Preventing Industry Abuse of Cannabis Equity Programs

Abstract

Enforcement disparities have pervaded the history of U.S. drug control laws, particularly regarding cannabis. These disparities have systemically disadvantaged persons of color and other communities. Responding to these inequities, some state cannabis legalization campaigns have emphasized social justice goals, and states and localities have adopted cannabis social equity programs directed toward communities disproportionately impacted by the War on Drugs. These programs encourage and assist individuals from target communities in entering the legal cannabis industry by offering access to grants, loans, and technical assistance and providing priority or preference in licensure, a significant advantage in a competitive industry. Equity programs serve laudable goals but must be structured to mitigate the risk of corporate abuses that threaten public health. The history of tobacco control in particular offers cautionary examples of how for-profit industries can infiltrate communities by leveraging targeted marketing, building political relationships, and operating disproportionately in underprivileged areas. Equity programs’ focus on disadvantaged communities may inadvertently allow this damaging history to repeat in the cannabis industry to the detriment of the communities equity programs seek to help. This Article explores pathways that could lead to industry abuse, surveys possible restrictions within a for-profit market, and assesses options for alternative market structures, including government monopoly, mandatory nonprofit status, and mandatory public benefit company status. Among these options, compulsory public benefit status offers the best combination of current legal feasibility and advancement of social equity goals.