Minorities find themselves almost shut out of Michigan's marijuana business – Detroit Free Press
Gov.-elect Whitmer talks possible clemency for marijuana convictions Detroit Free Press
When Margeaux Bruner looked into the possibility of getting a license to enter the blossoming marijuana industry, she realized she would face some barriers that might be impossible to overcome.
The Novi resident has bachelor’s and master’s degrees and worked in the logistics industry, which would be handy skills if she was able to get a secure transporter license. But she also had gone through a divorce, which led to a bankruptcy that could be a disqualifying factor if she applied for a medical marijuana business license from the state.
Plus, the financial requirements to get into the industry — a $6,000 state application fee, $66,000 state regulatory assessments, $5,000 application fee from a local municipality and proof of $200,000 in assets — was an exorbitant hurdle.
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“I understood very early on that I wouldn’t qualify. No. 1 was the capital requirement and I knew that the bankruptcy would potentially put me in jeopardy,” she said. “But I was still completely driven to get involved in the industry in some capacity.”
She now is the political director for the Michigan Cannabis Industry Association, a Lansing-based advocacy group for the marijuana industry.
In that capacity, she has been able to see that the obstacles she confronted in getting directly involved in the marijuana industry are also problems facing others in the African American community.
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Few minorities in the marijuana trade
Under the medical marijuana law passed in 2016, the state isn’t required to keep track of the demographics of the people who get licensed in the industry. And because of state law that bans affirmative action programs for university admissions and public employment, there are no set-asides for medical marijuana licenses for minority communities.
As a result, the exact number of African American-owned marijuana businesses isn’t known, but Bruner estimates that out of the 233 licenses awarded by the state, only a handful have been given to minorities — roughly four or five dispensaries and one grower. In a city like Detroit, where African Americans make up 80% of the population, only a couple of the two dozen or so licenses have gone to blacks.
It’s an untenable situation, said former Sen. Coleman Young II, D-Detroit, who since leaving office in 2018 because of term limits, has started Coleman Young Consulting, a firm that helps communities and individuals looking to get into the cannabis business.
“It’s terrible, a complete missed opportunity,” he said of the lack of minorities in the industry. “What we need to start talking about is the economic development opportunities that come with marijuana and its ability to change lives, transform economies and provide jobs for people who desperately need work.
“What we’re not talking about, so far, is the lack of participation and opportunity for people of color, especially in the city of Detroit,” he added.
Barton Morris, an attorney with the Cannabis Legal Group in Royal Oak, said that most of his marijuana-related clients are white men and they have a distinct advantage in the industry.
“The biggest barrier for minorities is the capitalization requirement,” he said. “But there are also those who have been convicted of marijuana offenses. And they’re being left out.”
According to the 2017 Drug Policy Alliance annual report, arrests for marijuana offenses went down dramatically in states that have legalized marijuana for adult recreational use. But African Americans are still being arrested 2.5 times more than whites for simple possession despite similar rates of use of marijuana.
In other states, such as California, Colorado, Maryland, New Hampshire and Oregon, it has become easier for people to get their past marijuana convictions erased or sealed. Illinois’ recently passed legislation, which Gov. J.B. Pritzker is expected to sign this month, also includes a provision to clear marijuana records for offenses that are no long considered crimes under the new legalization law.
“There’s no question that the majority of people I’ve represented for simple, nonviolent offenses are minorities,” Morris said. “And that has ruined lives. And there is nothing that’s been done to remove that from their records.”
Gov. Gretchen Whitmer and Attorney General Dana Nessel have said that’s a concept they support and lawmakers have introduced bills to clear some records. But no hearings have been held and Whitmer hasn’t moved yet to pardon any marijuana crimes.
“A lot of people have a problem with their records. They’re returning citizens and then on top of that they have to have so much money up front,” Young said. “But if you’re going to come into a majority minority area, you should have to bring in a minority partner, or a victim of the war on drugs.”
State’s ballot proposal includes ‘social equity’ component
The state Marijuana Regulatory Agency (MRA) will try to rectify the issue when it comes out with the rules and regulations this month that will govern the marketplace for legal weed for adult recreational use, which voters approved in November.
Part of the ballot proposal, which legalizes the possession, use and growing of marijuana for people at least 21, includes a requirement that the state submit an annual report to the governor that includes demographic information on people who receive licenses. It also calls for a social equity plan “to promote and encourage participation in the marijuana industry by people from communities that have been disproportionately impacted by marijuana prohibition and enforcement and to positively impact those communities.”
There was no social equity language included in the law passed by the Legislature in 2016 to regulate and tax the medical marijuana market. As a result, no such considerations have been made for the 233 businesses that have gotten licenses for the medical market and those businesses will be first in line for licenses for the recreational market.
But the state has floated the possibility of reducing or perhaps even eliminating the asset requirements that are included in the rules for the medical marijuana market that range from $150,000 to $500,000, depending on the license.
