Last week, on May 11, 2021, the Phoenix Business Journal ran my opinion piece on the Arizona Department of Health Services draft rules for the 26 social equity recreational cannabis licenses Prop 207 created, Noted in my column, I think the draft rules ignore vast communities Prop 207 sought to benefit. I also contend ADHS can and must do better. You can Read the full article here. [There is a paywall.]
For those of you who do not subscribe to the Phoenix Business Journal, here is the text from my column:
ADHS, Cannabis, and the Illusion of Social Equity
Arizona’s new recreational marijuana law, Proposition 207, provides for 26 specially licensed marijuana establishments, and directs the Arizona Department of Health Services to create a “social equity ownership program to promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws.” Since passage in November, months of speculation percolated over how ADHS would fulfill these dictates.
On May 7, ADHS released its draft rules, and is allowing a mere week for public comment. The draft rules fail to reference “social” or “equity” or “communities” or “disproportionate impact.” None of these words appear in the rules. Likewise, ADHS makes no provision to support the applicants, nor to assure they remain in control and ownership of their licenses.
ADHS proposes simplistic criteria — the proposed Rules require individuals with 51% ownership in the applying entity must have a prior cannabis-related criminal record that qualifies for expungement under Arizona law and have petitioned for expungement. Also, to qualify, applicants must have a 2019 income below 200% of federal poverty guidelines.
Huge Side Door
ADHS essentially proposes a de facto adopt-a-felon program, ignoring vast communities that Prop 207 sought to benefit, while leaving open a huge side door to allow existing license holders to exploit strawman applicants. Basically, to qualify for social equity, ADHS proposes only that you be a poor criminal. The bad optics on this are only further bolstered by the wholesale omission of any merit criteria in the application, as well as in a preference to allow lottery balls to choose the winners.
The draft rules make no account for Arizona’s cannabis history and offers nothing equitable to “communities disproportionately impacted by the enforcement of previous marijuana laws.” They even imply that one could not suffer “disproportionate impact,” unless personally charged and convicted of a past marijuana offense. DHS appears to believe that families of the convicted are not impacted.
From hemp plantations of colonial America to the Southwest states’ anti-marijuana laws of the 1910s to the Controlled Substances Act of 1970, persons of color have suffered a disproportionate brunt of America’s cannabis experience. The first 200 years of colonial American slavery were fueled by hemp plantations. The word cannabis was supplanted in the 1900s by marijuana, a slang word coined by propagandists as a pejorative against Mexicans. Richard Nixon cited his dislike for Jews as reason for supporting marijuana’s banishment to Schedule 1. Even if not enacted for racist purpose (most were), enforcement of cannabis laws has proven racist. In 2020, the ACLU published the results of a national survey on race, cannabis and arrest rates, revealing that Arizona’s cannabis-related arrest rates for blacks is three times the national average (and, per the U.S. Census, Arizona has one third fewer blacks per capita).
Vulnerable to Exploitation
The existing cannabis industry had a decade head start. Arizona’s program is already worth far more than a half-billion dollars, and the license roll up toward national and international cannabis conglomerates is underway, making these social equity licenses appear as chum in a shark pool. But, specially designated in Prop 207, social equity licenses are not the same as other licenses. These licenses are vulnerable to exploitation — how many operators in the existing industry will pledge not to look upon the social equity licenses as opportunity to gobble up more market share? How many of them will pledge not to attempt to apply for and/or will resist prying these licenses away from their owners? They won’t pledge, and no one should expect them to. That is also why ADHS’ rules matter.
If not further amended, the proposed rules will encourage existing operators to use shills and strawmen to apply for these licenses. If left unchecked, these licenses will shortly disappear out of the hands for whom they are intended. Social equity licenses are created for a special purpose. They have a statutory mission to repair and to elevate society. Why else would they exist in Prop 207,if not to be different? As the entity responsible for shaping sentiment into reality, ADHS is the best and first line of defense to the social equity goals.
ADHS can and must do better. The department needs to define “social” and “equity” and “communities” and “disproportionate impact,” and then needs to require an application that speaks to these qualities. There needs to be a merit-based application process, and not defer to lottery fiat. ADHS should enact rules that promote not merely initial license ownership by persons from the affected groups, but promote ongoing ownership and operation by and for the benefit of communities disproportionately impacted by the enforcement of previous marijuana laws. There is literally only one chance to get this right, and thus far ADHS seems to be missing the point.