NACB SOCIAL EQUITY GUIDELINES

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Executive Summary of the Plan

Overview.  The legalization of medical and adult-use marijuana has become widespread in the United States and has stimulated an urgent discussion about creating social equity programs to benefit individuals and communities damaged by the long-running War on Drugs.  The National Association of Cannabis Businesses (NACB) has examined current state and municipal social equity plans to understand their diverse approaches and identify their keys to success.  We believe our work is timely and will give policymakers a roadmap to leveraging the legal marijuana industry to create new minority-owned businesses, thousands of jobs, and substantial tax revenues to strengthen their own communities.  

The goal of social equity laws is to ensure that people from communities disproportionately harmed by marijuana prohibition and discriminatory law enforcement are included in the new legal marijuana industry.  Policymakers are working to address criticisms that outsiders are setting up legal cannabis businesses and profiting by doing the same things their less fortunate neighbors were arrested and given jailtime for just a few years ago.

Qualifications for social equity licenses. In most states, individuals eligible for equity licenses must live in(or have recently lived in) a designated geographical area where there has been a high rate of arrest and incarceration for marijuana-related activity that is no longer illegal.  These areas must have higher than average poverty and unemployment rates.  Applicants who themselves have been arrested or convicted, or who are hiring employees who have been arrested or convicted, may receive priority for their social equity license application.

Benefits for successful social equity applicants.  Priority consideration in the licensing process, reduced application and licensing fees, technical assistance, and low-interest loans to under-capitalized license holders.  An applicant who has been awarded a social equity license may also be eligible to set up shop with an established cannabis firm to learn the ropes in what some states refer to as “incubator” programs. Some consider it a form of apprenticeship.

Judicial reform is also a critical part of social equity success which increases the employability of previous offenders and helps remove barriers to housing and other benefits.  NACB strongly advocates automatic expungement of marijuana-related crimes, particularly those not involving sales to minors, operation of a motor vehicle, or violent offenses.

Reinvestment in Disproportionately Impacted Areas.  Twenty percent of cannabis tax revenue should be invested in the impacted communities to enhance education, legal aid, youth development programs and violence prevention.

Guidelines

Decades of arrests, convictions and incarcerations from cannabis-related crimes have inflicted structural, financial and emotional harm on areas throughout the country. These guidelines address the impact that cannabis enforcement policies have had on those marginalized communities and individuals. The proposed social equity program and policies are designed to benefit those who live in geographical areas adversely affected by the criminalization of cannabis. Through opportunity, training and investment, these guidelines will help those Disproportionately Impacted Areas achieve sustainable improvement.

I. Cannabis Social Equity Board

Establish a Cannabis Social Equity Board through a transparent appointment process led by the Governor and the state agency governing cannabis. The Board will be held accountable through public voting and monthly hearings. It will be comprised of approximately 12 members with bipartisan representation from the state legislature; representatives from related state agencies such as the department of economic development, the small business administration, and the cannabis control commission; licensed representatives from the state's cannabis retail, wholesale, processor and cultivator sectors; and a representative from a Disproportionately Impacted Area who is experienced in community development.

II. Qualifications for Program Applicants

51% ownership and control by one or more individuals who must meet the following criteria:

  • Resident of the state for the last 12 months
  • Annual income at or less than 80% of the state median income
  • Presentation of community action plan to hire those from a Disproportionately Impacted Area (DIA)
  • Convicted of cannabis-related offense or had a parent, spouse or child convicted of a cannabis-related offense up to 2 oz, after January 1, 1997, and prior to state legalization, without distribution to anyone under 18 and without connection to a violent crime

OR

Currently reside or resided in a Disproportionately Impacted Area (DIA) forat least five of the last ten years, defined as a geographic area with:

  • High rate of arrest, conviction and incarceration related to the sale, possession, use, cultivation, manufacture, or transport of cannabis.

AND one of the following criteria:

  • Poverty rate of at least 20%
  • 75% or more of the children participate in federal free lunch program
  • 20% of households receive benefits under Supplemental Nutrition Assistance Program
  • Average unemployment rate is more than 120% of the national average for at least 2 consecutive calendar years immediately preceding date of application
III. Supporting Documentation
  • Incorporation documents including Articles, Bylaws or Operating Agreement showing ownership
  • Proof of income-tax return and two months of pay stubs or proof of eligibility for general assistance, food stamps, SSI or SSDI
  • Proof of conviction-court documents, probation documents or Department of correction documents
  • Proof of residency-driver's license, utility bills or voter ID card
IV. Disparate Impact Study

At least every three (3) years, state commission will publish study of extent of disparate impact and burden based on race, gender, religion, sexual orientation, or country of origin by persons with prior cannabis-related convictions

V. Business and Economic Development Studies
  • The state's Office of Economic Development (OED) shall implement policies to ensure that regulated entities promote participation of diverse groups and provide equal access to employment and that no recipient of public funds engages in adverse discrimination against cannabis-related business or job applicants
  • The OED shall conduct outreach and provide continuous notice of participation opportunities and submit a report to the Governor and state legislature summarizing the participation and utilization of diverse groups in the cannabis industry
VI. Program Benefits
  • Funded from 5% of cannabis tax revenue
  • Training and technical assistance: Available workshops, Application assistance, Business plan creation/operational development, Management, recruitment, employee training, Accounting, Sales, Tax and legal compliance, Best practices, Access to low-interest loans, Raising private capital
  • Reduced application and renewal fees: 50% reduction of application fee and first year renewal discount with step down of 10% each year
  • Priority licensing and processing
VII. Expungement

Automatic expungement of record if arrested or convicted of cannabis-related crime if the arrest meets the following criteria:

  • Involved less than the new state limits
  • Did not involve distribution, endangerment to or neglect of someone less than 18 years old
  • Not connected to a violent crime
  • Not connected to operating motor vehicle under the influence
VIII. Reinvestment
  • Allocate 20% of cannabis tax revenue to independent special cannabis development fund
  • Fund devotes resources to Disproportionately Impacted Area (DIA)education, legal aid, youth development and violence prevention
IX. Incubator Program
  • General applicants can qualify to become incubators and receive permitting priority and reduced renewal fees
  • Incubator must have valid license and 1000 square feet of available space for equity applicant to use rent free for one year
X. Loans
  • Establish Social Equity Cannabis Business Development Fund for loan program funded through licensing fees and tax revenue
  • Must satisfy criteria to apply for Social Equity Program
  • Must have received a license
  • Fixed federal rate for at least 5 years
  • Loan proceeds only for day-to-day business operations (rent, payroll, equipment, inventory, compliance, training, utilities, professional services)
  • Documentation includes financial narrative outlining applicant's experience and knowledge of operating cannabis business, business plan, work experience, use of funds and repayment plan
  • Rate, size and duration of loan determined on case-by-case basis
XI. Regulatory Authority
  • State agency or commission has the authority to review, regulate and enforce the social equity programs in cities and communities
  • Any municipality may issue ordinances or regulations it deems reasonable for the operation of cannabis businesses; however, such ordinances or regulations shall not conflict with the regulations and policies issued by the Cannabis Social Equity Board or contravene any remedial or protective part of this Act

Compare State Cannabis Social Equity Provisions

Compare criteria, benefits, funding, tax allocations and much more! See how other states have improved social equity for the growing US cannabis industry.
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