Excerpted From: William Garriott and Jose Garcia-Fuerte, The Social Equity Paradigm: The Quest for Justice in Cannabis Legalization, 47 Seton Hall Legislative Journal 129 (2023) (333 Footnotes) (Full Document)



GarriotGarciaFuerteOn June 29, 2020, Colorado Governor Jared Polis stood in front of the Simply Pure cannabis shop in Denver's Highlands neighborhood. He was there to sign the newest piece of marijuana legislation--House Bill 1424 law. The bill's purpose was to create greater equity in the legal cannabis industry, “[w]e hope this legislation will be a first step toward new opportunities for thousands of Coloradans, who should not be living with a cloud over their head because they were a little bit ahead of their time ....”

Representative James Coleman of Denver also spoke at the event. Representative Coleman sponsored the bill along with Representative Jonathan Singer from Longmont (D), Senator Julie Gonzales of Denver (D), and Senator Vicki Marble of Fort Collins (R). He emphasized the importance of this legislation for the Black community:

For decades now the Black community has been disproportionate[ly] criminalized, because of marijuana, while others have profited .... We've needed to act on this injustice and disparity for decades, and there are people standing here who have been speaking, acting, advocating[,] and pushing for this very moment for decades. This is the first of many actions that must be taken to have racial equity in our state, and I'm so humbled by being a part of making this step happen.

The setting for the signing was no accident; using a licensed cannabis business as the backdrop showcased the industry focus of the legislation. The dispensary also belongs to Wanda James, a longtime ally of Polis, and the first Black dispensary owner in the state. She spoke at the event about the importance of prioritizing social equity in the legal industry:

Social Equity is about righting the wrongs of the drug war and giving diversity a strong foot hold in the developing industry .... We all know the drug war unfairly targeted people and communities of color, leaving families and people stuck in the criminal justice system for decades. We legalized a plant and too many people of color were unable to participate in this new market opportunity. [My husband and I] were fortunate to participate in the industry before it evolved into a billion-dollar industry. But too many people who look like me were not given a fair opportunity to participate due to the prohibitive policies that target people of color many states, including Colorado, embraced early. I'm honored to help pave a path forward so more [B]lack and [B]rown entrepreneurs can have a future in the industry.

James's comments capture the spirit of equity advocacy in the legalization era--and not just in Colorado. They also show the significant influence that Colorado's market-based, “regulate it like alcohol,” approach has had on the equity debate. The legalization campaign in Colorado, which helped set the blueprint for legalization schemes elsewhere in the U.S., privileged economic arguments over justice concerns to build the political coalition necessary for it to pass. Many advocates could live with that compromise in the name of getting legalization done, but, a decade later, patience is wearing thin. Activists have pressured states that recently legalized cannabis and those currently legalizing cannabis to include equity provisions like those Colorado has now adopted. Most states where adult use is legal have incorporated such provisions.

Social equity provisions are intended to address the precise problem that Jared Polis, James Coleman, and Wanda James named in their remarks: the underrepresentation of people and communities of color in the legal industry, and the overrepresentation of the very same people and communities in the criminal justice system because of prohibition. This problem is part and parcel of a more general problem: the disproportionate impact of the broader War on Drugs on communities of color and the poor. As a result, though each state approaches social equity a bit differently, three priorities are typically present:

1. Increasing access to the industry for minoritized communities;

2. Sealing or expunging criminal records; and

3. Using tax revenue generated by legal sales to reinvest in disproportionately impacted communities.

Taken together, these initiatives constitute what we term “the social equity paradigm.”

The social equity paradigm has been significantly shaped by the dominant approach to legalization in the United States. This approach uses commercial markets modeled on those in place for alcohol to regulate and tax cannabis. The market-based approach to legalization has given birth to a market-oriented approach to equity and justice reform. For proponents, it's not just about avoiding arrest and incarceration for cannabis, but building generational wealth through cannabis. For some longtime activists, this market-centered approach is nothing less than the hijacking of the legalization movement by entrepreneurs and venture capitalists. For others, it represents the next natural evolution of the struggle for civil rights. As Wanda James has remarked:

I've often said that my father's generation fought to be able to ride the bus, right? To get on the bus and sit where they wanted to on the bus. Our challenge is how do we own the bus? How do we own the bus line, right? So, it's one thing to decriminalize, which is great. We should not be going to jail for this. But now let's take it a step further.

This article provides an overview and analysis of the contemporary social equity paradigm. Section II presents a history of the cannabis plant and the justice system, with a focus on the policies from the War on Drugs era that are the primary targets of social equity provisions. Section III examines points of convergence and divergence in states that pursued social equity measures. Section IV looks at challenges to the social equity paradigm, with an emphasis on legal challenges. The conclusion evaluates the implications of the analysis for the future of the social equity paradigm and broader legalization movement.

[. . .]

