Denver, the epicenter of Colorado’s cannabis industry, has an equity problem. And it is one that regulators, lawmakers, and industry stakeholders have gathered around and discussed for weeks, with the goal of making recommendations to Denver Mayor Michael Hancock and the City Council for approval.
The Marijuana Licensing Work Group met last week, virtually, for the third time. The previous two meetings focused on equity in the context of new licenses, while this meeting focused on equity more broadly, bringing together regulators, city council members, and representatives from Governor Jared Polis’ office, the city attorney’s office, the Mayor’s Office of Social Equity and Innovation, and Denver Public Schools.
(Cannabis Wire covered the first two working group meetings, which covered lengthy discussions about what the future of Denver’s cannabis hospitality and delivery industries could look like, through the lens of equity.)
Ashley Kilroy, the executive director of Denver’s Department of Excise and Licenses, kicked off the working group meeting by emphasizing Hancock’s commitment to an equitable cannabis industry.
“The recent murder of George Floyd has only heightened that call to action,” Kilroy said, referencing the Minneapolis man who was killed by police, sparking international protests. This was the first working group meeting since Floyd’s murder.
“On behalf of our city employees here on this call with me, I just want to let you know we all condemn all forms of racism. And like you, where we are outraged by this horrific murder that we all witnessed on television or on video,” Kilroy said, calling for justice and unity while also acknowledging that the group had gathered to “take action in one area that we do have purview over, or control over, marijuana licensing.”
Molly Duplechian, also of Denver’s Department of Excise and Licenses, highlighted data showing that while cannabis arrests dropped after Colorado legalized, people of color were still disproportionately affected. Duplechian also noted that the city has implemented an expungement program, through which officials identified 95 eligible individuals. Some cannabis tax revenue also flows to the affordable housing fund, Duplechian said, which will help build 6,000 units.
The group also discussed a study that the City and County released last week that found that 75 percent of local cannabis business owners are white. Those who identified as Hispanic, Latino, or Spanish make up 13 percent, while those who identify as Black or African American make up just 6 percent.
The study also found that 77 percent of respondents said that access to capital was the biggest barrier to ownership, and that to advance ownership or employment in the industry, people need information about how to secure funding and training. Respondents also identified social justice issues that need improvement, from overall empowerment of communities disproportionately impacted by the war on drugs, to ensuring that entry level cannabis industry jobs pay a living wage, to addressing racism, sexism and a broader lack of inclusiveness in the cannabis industry.
Ean Seeb, who owned one of Denver’s first cannabis shops, Denver Relief, and, later, Denver Relief Consulting, and who is now Governor Jared Polis’ adviser on cannabis, gave a brief legislative update. Last year, lawmakers passed SB 224, which went into effect this year and brought with it a number of cannabis policy changes, including “accelerator” licenses, which allow a person to “operate respectively on the premises of a licensed retail marijuana cultivation facility or retail marijuana products manufacturer” and to “receive technical, compliance, and capital assistance from the host-licensed retail marijuana business.” A bill introduced last week, HB 1424, would change “accelerator licensee” to “social equity licensee” and expand the program to include retail, among other changes.
Among the new criteria for program qualification, is, for example, if an applicant’s immediate family, parent, legal guardian, sibling, spouse, their child or a minor in their guardianship, was arrested for a cannabis offense, convicted of a cannabis offense, or were subject to civil asset forfeiture related to a cannabis investigation, Seeb said.
“Civil asset forfeiture is a terrible piece of the war on drugs and a lot of people suffered as a result of that, aside from just convictions and arrests,” Seeb said.
Another requirement would be that a social equity licensee maintain at least 51 percent of the beneficial ownership.
“There’s plenty of anecdotal and real information to support that in many cases, social equity licensees have effectively been taken advantage of by people looking to support them with capital contributions or whatnot that effectively take away their ownership,” Seeb said.
One question that the group considered was: what should be the goals of a social equity program?
John Bailey, of the Black Cannabis Equity Initiative, responded that “part of this is experiential. If you haven’t gone through some of the things that Black folks have gone through, brown folks have gone through, then many of you are sort of drinking from a well that you didn’t dig.”
“To be eight years and eight billion dollars later asking this question, well it’s late and somewhat disingenuous,” Bailey said, adding that he wants to ensure that equity efforts are just another way for those “who want to get another dispensary or another store.”
Bailey suggested that government staff must be dedicated to working toward long-term sustainability so that the equity effort is “not just a token something that everybody feels somewhat good about but everybody under their breath is complaining about.”
Councilwoman Candi CdeBaca flagged that the working group faced a tall mountain, in part because the makeup of the working group didn’t match the group of people who would benefit from equity policies.
“I think moving forward with the assumptions that we have from an insufficient study and a group that is not representative of people who are excluded, I think we have some major challenges, if we’re going to use this group to jump to conclusions about what equity should look like,” CdeBaca said, suggesting a stakeholder process that includes those who have been left out of the city’s cannabis industry.
Sarah Woodson, of Color of Cannabis, talked about the efforts of her organization, including a 10-week educational course that comes with mentorship from companies like Terrapin Care Station, Native Roots, and Good Chemistry.
“Those people will come in and do some high level mentorship on: how do you start a business? What does 280E look like?” Woodson said, referencing the tax code that blocks cannabis businesses from deducting many typical expenses. Woodson said she’s going to push for legislation that would open up statewide funding for equity applicants.
Clarissa Krieck, National Cannabis Industry Association’s director of business development, suggested that the top barrier to entry comes down to money.
“There’s no doubt that capital is one of the most pressing issues here,” Krieck said. “I wonder if this city has asked questions about: could we potentially also lower some of these costs attached to regulatory requirements?”
Jaci Flug, general counsel for Drizly, a national alcohol delivery platform with a cannabis arm called Lantern, spoke as a former regulator, and asked that the regulatory agency be given some discretion about selecting an equity candidate that doesn’t fit the definitions to a T.
“There’s always going to be somebody that is some exception to this. We draw lines on neighborhoods or conviction arrest or this member of the family. And there’s always going to be somebody that fits in the spirit of social equity, but maybe not in that black letter. So I think it’s important that any definition always gets a licensing agency discretion,” Flug said.
The final Marijuana Licensing Work Group will be held on June 25. Public comment remains open.
“When we look at the disproportionate criminalization of black and brown people during the war on drugs and we now have a multi-billion dollar industry of white men, I think that you should have had the same proportion of black and brown people running the industry. That’s what success would have looked like to me,” CdeBaca said.