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How to make recreational pot business fairer to black and brown entrepreneurs

A loophole in the Illinois law opens the door to businesses that have only token minority ownership.

Marijuana being grown at a dispensary in Oakland, California.
Marijuana being grown at a dispensary in Oakland, California.
AP Photo/Jeff Chiu

Last week, applications for Illinois’ 75 new recreational cannabis licenses became available to the public, opening the door for dispensaries to begin sales on Jan. 1.

On the same day, 19 members of the Chicago City Council’s Black Caucus threatened to pass an ordinance shutting down those sales for at least six months. Why would elected leaders threaten new jobs and revenue from businesses their own constituents overwhelmingly favored?

It’s about equity.

We need to make sure that we are doing right by the communities still reeling from four decades of the War on Drugs, when the state leveraged the might of the criminal justice system overwhelmingly on black and brown communities. The fact is, the current legislation doesn’t just fall far short — it actively gives white-owned businesses a huge leg up.

Here’s how:

When cannabis sales become legal on Jan. 1, the state’s existing medical dispensaries, which are all white-owned and already fully operational, will have a jump on new businesses just trying to set their feet. But it’s even more insidious than that, and it has to do with the lottery system that will determine the distribution of new licenses in the first place.

Perhaps the most innovative feature of House Bill 1438, Illinois’ law legalizing cannabis, was that it sought to repair the damage of the War on Drugs through its “Social Equity Applicant” program. That program created three designations of social equity applicants, who would have extra points in the application lottery and be eligible for financial resources to offset start-up costs.

The big catch: One of those social equity designations, number 3, directly permits people who do not belong to affected communities to apply, as long as they sign up members of those communities as minority stakeholders.

Therefore, existing businesses, including the white-owned dispensaries that are currently the only game in town, will be able to apply for licenses with a social equity designation meant for new applicants from impacted communities. What’s worse, they will do so by using token members from those communities, who will be divested from the businesses when capitalization time comes. This is in direct violation of the spirit of HB 1438.

I know this because I’ve been here from the start.

Way before Gov. J.B. Pritzker signed HB 1438 into law, groups representing black and brown communities fought to make sure that any effort to legalize cannabis in the state placed equity at the center of cannabis legalization. My organization, Equity and Transformation joined The Black Roots Alliance, Action Now, Chicago Food Policy Action, and a bunch of our allies to form the PURE Cannabis Coalition to demand the state of Illinois put equity before profit and to ensure victims of the devastating War on Drugs saw reparations.

We knew that too often in American history, when occupations transition from being part of informal economies to being part of the formal economy, the black and brown bodies who had previously done the work were left behind. Cannabis legalization was a once-in-a-generation opportunity to rewrite the story.

So we organized and developed the framework for what constituted an equitable cannabis policy in Illinois. We then let our demands be known to state Sen. Heather Steans and state Rep. Kelly Cassidy, both Chicago Democrats, who listened and put equity at the front and center of their bill.

That’s why members of the PURE Cannabis coalition stood behind Pritzker when he signed HB 1438 into law. It instantly qualified 800,000 state residents for expungement of criminal records, and it dedicated 25 percent of tax revenue to the Restore, Reinvest, Renew program to address economic development, violence prevention services, re-entry services, youth development, and civil legal aid for impacted communities.

All of that labor is now at risk because of a loophole added after the bill was signed. If it goes into effect, it will be yet another theft from black and brown communities and go a long way to tarnishing “one of the most equity centric laws in the nation.”

As Ald. Anthony Beale said at a City Council zoning committee hearing last week, we are “fighting very hard to try to get an inclusion of the black and brown communities to be able to benefit from a product that has locked our community up. And now we’re being locked out of opportunities to be able to capitalize on a product that’s now been legalized.”

You better be sure we are still fighting so that doesn’t happen. We call on Gov. Pritzker and our legislators in Springfield to get rid of the Social Equity Designation #3 and restore the original intent of HB 1438.

Richard Wallace is the founder of Equity And Transformation, a nonprofit organization advocating to build social and economic equity for black Chicagoans engaged in the informal economy. In 2018, he was named one of the inaugural Atlantic Fellows for Racial Equity.

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