Social equity's movement from the margins to the center of current cannabis legalization efforts represents years of work by activists and allies. The central features of the social equity paradigm--facilitating access to the industry, removing criminal records, and investing tax revenue in disproportionately impacted areas--reflect both the legacy of prohibition and the contemporary approach to legalization, the hallmark of which is the creation of regulated for-profit cannabis markets. These markets have created, or have the potential to create, both private and public wealth. Proponents of social equity insist that those disproportionately harmed by cannabis prohibition should disproportionately benefit from its legalization. This is the cornerstone of the social equity paradigm.

That social equity provisions are now being included in most adult use legalization schemes reflects an important development in the broader movement to legalize cannabis and reform U.S. drug policy. Simply getting states to adopt such provisions may not be enough, however, as the discussion of the challenges demonstrates. The legal environment is proving hostile to social equity efforts and poses perhaps the most significant barrier to realizing program goals. In addition to the inherent administrative and regulatory challenges, courts have been reluctant to find constitutional the components of social equity programs that provide differential access to the cannabis market. This is particularly true when race is the basis of that access. Using race-conscious means to achieve race-conscious ends remains constitutionally fragile in the U.S. So far, colorblind social equity programs that focus on economic or geographic criteria have had more success, at least in federal courts. But the Dormant Commerce Clause is likely to continue to pose a significant challenge to any cannabis program that seeks to limit access based on characteristics such as residence in a disproportionately impacted community. As a result, the future of social equity programs as currently conceived remains uncertain. Federal courts already have a blueprint for how to strike them down, if individuals who get denied a license decide to keep litigating the constitutionality of these programs.

Ironically, perhaps, one of the biggest looming threats to social equity is federal cannabis legalization. While this is a goal of most legalization proponents, it will only compound the challenges social equity programs face. States will no longer be able to justify their social equity programs on the theory that they are operating as a “laboratory of democracy” in the context of federal prohibition. As noted above, opponents of social equity programs--and the First Circuit Court of Appeals--critique such an approach for being too economically protectionist of state-residents and thus per se discriminatory against interstate commerce. In other words, federal legalization will likely break the fragile constitutionality of social equity programs that seek to give qualifying social equity applicants privileged access to the market. Multi-state cannabis corporations will then likely rush to get licenses in as many states as soon as possible. This rush for licenses will push out potential social equity applicants who do not have the resources immediately available to compete. Federal legislation and legalization will likely threaten small-scale operators of all kinds.

Given these challenges, social equity proponents might consider, as a practical strategy, focusing their efforts less on industry access, and more on eliminating criminal records and securing community investment. Indeed, neither of these latter two aspects of the social equity paradigm face the kinds of legal and administrative challenges that already exist for industry access programs. Moreover, even successful industry access programs will be limited in scope compared to automatic criminal record expungement and/or the direct infusion of millions of dollars into disproportionately impacted areas. Regardless, all legalization stakeholders would do well to anticipate the challenges to the social equity paradigm that will come with further litigation and federal legalization and to incorporate responses to such challenges into ongoing advocacy efforts.

More generally, the shortcomings of the social equity paradigm detailed in this article show the inherent limits that the current approach to legalization imposes on the quest for justice through cannabis law reform. State regulation has led to a fractured regulatory regime across legalized jurisdictions. State attempts at redressing social inequities have not lived up to expectations. Moreover, state governments must balance competing interests in their regulatory schemes. What the market needs to be viable is not always compatible with what people need to thrive. Socio-political sacrifices are made as a result, such as using lotteries to distribute licenses to qualified applicants, rather than giving all qualified applicants a license, or restricting home-grow options for individuals in the name of limiting competition with or curbing diversion to the unauthorized market.

To be sure, policies such as unrestricted licensing or home grow would be devastating for the legal market and politically unpopular. They will also come with their own risks to both the people and the planet. But therein lies the rub: the market-centered approach to legalization is not well-equipped to provide the kind of justice many equity advocates desire, and it does not feel like the goals of equity are being realized when social equity programs themselves are functioning as sites of state-based coercion and social exclusion. People will continue to be arrested for cannabis crimes even after legalization so long as there is a regulated marketplace whose boundaries must be policed.

Other approaches are possible, but none are impervious to challenges. For instance, an approach formally rooted in the principles of transitional justice would carry a different set of priorities, including truth-telling, institutional reform, and making amends to those harmed through concrete forms of reparation or restitution. Such an approach would chart a different path forward than the social equity paradigm's market-based reparations-by-proxy, in which the needs of the regulated marketplace sit uneasily with the needs of those harmed by U.S. drug policy. Further, the resources available to reinvest in under-resourced communities are only as robust as the amount of cannabis that gets sold. To be clear, any approach will face challenges. The purpose of this article has been to analyze the reigning approach so that those seeking justice can be clear-eyed about the possibilities and limits of reform.

Professor in the Law, Politics, and Society Program at Drake University, This email address is being protected from spambots. You need JavaScript enabled to view it..

J.D., Lewis & Clark Law School (2023), jose.garcia-fuerte @outlook.com.