How African-Americans Are Left Out of the Marijuana Boom

Allison Keyes


From The Root and republished by our content partner New America Media:


Editor’s note: This is part 2 in an ongoing series that looks at the growing legal marijuana industry and its effect on the black community.


Zulu, a Maryland resident who calls himself the African Herbalist, sells marijuana on the black market. The 32-year-old is using a pseudonym to avoid being picked up for breaking the law in his home state and in the District of Columbia, where he delivers loose weed, edibles, oils and rubs to customers who call him. But Zulu says he’d much rather be in the business legally.


“This is my passion. This is something I could do every day with no worries,” says Zulu, who works at a bar in Northwest Washington, D.C. But he tried and failed to get in on the legal ground floor in Maryland when the state was putting together rules for its legal medical-marijuana industry.


“There are so many restrictions and rules, it was virtually too hard for just anyone to get the license,” Zulu says. “You need to know someone or know somebody upfront—and that makes it hard for small businesses.”


Zulu says he had a business plan for what he hoped would be a small caregiver-collective dispensary, but he did not have the $2,000 initial grower-application fee or $250,000 biennial grower-license fee required under step one of the two-step application process; nor did he have the $1,000 initial dispensary application fee, or the $80,000 biennial dispensary-licensing fee required under Maryland’s process. In a good week, Zulu says, he makes about $400 from marijuana, but in a bad week it can be as little as $20 because he gives away some products to those who need them and to the homeless he sees on the district’s streets.


In Maryland, No Licenses for Black Businesses


Earlier this month, the Natalie M. LaPrade Maryland Medical Cannabis Commission awarded stage-one license preapprovals to 15 growers and 15 processors. None of the companies on tap for what are likely to be lucrative growing licenses is led by African Americans.


“I think small guys were definitely not welcome to this game,” says Zulu, who says his primary reason for selling marijuana is to help senior citizens like his mother and others find relief from the pain of arthritis, eczema and other ailments. His products include everything from topical ointments for joint pain and skin problems, to a painkilling tincture for a friend suffering from cancer. “We know how to help … but … the people who got licenses were ex-cops and ex-political officials.”


The Washington Post reports that of the 144 companies that applied for the 15 growing licenses in Maryland, 26 had political ties, at least 30 had law-enforcement ties and 47 had ties to out-of-state corporations.


The diversity, or lack thereof, in the marijuana industry has been a concern for advocates nationwide. The law in Maryland, a state that is nearly one-third black, says regulators should “actively seek to achieve” racial and ethnic diversity in the industry. But a letter from the state’s attorney general’s office says it would be unconstitutional to consider an applicant’s race or ethnicity in the award of a license. Maryland’s Legislative Black Caucus chairwoman, Del. Cheryl Glenn (D-Baltimore), says she is considering ways to urge the commission named after her mother to award more licenses to companies owned by people of color.


Medical marijuana is legal in 25 states and in Washington, D.C., and recreational sales are allowed in four states­—Colorado, Washington, Oregon and Alaska. Growth and possession of recreational weed is allowed in D.C., as well, and laws legalizing pot are on the ballot this fall in nine states. California, Nevada, Arizona, Massachusetts and Maine are considering recreational-marijuana laws, while Florida and Arkansas are among states considering medical-marijuana programs. But an investigation by BuzzFeed estimates that only about 1 percent of the nation’s more than 3,500 marijuana dispensaries are owned by African Americans.


“It’s disappointing that the very people impacted the most by this part of the war on drugs are not now able to participate in what is now the legal regulated world,” says attorney Christian Sederberg. He’s with the so-called Marijuana Law Firm in Colorado, where weed is legal. “And it’s not just because of criminal backgrounds, but because these businesses in some states have high barriers to entry: lots of money, huge infrastructure costs and political connections. It’s not that no people of color have those, but it’s a classic American sort of new industry dominated by white men.”



The High Cost of Doing Weed Business


In Colorado the initial licensing fee to open a retail store is $3,000, but in New Jersey it is $20,000. Many applicants cannot meet the start-up capital requirements, which vary from $150,000 in Arizona to $250,000 in liquid assets as a prerequisite in Nevada.


In New York, where the registration fee alone was $200,000 when the medical-marijuana program went online this year, the average applicant likely spent millions. The cannabis-business advising firm 4FrontAdvisors told MarketWatch the total capital and operating costs of New York dispensaries will be somewhere between $15 million and $30 million for each of the five companies granted operating licenses in the first year.


But people like Adam Bierman, co-founder and CEO of the California-based cannabis-management and consultant company MedMen, say costs such as those for New York make sense for states trying to make sure that those who get into this business actually know what they are doing.


“The average [New York] applicant that scored high probably spent somewhere around $5 million for that application process. … That’s reasonable for me,” says Bierman, whose company offers nationwide consulting for dispensaries, cultivations and merit-based licensing applications. The company’s capital arm is a $100 million fund.


“That’s giving you a license to address 20 percent of the [New York state] population. … To pull that feat off you’ve got to build facilities, hire people, that’s big business there. … Let’s not be surprised or naive about what this has become. States don’t want a free-market environment. That’s too hard to govern.”


He says people thinking they want to get in to an industry that’s becoming industrialized should consider pretending it’s not pot. What if, for example, Bierman asks, you wanted to get into the pharmaceutical, grocery or casino industries?


“The barrier of entry is extremely high,” Bierman explains. “Can you demonstrate tens of millions of liquidity? Can you lock up real estate that would allow you to build a grow facility? … Can you put together a cannabis-security team? You need to demonstrate to a state that you will be secure and protect that license.”


He adds that there is much discussion in the industry on how what he calls the “completely failed drug war” has disproportionately affected people of color, and that there is a sentiment that since it has negatively affected such people for so long, they should be the ones who benefit from the commercial opportunities.


“Morally, you can say we should make sure [people of color] should get the upside,” Bierman says. “But on the flip side, these states have a huge undertaking and have to do what’s best for the state, colorblind.”


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Author Bio:


Allison Keyes is an award-winning correspondent, host and author. She can be heard on CBS Radio News and WTOP News Radio, among other outlets. Keyes, a former national desk reporter for NPR, has written extensively on race, culture, politics and the arts.


From The Root and republished by our content partner New America Media


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