people of color—specifically, women of color—get into the business.
MCBA co-founder Jesce Horton also does on-the-ground work, including hosting a free event designed specifically to help folks get their criminal records expunged.
The problem of concentrated wealth and power in the cannabis industry has become clear since the passage of I-502, a law which was meant to be tweaked and amended as the legalization experiment progressed. The research and data and anecdotal evidence is apparent. As it stands, the system rewards those who have the privilege to spend a lot with the promise of making little and the ability to take a huge financial risk without assistance.
Which means that it’s time to start making those tweaks.
Lessen the priority given to folks with clean records and existing business acumen. Smooth the unnecessarily complicated application process. Ease access to banking to help address the need for stacks of cash and an in-depth understanding of state and federal tax code. Help clear the records of those who were impacted by racist enforcement policies. Offer grants and apprenticeships and incubators just like we do in tech.
There are a great many ways that Washington could help set this right. Outreach. Classes. Programs for growers, producers, and retailers with criminal records to re-enter into the system in a legal way. State tax write-offs to offset the difficulty of federal taxes.
What’s lacking, it seems, is political will.
With I-502, and legalization more broadly, there’s an opportunity to address decades of systemic racism. We can’t just hope the market works itself into an equilibrium of racial balance, because as long as the law is just more of the same, it’s apparent that it won’t.