A new memo from pro-legalization advocates offers some insight for marijuana businesses, investors and consumers on how they can better support social responsibility in the increasingly legal industry.
The four-page document unveiled by the Drug Policy Alliance (DPA) on Friday proposes guidelines to help assess whether a business is operating in a manner that recognizes the historic harms and injustices caused by prohibition. Specifically, the memo asks industry players to take a harder look at their policy positions, internal operations and practices, whether their company supports up-and-coming marijuana businesses and how invested they are in the local communities in which they operate.
As the document notes:
Repairing the harms of prohibition entails:
1) ensuring that the harm is not continuing;
2) supporting the development of an accurate historical record of the harms caused by marijuana prohibition, including how it has oppressed black and brown communities; and
3) supporting initiatives that create a remedy for past harms.
DPA, along with the Marijuana Policy Project, has been a driving force in funding moves pass marijuana legalization ballot measures and shepherd cannabis bills through state legislatures. Without its work, the market for legal cannabis in the U.S. would be much smaller, if it existed at all.
“Marijuana policy reform was not done to get people rich,” Justin Strekal, political director for NORML, which maintains a cross-country grassroots advocacy network that has helped push legalization, told Marijuana Moment. “It was done to end the oppression of those who choose to consume it. While reform has led to a growing marketplace, tragically the oppression continues and is even perpetuated by some in the industry itself.”
Other measures that address the costly effects of the drug war, according to the DPA guidelines, include opposing any rules or laws that would intentionally shut out people who have been arrested or convicted on marijuana-related charges from working in the industry, investing in communities that have been disproportionately impacted by cannabis enforcement and creating opportunities to help people from marginalized communities participate in the industry.
“The harms of marijuana prohibition have been devastating, particularly for Black and Brown people who have suffered dramatic rates of arrest, mass criminalization, heavy-handed policing, seizure of property with little or no process, and large-scale deportations,” DPA Executive Director Maria McFarland Sánchez-Moreno said in a statement. “Given this history, those investing and operating in the cannabis sector have some responsibility to support repairing the harms of prohibition.”
The organization suggested a list of questions for companies to consider concerning a range of topics: Among them, whether they support home grow—which ensures access for those who can’t afford retail marijuana or live too far away from a dispensary—how inclusive they are in who they hire and if they support scaled license tiers.
Other questions include:
• Does the company support a free and fair marijuana market that does not give it disproportionate advantages?
• To which causes or candidates is the company donating money?
• Does the company have a policy against drug testing employees?
• Is the business a social benefit corporation? B-Corp? Non-profit? Cooperative? Or collective? If not, what percentage of its profits is donated to nonprofits?
Jag Davies, DPA’s director of communications strategy, said the new guidelines are part of a broader shift in the organization’s work over the past few years toward emphasizing racial and restorative justice provisions in any legalization bill they’re involved with.
“It started with Prop 64 in California in 2016, which we played a leading role in making sure that it had a number of criminal justice and restorative justice provisions that other previous legalization bills didn’t have,” Davies told Marijuana Moment in a phone interview. That work continues with their campaigns for legalization in New York, New Jersey and New Mexico, he said.
“The debate is really not about whether legalization is going to happen. It’s how it’s going to happen and to what degree it’s going to repair the harms of criminalization and to what degree it’s going to repair harm among the people who were worst harmed by marijuana criminalization,” Davies said.
The National Cannabis Industry Association, which works to represent the interests of legal cannabis businesses, said in a statement shared with Marijuana Moment that the organization “fully supports social responsibility and equity in the industry, as well as repairing the harms caused by prohibition, and we will continue promoting those values to our members.”
In addition to supporting limited home cultivation and federal legislation like the Marijuana Justice Act, the association also helped the Minority Cannabis Business Association draft a model social equity ordinance for cities that was published this month.
But there’s still a long way to go before all of the cannabis industry’s major players start walking the walk, advocates say.
“The Drug Policy Alliance correctly identified one of the biggest problems emerging in the reform movement: the ‘I got mine and you’re on your own’ mentality,” Strekal, of NORML, said. “It’s a travesty to see business leaders making millions of dollars and bragging about how great they are while they do nothing to stop the practice of arrests in a nearby state or bring wholeness to their neighbors who have had their lives disrupted or destroyed by criminalization just a few years earlier for essentially the same activity.”
Photo courtesy of Nicholas C. Morton.
Colorado Sold Twice As Much Recreational Marijuana As Medical Cannabis Last Year
The share of legal marijuana sales in Colorado that came from the recreational market in 2018 significantly outpaced those from the medical market, according to an annual government report released on Monday.
In fact, there were about two times as many adult-use sales of flower compared to medical cannabis purchases—a new milestone for the state.
