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Marijuana legalization is one of the most successful, if disappointing, social movements

Cannabis prohibition remains central to America’s failed war on drugs: more than half a million people were arrested for a cannabis-related offense in the United States in 2018, accounting for more than 43% of all drug arrests.

But times are changing: cannabis reform is one of the most successful social movements of recent times. Today, 24 states and Washington, DC, allow adult-use cannabis.

Although the drug remains banned at the federal level, the Biden administration has recently begun the process of reclassifying cannabis as a less dangerous substance (moving from Schedule I to Schedule III). This will dramatically loosen federal restrictions on the US cannabis industry, which is projected to generate more than $30 billion in retail sales by 2024.

Cannabis legalization, however, has been a disappointment. High barriers to entry prevent many small business owners from entering the industry. A 2023 survey found that fewer than 25% of U.S. cannabis businesses are profitable, with most of the money going to a small group of large, multi-state corporate operators led by predominantly white ownership groups. A 2021 report found that fewer than 2% of U.S. cannabis business owners are Black.

These are the somewhat predictable results of the concessions that cannabis activists made to the business community. States that have not yet legalized cannabis should take into account the dangers of these compromises, or they will end up reproducing the very power dynamics that legalization was supposed to disrupt.

Equity has long been a priority for some cannabis legalization activists. Washington state legalized cannabis for adult use in 2012 with a law drafted by a small team of local activists and supported by the American Civil Liberties Union (ACLU). Advocates were primarily concerned with protecting small, independent operators, including protections such as residency requirements for cannabis license holders, limits on the number of licenses held, and strict limits on the amount of “canopy” a cannabis grower is allowed to grow. This has allowed small operators to gain a larger share of the market in Washington than in other states.

But by the time California legalized cannabis in 2016, corporations had already realized the huge profit potential offered by legal marijuana. Local activists spent years drafting a progressive legalization initiative in California that included many of the same protections implemented in Washington.

The initiative was supported by prominent national cannabis advocacy groups, including the Drug Policy Alliance and the Marijuana Policy Project. However, before they could bring their amendment to a vote, Silicon Valley billionaire Sean Parker backed another legalization campaign with $8.5 million of his own money. Some groups pulled funding from the previous bill and pressured local activists to support the new, more resourced campaign, resulting in a more business-friendly bill with no residency requirements or limits on licenses.

In other states, activists have attempted to develop legalization bills focused on consumers and patients. Michigan’s cannabis industry, for example, enjoys relatively low barriers to entry, making it easier for small operators to establish themselves, thereby increasing competition and lowering costs for consumers.

This was achieved only because local activists resisted corporate influence. In the run-up to Michigan’s 2018 campaign, they were pressured to draft a business-friendly cannabis legalization bill by national groups and corporate donors seeking the same kinds of market advantages they enjoyed in California.

They resisted the pressure and lost a significant amount of financial support as a result; on average, pro-legalization campaigns raise more than 400% of their opponents’ money, but in Michigan campaign spending was much lower. Voters still overwhelmingly supported the bill.

Still, Michigan has had to grapple with one of the most persistent challenges of legalization: racial equity. A 2021 study found that about 3.8% of cannabis business owners in Michigan were Black and only about 1.5% were Latino.

Some states have been experimenting with ways to address these concerns, with mixed results. In 2019, Illinois became the first state to incorporate specific racial equity provisions into its cannabis law, creating a social equity applicant system, providing technical and financial assistance to first-time business owners, and distributing 25% of cannabis tax revenue to communities disproportionately impacted by the war on drugs. A recent report estimates that 27% of legal cannabis business owners in Illinois are Black, but only 5% identify as Latinx and 3% as Asian.

New York’s cannabis law, passed in 2021, followed in Illinois’ footsteps and has been hailed as the most progressive cannabis law instituted, with a goal of awarding at least 50% of its cannabis licenses to equity applicants. But delivering on that promise has so far proven elusive. After New York’s cannabis market gained momentum this year, initial results have been disappointing for equity advocates.

Still, these more progressive laws make it easier to achieve equity. Among the biggest barriers for people of color trying to enter the industry are excessive regulations and fees, which tend to disproportionately affect small operators. Passing reforms has been challenging because stakeholders who benefit from the current system fight hard to protect their share of the market, even when the regulations they are protecting make little practical sense.

And reforms implementing it face an uphill battle. In Washington, activists finally passed reforms designed to help equity seekers succeed in the cannabis industry in 2020, eight years after marijuana was legalized in that state. In recent years, however, the percentage of the state’s cannabis business owners who are Black has stagnated at 4%.

It may be too late to prevent corporate domination of the cannabis industry. California’s market is already showing the effects of consolidation: The number of cannabis licenses in the state has fallen from a high of 18,000 to 4,000. Where Californians once had around 6,000 cannabis brands to choose from, now only 1,600 are legally sold in the state. A 2022 LA Times analysis found that the 10 companies with the largest cultivation operations in California own 22% of the state’s cultivation licenses.

But the brewing industry suggests that more is possible for small operators, who are more likely to be people of color. Independently operated craft breweries have increased their market share, reaching a small but significant 13% in 2021.

If legal cannabis is not pushed in a more diverse and progressive direction, it will fail to produce the social change that motivated many activists to promote it in the first place.

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(Jose Mello is an associate professor of political science at DePaul University and the author, most recently, of “Marijuana for profit: cannabis legalization, racial capitalism, and the expansion of the carceral state.”)

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