'Social equity' cannabis licenses aim to repair drug law harms to BIPOC communities

One bill headed to Gov. Inslee’s desk this session, SB 5080, aims to increase racial diversity in the state’s licensed cannabis businesses — and to support the communities most harmed by past drug laws.

Washington state has had legal recreational cannabis for more than a decade. But it still wasn’t very long ago that adults were being arrested for using it in Washington.

Peter Manning is the president of Black Excellence in Cannabis, which advocated for the legislation. He said his cousin was arrested and sent to state prison for smoking a joint at a bus stop in White Center, southwest of Seattle, as recently as 2005.

“They charged him with having drugs in a school zone. They gave him two years. My cousin has never been the same since,” Manning said.

University of Washington research finds that, prior to legalization, Black people were nearly three times more likely to be arrested than white people for possessing cannabis, despite adult use being similar across racial and ethnic groups.

Since legalization, Black applicants have faced barriers to entering the business. Records from the Washington State Liquor and Cannabis Board show only 4% of the state’s new licensed cannabis businesses are Black-owned.

Now advocates are celebrating the passage of legislation aimed at addressing these problems.

“Senate Bill 5080 helps the Black and brown community to gain access — and more access — in the cannabis industry," said Mike Asai, who isalso with Black Excellence in Cannabis. "We’re just elated and happy that this bill has passed.”

The bill allows regulators to award a total of nearly 100 “social equity” retail licenses, along with new producer and processor licenses. Applicants must show that they or their families were harmed by prior drug laws and lived in areas with higher rates of drug arrests and poverty.

Asai himself was denied a license for his medical cannabis dispensary in 2016. He is eagerly applying for one of these new licenses.

“I meet a lot of the criteria as a social equity applicant and as a pioneer in the medical cannabis days, and very hopeful that I will obtain a license,” he said.

Raft Hollingsworth has operated The Hollingsworth Cannabis Company, a licensed producer and processor in Shelton, Washington, since 2013. He also served on the Social Equity in Cannabis Task Force that made recommendations to the WA Liquor and Cannabis Board to address social equity issues.

Hollingsworth said he appreciates that the state took on the question of restorative justice. He hopes the new licenses will create generational wealth and repair the harms of previous drug laws.

"Black and brown communities should feel the bulk of this bill,” he said. “It should create opportunities for them to profit on something that once oppressed them. Straight up.”

But Hollingsworth said it’s clear these new licensees will be competing for business in a very tough market.

“It’s hard for everybody, not just people of color right now," he said. "You have a real surplus of marijuana, prices are down, but the product number is still going up.”

That was the biggest concern of the Washington CannaBusiness Association, which testified as “other” on the bill.

“The more flower on the market, the further prices have gone down," said Vicki Christophersen, the group’s executive director. "We’ve seen the lowest prices for flower since legalization because we have so much of it.”

Christophersen said that’s why the bill grants 100 licenses each for retailers and processors, but just 10 for new growers.

Her group was also concerned that the new retailers could all potentially locate in the same place, further flooding that market — but she said state regulators will address that during rulemaking.

Hollingsworth said the new licenses could be part of a shift away from big players to more mom-and-pop businesses. The state is already accepting applications for 46 of these retail licenses — that deadline closes April 27. The bill anticipates 52 new retail licenses in future years.

Update 4/24/2023: A statement issued by the Washington State Liquor and Cannabis Board on the passage of SB 5080 said in part, "The bill is the result of four years of dedicated leadership by LCB Board member Ollie Garrett. It was through her leadership that the agency initially took stock of the cannabis system in 2019 and began the effort to address its lack of diversity in business ownership. In 2020 the LCB submitted agency-request legislation to increase racial minority representation within the system."

"E2SSB 5080 expands the scale of the current Social Equity Program and makes it more effective by allowing additional retail stores over time, allowing social equity licensees more flexibility to locate a store, while also maintaining local control over zoning and outlet density. With Gov. Inslee’s signature, this new law will allow the LCB more flexibility to help those harmed by the War on Drugs, establish their business and achieve the state goal of increasing opportunity for social equity applicants."

The Legislature has also taken action on two other high-priority bills affecting the cannabis industry:

SB 5367 brings all THC products into the state’s regulated marketplace. It closes a loophole for industrial hemp-derived Delta-8 THC which has shown up in products in some convenience stores and gas stations.

But Christophersen said the issue is not resolved with this bill.

“You can regulate what’s in the convenience stores and the gas stations, but the internet is very hard,” she explained.

Hollingsworth said the legislation is good news for regulated small businesses.

“They were putting [Delta-8] in edibles, vape cartridges," he said. "It was indistinguishable from conventionally grown cannabis” and it drove prices further down.

SB 5069 would allow interstate cannabis commerce pending changes to federal law.

According to WACA, the legislation is a “trigger” bill “modeled on legislation adopted already in California and Oregon.”

It would authorize Gov. Inslee to allow Washington businesses to compete across state borders should the federal government end cannabis prohibition while our state Legislature was out of session.

Hollingsworth said Washington state would be well-prepared to compete should that occur.

“You spend $20 here versus $20 anywhere else, it’s going to be a better product here," he said.