Marijuana

Stop Pot Monopolies From Gobbling Up Arizona's 'Social Equity' Licenses, Group Urges

A coalition has sent DHS a letter asking it to lower filing fees and make other changes to facilitate the "social equity" part of Prop 207.
A coalition has sent DHS a letter asking it to lower filing fees and make other changes to facilitate the "social equity" part of Prop 207. Shutterstock
A collection of marijuana industry veterans, pastors, and people of color who want to enter the now-legal cannabis industry are asking the Arizona Department of Health Services to ensure that new licenses meant to address the racist impacts of the War On Drugs are not awarded to large cannabis conglomerates.

"Having been around for a bit, we know how the big boys like to come and grab everything up,” said cannabis attorney Jerry Chesler, who sent a letter to DHS on the coalition's behalf last week.

At issue are the 26 new licenses for cannabis establishments that the state is required to issue under Proposition 207, the marijuana legalization law that passed in November. With the proposition essentially capping the number of licenses for recreational dispensaries in the state and allowing current medical dispensaries early access to them, those 26 licenses required to be issued as part of a "social equity" ownership program may be the only chance many have of breaking into the market.

How that program will work is an open question. The proposition only requires that it "promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws." It's a very general description that leaves the specifics to DHS to sort out.


While data reinforces what communities of color have long known — that marijuana enforcement disproportionately targeted Black, Latino, and Native people — efforts to tie licenses explicitly to race have been found unconstitutional in other states, a national cannabis attorney told Phoenix New Times in November.

In the letter to DHS, Chesler proposes instead to:

—Prioritize 22 Arizona ZIP codes that have high poverty rates and large populations of color

—Require applicants to be either 1.) residents of those areas for at least five years or 2.) have a nonviolent pot offense or be related to someone who does. Those applicants would be required to own at least a 51 percent stake in the company.


—Require applicants who meet the above standard to locate their store in the ZIP code or pay a percentage of their profits to community organizations in that ZIP code if they decide to locate elsewhere. Chesler's proposal also suggests requiring documentation of a plan to encourage hiring people from one of those ZIP codes as part of the application. (You can read the proposal in full at the bottom of this page.)

The goal is to build collective economic engines that can uplift the whole area, said Ingrid Joiya, a cannabis business consultant who helped develop the plan in the letter.

The challenge behind the plan, she said: “How can you really help the community… instead of just making 26 people who win the licenses individually wealthy."

Joiya said the recommendations in the letter were developed based on her experience working with applicants in other states and on meetings with local pastors and members of impacted communities. She said the pastors involved would be issuing a statement later this week.

Joiya said it's especially important to guard against large operators using a token person of color to try and take advantage of the program. In one case last year, Tempe-based cannabis conglomerate Harvest agreed to donate $500,000 to resolve a complaint from Ohio regulators that it had falsely listed a Black woman as its local owner and operator to get a license in the state.

As well as requiring sworn affidavits to guard against such "straw man" arrangements, the letter proposes lowering filing fees, allowing people with non-violent marijuana convictions to apply for the licenses, and not requiring that applicants already have a location secured before they can apply.

“Let the balls fall where they may, [and] you’re going to end up with the industry looking like it does now, which is a bunch of white guys," Joiya said.

Chesler said he's representing the group on a volunteer basis because he believes the program should help address some of the inequities in enforcement. Back in 1974, he was busted for a marijuana offense in New York. He says because he was a white kid from Long Island who went to a politically connected temple he escaped punishment.

“I got a break. I didn’t go to jail. I got be a lawyer,” Chesler said. “If I was a Black kid I would probably still be in jail.”

Joiya put it more directly.

“People who look like me are sitting in jail for the very same thing people are having very successful business enterprises [doing],” she said.

The social equity component of the legalization proposition was a key part of drawing support from communities of color to pass Prop 207, Joiya said. If the social equity licenses end up just being a way to further the existing industry, it's a "bait and switch."

DHS spokesperson Steve Elliott told New Times that the department had received the letter.

"[DHS] looks forward to engaging with stakeholders, community members, and interested parties as we develop the necessary regulatory framework in the coming months," he wrote in an email.

The agency has not released any information on when the social equity licenses may be issued, but Joiya and Chesler say they are hoping for a transparent process and a seat at the table.

Read the letter here:
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Erasmus Baxter was a staff writer for Phoenix New Times.