What is a "Social Equity" Cannabis License?
Cities and states around the country have adopted various processes and criteria for issuing the (often limited and very valuable) cannabis licenses. In our course about the license process, Belinda and I talk about several types of processes including 1) Merit Based, 2) Lottery and 3) Social Equity. The concept of Social Equity is new to many people, so I'm going to explain here about how it might work.
The concept of Social Equity in the Cannabis industry is an effort to make up for damages caused to populations that were disproportionately adversely impacted by the war on drugs or to provide economic opportunity to populations or individuals that have been otherwise marginalized or disadvantaged. The programs are typically looking to develop programs and policy that will repair the harm and move towards decreasing the disparities in outcomes for certain populations including low income and minorities.
How to these programs work? How do you determine whether a person was "disproportionately adversely effected by the war on drugs? Well, it depends.
Municipalities that have social equity programs all define "Social Equity" differently. These differences are both in how eligibility is defined (ie "who" qualifies) as well as in how the program is structured (ie "what" the business and ownership requirements look like). Let's start with eligibility.
Eligibility varies from one municipality to the the next. Examples of qualifying criteria are:
- Previous conviction for non-violent cannabis offense
- Spouse or child of an individual with a cannabis conviction
- Loss of housing due
- Low income (based on actual income relative to area median)
- Location of residence (for example, in Oakland CA you qualify if you have lived for 10 of the last 20 years in the certain police beats with disproportionately higher number of cannabis-related arrests)
- Some cities require you also to be a current resident
As far as the ownership and structure requirements, this varies dramatically as well. Some examples:
- Social equity owner must own a certain % of the business (varies from municipality to municipality and there may also be different license types within one city that have different percentage ownership requirement)
- No ownership requirement, but the licensed business must provide free commercial real estate space to a social equity business
In sum, this important program in the cannabis industry is extremely nuanced and complex. Our course covers this topic as well as Merit Based and Lottery Based license processes. Hope to see you in the course!