Will Black People Miss Out On The Benefits Of Marijuana Legalization?

January 6, 2014  |  

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Colorado is about to find out what black, brown and poor communities have known for years: There is a sustainable amount of income to be made in selling weed.

The now legal recreational marijuana industry, which went into effect statewide on New Years Day, is projected to raise $130 million in taxes for the state this year alone. According to The Raw Story, many dispensaries will run out of product by the end of this week, which means that retailers too will likely reap from good ol’ supply vs. demand economics. This article in the Washington Post states that business is going so well that some dispensaries are already talking about expansion, including one dispensary, which already plans to double its 20,000-square-foot production space. Also, the Denver Post is reporting that High Times magazine executives are launching a new private-equity fund called the HT Growth Fund, which plans to raise $100 million over the next two years to invest in cannabis-related businesses, with individual investments expected from $2 million to $5 million per company. And according to this article on CNBC, the National Marijuana Business Conference, now in its second year, has seen its attendance double with more than 30 exhibitors paying as much as $16,000 to talk about investments, equipment, legal services and accounting.

It seems like everyone is gearing up to profit hugely off of the coming wave of legalization, which is happening across the countryeveryone except the folks who, historically, have found themselves disproportionately affected by draconian marijuana laws. Yeah, I’m talking about blacks folks, who are arrested twice as much on average than whites, even as statistics show that blacks and whites use marijuana at almost identical levels. Even in Colorado, as customers, retailers and the government all reel in the funky smelling greenbacks, there are still laws on the books, which give significant jail time (one to three years) for the sale and distribution of five pounds or less. As MSNBC contributor Goldie Taylor smartly pointed out in a series of tweets delivered over the weekend, legal marijuana in Colorado has already reached $500 an ounce with a 25 percent sales tax, making it more expensive than what you can get out on the street. As such, there is less economic incentive to legalize when ditch weed is still available. The tumblr Notes of a Scandal documents more of Taylor’s beliefs on how capitalism and legalization of marijuana can work together to further malign the already marginalized, writing:

 “I’ve read a handful of columns re: legalization of marijuana from pretty smart writers. All of them miss the mark.The manner in which pot has been legalized is problematic, at best. Colorado’s new regulations further tip the scales in favor of a privileged class already largely safe from criminalization those people– largely black, brown and poor– due to exorbitant pricing and heavy taxation, are priced out of the legal market for those of you concerned about inequities in drug prosecution and sentencing, my point is this will widen the chasm pricing and taxation will ensure that the black market for weed will persist. And that black market will remain criminalized.”

Moreover, black, brown and poor folks, who are more likely to be arrested for marijuana possession and ultimately find themselves priced out of Colorado’s market as legal customers, might also find themselves economically maligned as potential legal sellers and business owners of the plant. This article in the Business Insider from 2013 lays out pretty well the history of marijuana legalization in Colorado, which started through legalization for medical purposes and has blossomed into a professional and rigorous regulatory system of licenses and registrations both sellers and growers must maintain just to even qualify to grow commercially. According to the report, the cost to buy-in into the burgeoning recreational marijuana market is pretty steep. And as the current law states, no new licenses will be granted to new marijuana businesses until eight months from now (some places in Denver have amended the law to hold all new ordinances off until 2016), which the Business Insider reports will give established businesses, many of whom were former medical marijuana dispensaries, “an outstanding advantage moving forward in the legalized marijuana economy.” This advantage will likely benefit at least one investment group, who had already been planning on franchising and expanding nationwide “when serious marijuana legalization moves beyond the Rockies.” And according to Kayvan Khalatbari, co-owner of the very successful Denver Relief marijuana dispensary, to get into the business of selling legalized marijuana in Colorado would cost an upwards of $2 to $10 million – and that was in 2013, before the official legalization happened. Khalatbari, who also acts as a consultant to other potential marijuana purveyors looking to establish a claim in the emerging marijuana industry, says this about the problem with trying to get your start as a legal seller around the country:

The startup costs alone are immense, as is the amount business owners need to have on-hand just to score a license. In Massachusetts, you need half a million in the bank and a financial letter of credit,” said Khalatbari. “In Connecticut it’s $2 million. But even aside from that, if you’re serious about Massachusetts, yet again there’s only 20 to 35 licenses in the entire state for potentially 200,000 patients. We’re dealing with 3,000 to 10,000 patients per center, so it’s going to be massive.”

What this all could very well mean is that by the time legalization hits more parts of the country, particularly in states with higher yields of people of color and those most affected by the drug laws, the opportunities to legally come in as a small business and profit will be next to impossible. Hopefully, it’s all a reminder that there is a bigger difference between criminalization and legalization. Instead of being given harsh sentences and policing because of marijuana, you will get harsh sentencing and policing because of a failure to have the appropriate licenses. As trivial as it all seems, the racial and economical pitfall around marijuana legalization are issues, which I hope the NAACP, among other civil rights groups and leaders, add to their platform in the coming years. The potential wealth building opportunities alone, which marijuana legalization can bring about, and how the benefits of legalization will likely be distributed, are too important to ignore. If they are ignored, then the industry will likely be as whitewashed as Silicon Valley.

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