Colorado’s Marijuana Enforcement Division (MED) said that 288,292 pounds of bud were sold last year for recreational purposes, while 147,863 pounds were sold to medical marijuana patients. For comparison, in 2017, recreational consumers purchased 238,149 pounds and 172,994 pounds were sold to patients.
That means the recreational-medical gap increased 73 percent in one year.
In part, the trend can be attributed to the ongoing expansion of Colorado’s adult-use cannabis market since the state’s first recreational shops opened in 2014. Medical cannabis sales were notably higher than recreational sales in that first year of implementation, with just 38,660 pounds coming from the adult-use market and 109,578 pounds being sold to medical patients.
Medical and adult-use sales were roughly even in 2016. But by 2017, recreational sales accounted for 58 percent of the market. And last year, they represented 66 percent of the market.
MED also found that licenses for recreational marijuana facilities increased by three percent (47 licenses) while medical business licenses declined by eight percent (77 licenses).
“Data collection continues to be a priority at the MED,” Jim Burack, director of the program, said in a press release. “This ongoing analysis and compilation of industry information helps inform the public and contributes to our outreach efforts to stakeholders.”
The report also showed that the adult-use market is the primary destination for individuals purchasing edibles. Eighty-six percent of edible sales came from recreational consumers. And from July-December 2018, 75 percent of cannabis plants were cultivated for adult use.
The market shift isn’t unique to Colorado. An Associated Press analysis from June detailed how states across the country that have established recreational marijuana programs are seeing the number of medical patients decline as more consumers transition to the adult-use market.
That may be partially explained by individuals who sought out medical cannabis recommendations choosing not to renew their registration after recreational marijuana shops became available. To that point, a recent study found that many customers at recreational dispensaries are consuming cannabis for the same reasons that registered patients do, such as to alleviate pain and sleep issues.
The concern for some advocates, however, is that adult-use legalization could drive up prices for patients, or leave them with fewer product options tailored to therapeutic use as demand for high-THC products increases.
“When states pass adult-use legalization we are seeing many patients leave the strict controls of the medical programs,” David Mangone, director of government affairs at Americans for Safe Access, told Marijuana Moment. “Patients must already pay out of pocket for cannabis, and any added cost like a registration fee for a medical card or renewal can make the process of obtaining medicine extremely burdensome and costly.”
“States like Colorado must continue to provide adequate benefits to patients to ensure the medical program remains robust,” he said.
Mangone added that “as states pass adult-use programs it is important that they continue to understand and appreciate the needs of patients.”
“A common frustration for many is not what happens in terms of access to cannabis, but rather what happens in terms of access to specific products. Products and flower with a high-THC content have a wider market appeal, but may not necessarily benefit the existing medical market.”
That said, one interesting finding from this latest MED report is that medical and recreational consumers alike seem increasingly interested in concentrates, with the units of such products sold to both nearly doubling from 2017 to 2018. Concentrates are sold at a much higher rate in the adult-use market, but the potent products evidently have growing appeal across the board.
Gov. Jared Polis (D) recently celebrated tax earnings from marijuana sales, touting the fact that the state has amassed more than $1 billion in cannabis revenue that has been allocated to various social programs.
And the marijuana market is continuing to evolve in state. Polis signed legislation in May allowing for home deliveries of cannabis products as well as social consumption sites.
The governor said last month at a conference with governors from around the country that the new delivery law could help mitigate impaired driving.
Photo courtesy of Kimberly Lawson.
Credit Unions Won’t Be Punished For Working With Marijuana Businesses, Federal Regulator Says
Regulators won’t punish credit unions simply for working with marijuana businesses that are operating in compliance with state laws, the head of the federal agency that oversees the financial services providers said in a new interview.
National Credit Union Administration (NCUA) Chairman Rodney Hood also suggested that Congress could entirely resolve banking issues in the cannabis industry by federally descheduling marijuana.
“It’s a business decision for the credit unions if they want to take the deposits,” Hood told Credit Union Times, adding that the financial institutions must follow existing federal guidance and ensure that the businesses they choose to service are not violating anti-money laundering laws or other rules.
“We don’t get involved with micro-managing credit unions,” he said.
While the comments don’t signify a new shift in policy, and don’t take into account the fact that the Justice Department still maintains authority to potentially prosecute credit unions that allegedly violate the law by banking marijuana proceeds, they are the latest indication of a growing consensus that federal action is needed to clarify the situation.
Uncertainty around banking in the state-legal marijuana market has been a hot topic in the 116th Congress.
Legislation that would shield banks and credit unions that take on cannabis clients from being penalized by federal regulators was approved by the House Financial Services Committee in March, and the Senate Banking Committee held a hearing on the bill last month. That panel’s chair, Sen. Mike Crapo (R-ID), said last week that he agrees a solution for the industry is necessary.
Though the NCUA head didn’t endorse specific legislation to give credit unions peace of mind when dealing with cannabis businesses, he did float the idea of descheduling marijuana as one way to provide unambiguous clarity for financial institutions.
