An opportunity to make cannabis industry more equitable
Advisory board will make recommendations for Social Equity fund
FOR YEARS, budding marijuana entrepreneurs – particularly those of color – have complained that the legal industry is dominated by Big Pot.
Now is the time for those advocates to take seats at the policy-making table.
The marijuana equity law Gov. Charlie Baker signed in August created a Social Equity Trust Fund, which will offer grants and loans to participants in equity programs, generally those from communities disproportionately affected by prior drug law enforcement.
Applications are now open for seats on the advisory board that will advise the Executive Office of Housing and Economic Development on administering the fund. Five board members will serve five-year terms. They will be appointed by the governor, treasurer, and attorney general, and are required to include people with backgrounds in the cannabis industry, finance or commercial lending, business development, and entrepreneurship. They must be from or have experience advocating for communities disproportionately impacted by prior drug laws. Board members must be appointed by January 9, under the law.
Cannabis Control Commissioner Nurys Camargo, in an op-ed on MassLive, urged people from harmed communities to apply. Camargo wrote that marijuana entrepreneurship can provide a pathway to economic stability and generational wealth. But that has not been the reality for many aspiring entrepreneurs. “The communities harmed by the Commonwealth’s disproportionate enforcement of cannabis prohibition laws still find themselves at a disadvantage, while others profit off the substance that pilfered their communities,” Camargo wrote.
Camargo said the advisory board will provide crucial guidance on the creation of policies and procedures surrounding the fund “and will need to understand the systematic and social structures that have created inequity – past and present – not just business and the cannabis industry.”
“The individuals appointed to the board can make or break this trust fund for years to come,” she wrote.
Some of the most crucial decisions the board will advise on are the size of potential loans and who qualifies. Cannabis activist Grant Ellis said the application for funds needs to be designed in a way that is “intentional and direct” to attract applicants from communities who most need them. He said the loans must be large enough to help entrepreneurs avoid having to obtain financing from predatory lenders. Today, a big concern is that the only way to get start-up capital for a marijuana business is by accepting loans that come with draconian conditions – high interest rates or requirements to give up equity or control.
Aaron Goines, who leads an advocacy group for marijuana delivery companies and previously worked in finance, said he does not want to see the fund give out microgrants. “Fifty-thousand or $100,000 doesn’t get you anywhere in cannabis,” Goines said. “You can burn through that through lawyers or having real estate tied up for a year.” Goines suggested a venture capital model where a large sum of money is given to a company a little at a time, as it meets milestones.
Goines, who is considering applying, said he hopes board members are people who understand economic and industry headwinds – like inflation or the potential impact of a recession on the industry. What the board needs, he said, “is individuals who have business acumen, those who have operated businesses or started up businesses, who have seen economic cycles and can apply some of that knowledge towards the cannabis industry.”
“You want to deploy capital to people you believe are going to be successful, and you hopefully want to avoid burning up cash unnecessarily in the fund,” Goines said.
There will also be pressure to appoint people of color. Ominique Garner, a Black farmer and cannabis activist who plans to apply, said she hopes there can be “more Black and Brown representation at the table.” She added: “I’m hoping we can have real opportunity for the people most impacted and affected by this continuous struggle to have an opportunity at the table to ensure things are divided out equitably and transparently.”