And a new category of business license — the micro business, which would allow a licensee to grow up to 150 plants, process and sell the products from one facility — has marijuana advocates hopeful that the options will allow more diversity in the marketplace.
“The MRA’s social equity program will have dedicated representatives who will provide education and outreach to those looking to enter the adult use marijuana market,” said David Harns, spokesman for the MRA. “The education and outreach sessions will be coordinated by the MRA and will take place in communities that have been disproportionately impacted by marijuana prohibition and enforcement.”
Industry advocates suggested that some of the cities that could qualify for social equity programs include Detroit, Pontiac, Grand Rapids, Muskegon, Saginaw and Flint.
Other states also have implemented social equity programs:
- California passed a law last year allowing communities to come up with their own social equity programs. Los Angeles, for example, provides priority review of license applications for people who qualify for the program, as well as technical and business assistance; social equity applicants also could qualify for fee deferrals, workforce development, job training and placement.
- Massachusetts has designated 29 cities that have been disproportionately impacted by marijuana enforcement. For those communities and people who qualify: education programs for people who want to get involved in the industry; priority license review status for people who meet the equity criteria; technical services and mentoring for businesses facing barriers.
- Illinois passed marijuana legalization last month that is expected to be signed into law and go into effect on Jan. 1, 2020. The plan includes $20 million in low-interest loans and fee waivers for social equity applicants, and 25% of the tax revenues from marijuana sales will be put back into communities that have been disproportionately impacted by marijuana enforcement.
Morris suggested that a social equity program could include things such as training at community colleges for cannabis-related jobs; low-interest loans or a special fund for minorities looking to get into the industry, and giving priority status to applications that have minority ownership interests.
“If we don’t do something about it now, there’s going to be no diversity in the industry,” he said. “So it’s important that this be addressed adequately.”
Marijuana attracts some minority ownership
Despite the barriers, some minority business owners have broken through. Anqunette and Richard Sarfoh are the owners of the BotaniQ dispensary in Detroit’s Corktown and have hopes to soon open a grow and processing facility in Warren.
Anqunette Sarfoh, a former television news anchor at Fox 2 News, started using marijuana when she was stricken with multiple sclerosis and has gone from having to take nine prescription medications a day to none.
The couple retired from their jobs and, along with some investors, were able to cobble together the necessary capital to get approved for a license, opening on Nov. 6, Election Day in 2018.
But their path to the legal weed business was not without pitfalls.
“We found that so many out-of-state investors had come in and had bought up all the properties in Detroit’s green zone and were just sitting on them. That was the biggest hindrance for us,” she said, referring to areas at least 1,000 feet from schools, parks and churches. “We don’t own this facility, but we have a 100-year lease, which renews every year and it increases.”
And she has found it difficult to attract African American employees to work in the dispensary.
“In our community, cannabis use has been stigmatized, because of how the legal impacts have affected our community,” she said. “In some communities, kids can go in a cornfield and smoke a joint and go on about their lives. But in our communities, what happens when you’re caught, your future is gone. And so for the longest time, you just don’t even touch it and and you grow up knowing that it could ruin your life.”
Likewise, Christine Montague, a retired social worker and former Washtenaw County commissioner who, along with her daughter, Teesha, owns the Huron View medical marijuana dispensary in Ann Arbor, has gotten the green light — and a license — from both city and state officials. But her path wasn’t easy, either.
“I refinanced my house. I took all my money out of my 401(k) and I started the business,” she said. “I had to build it up from nothing.”
And while she has tried to meet with other marijuana business owners and develop a network of colleagues who might be willing to share in things like transportation costs, Montague says she has encountered a tight-knit group of owners who have not been particularly welcoming.
“Most of them are struggling like us. And most of them have partners, but none are African Americans,” she said. “I feel like I’m a trailblazer, but it’s just a very hard business for minorities, and particularly minority women, because people think they
can bully you.”
Other minorities have gotten into the business without having to get a license. There are lawyers, consultants, chefs and event planners who are capitalizing on the budding business.
High End Detroit, an event planning company, hosted a recent cannabis dinner to bring together a dozen African Americans who had an interest in the marijuana business, without the need for a license, from CBD-infused hair care products to production of vaping devices to cannabis consulting. Held at a bed and breakfast on the west side of Detroit that caters to people who want to smoke a bowl and enjoy a marijuana-infused meal, the event allowed the group to vent about the challenges of succeeding in the emerging industry.
Willis Marshall, of Detroit, is marketing a line of hemp-infused skin and hair-care products under the DaO label. But he also wants to expand into the marijuana market with a grow and processing facility.
“The biggest barriers are the amount of cash you need and the liquid assets,” he said. “But I’m starting to see minorities pool together and hopefully that will level the playing field.”
Kathleen Gray covers the marijuana industry for the Free Press. Contact her: 313-223-4430, email@example.com or on Twitter @michpoligal.
This article originally appeared here in https://www.freep.com/story/news/marijuana/2019/06/21/minority-representation-marijuana-business/1515162001/