“Hood said that Congress could remove all ambiguity if it enacted legislation to declassify marijuana,” the trade publication reported after its interview with the official.
Separately, the independent federal agency recently took one proactive step toward reforming policy partly in response to state-level legalization efforts. In a notice published in the Federal Register last week, NCUA proposed changing its rules so that individuals with prior low-level drug convictions would be allowed to work at credit unions.
Though bank and credit union representatives are calling for enhanced clarity when it comes to cannabis banking, more financial institutions do seem willing to take the risk anyway, with federal data showing a notable uptick in the number of marijuana-servicing banks in the last quarter.
More Than 100 Marijuana Businesses Urge Congress To Include Social Equity In Legalization
A coalition of more than 100 marijuana businesses and industry associations sent a letter to congressional leadership on Thursday, pressing them to ensure that any cannabis reform legislation include provisions promoting social equity in the industry.
The letter describes the evolution in public opinion around marijuana policy, the mass incarceration implications of prohibition and the economic potential of legalizing and regulating cannabis. It makes the case that as Congress considers various proposals to change federal marijuana laws, the work won’t be complete with the mere end of prohibition.
Specifically, the signees say they are concerned that individuals from communities disproportionately impacted by the war on drugs are being “left behind because a previous [cannabis] conviction often is a disqualifying factor to become an owner or employee in the new legal ‘green-rush'” and also because “they are unable to come up with the capital necessary to break into the industry.”
“In 2018, combined sales of regulated medical and adult-use cannabis topped $10.4 billion, and the 7 states with active adult-use markets generated nearly $1.2 billion in tax revenue. The industry is now employing well over 200,000 people,” the letter reads. “And yet, with this rapidly growing new industry and broad popular support for legalization, many of the communities who were devastated by the decades-long War on Drugs are now being left behind.”
The coalition made a series of policy recommendations that aim to level the playing field and repair the social and racial harms of the drug war.
For example, the businesses said that, beyond federally descheduling marijuana, lawmakers should allow banks to service state-legal cannabis businesses, fund social equity programs to encourage those targeted in the drug war to participate in the legal market, clear the records of individuals with prior marijuana convictions and invest in efforts that lift up impacted communities.
Signees include the Minority Cannabis Business Association, National Cannabis Industry Association (NCIA), Marijuana Policy Project, Americans for Safe Access, Michigan Cannabis Industry Association, Harborside, Berkeley Patients Group, Arcview Group, MJ Freeway, Greenbridge Corporate Counsel, SPARC and 4Front Ventures, which led the letter.
“I feel the cannabis industry has a moral obligation to ensure that communities and individuals who were harmed the most by prohibition do not lose out yet again as we forge these new economic opportunities,” said Mike Liszewski, 4Front’s senior regulatory affairs counsel and the chief organizer behind the letter, said in a press release.
“There are many who would argue that Congress should not get into the business of picking winners and losers,” the businesses wrote.
“We would argue that if Congress chooses to end federal cannabis prohibition but chooses not to address these glaring racial and economic disparities in the process, it will in fact pick those who are already the most well-financed, the least likely to have suffered an arrest and conviction, and almost certainly do not come from the communities that were severely harmed by decades of prohibition to be the winners of the new economy.”
The letter comes one week after the House Judiciary Crime, Terrorism and Homeland Security Subcommittee convened for a historic meeting on ending federal marijuana prohibition, where witnesses and members discussed how to chart the best path forward toward legalization.
“As representatives of the legal cannabis industry, we have a responsibility to help undo the harms caused by prohibition and ensure that people most impacted by failed federal policies have access to the opportunities being created every day in this market,” Aaron Smith, executive director of NCIA, said in a statement. “We are pleased to join this distinguished group of business leaders and advocates in calling on Congress to incorporate these ideas into legislation.”
“Past Congresses have played a major role in marginalizing people of color through the war on cannabis, and it is the duty of current and future lawmakers to make up for this,” Smith said.
On a related note, a separate coalition of civil rights and drug reform groups, including the ACLU, was formed last week and released a letter making similar social justice recommendations for federal cannabis legislation.
“Some in Congress may feel it is too soon to end federal cannabis prohibition or that Congress does not have a responsibility to address the harms created by how this policy has targeted certain communities,” the new letter from the businesses and industry groups states. “But if Congress declines to harmonize state and federal cannabis laws or fails to take responsibility for the consequences of disproportionate enforcement, the problems caused by prohibition will continue to persist.”
“The time to wait and see is over,” they wrote. “Now is the time for Congress to take the bold but ultimately pragmatic step to deschedule cannabis along with approving the necessary funding and programming to support the communities that incurred the most harm because of federal prohibition.”
Read the full letter from cannabis industry groups below:
This piece was updated to include comment from Liszewski.
Photo courtesy of Mike Latimer.