Letter to National Leadership on the

Cannabis Administration & Opportunity Act

Dear Honorable Leadership:

Equity Trade is a large, national organization based in the San Francisco Bay Area, consisting of long standing cannabis advocates, activists, operators, consultants, and regulators - stakeholders, who have directly worked on local Cannabis Equity Programs since their inception in 2015.

Our Mission & Vision is to support the visibility of equity operators and their access to resources through our network of allies. We are the creators of a USPTO approved Certification Mark built on a blockchain network designed to provide visibility, transparency, and data control to our members. Our Certification and social capital will support the success of Equity Operators who are often small business operators with limited capital and no capacity for margin of error.

Our collective expertise comes from personally navigating the various Social Equity frameworks implemented across local jurisdictions in California. Our stories and lived experience are invaluable contributions to cannabis policies and we have been fortunate enough to play a large role in the development and implementation of our respective local and State level programs.

We submit for your consideration the following comments on the Cannabis Administration and Opportunity Act Discussion Draft.

  1. Define Social Equity & Social Equity Businesses

Defining “Social Equity” and “Social Equity Business” is critical for creating and standardizing a national framework in which businesses in all states and municipalities can learn and access opportunities for upward economic mobility.

States such as California, New Jersey, New York, Illinois, Massachusetts, Michigan, and Connecticut have taken steps to integrate Social Equity best practices and policies into their regulatory frameworks. States like Oregon, New Mexico & Virginia are just beginning their process and have an opportunity to be guided by a clearly defined national social equity model. A national definition has the opportunity to strengthen and legitimize these efforts, empower coalitions of operators to work together across state boundaries, and ultimately leverage increased impacts of legalization on marginalized communities.

The CAOA must seize the opportunity to define Social Equity, the criteria for Social Equity Business designation eligibility, and create measures for the intended impacts that Equity-forward legislation can have on operators, consumers, and communities. By establishing these definitions, criteria, and goals, the CAOA can make history, not just by legalizing cannabis, but also by serving as the first comprehensive roadmap for equity businesses across the country to educate, provide access to economic opportunities, and right the wrongs  of the War on Drugs in marginalized communities across the nation.

A national definition should consider the following criteria for designating Social Equity businesses:

  • Owner/operator’s ownership structure, operations, employment practices or charitable contributions demonstrate a commitment to justice and equality.
  • Owner/operator or their immediate family members have been arrested and/or convicted for drug related offenses
  • Owner/operators attended public education institutions who lacked diverse teaching staff, culturally relevant curriculum, or had police presence in schools
  • Owner/operator experienced suspension or expulsion from a learning institution as a youth for drug-related offense
  • Owner/operator lived in a district  with a high drug arrest rates
  • Owner/operator qualifies as low income, being below 80% of the AMI  
  • Owner/operator has experienced housing insecurity like eviction or a promise of relocation from section 8 housing without follow through. Like a HUD voucher
  • Owner/operator is a member of a group minimally represented by governing leadership including but not limited to: Black, Brown, Indigenous
  • Owner/operator is a woman
  • Owner/operator is is a veteran
  • Owner/operator is disabled
  • Owner/operator identifies as LGBTQIA+

A “Social Equity Business” definition needs to go beyond the cannabis industry. It is imperative that we make space and opportunities for Indigenous people, Black, Brown, low-income, women, LGBTQA+, and veterans to be owners in the cannabis industry. It is even more important to adopt trauma-informed policies that focus on healing the harms from the War on Drugs through economic opportunities in all industries, not just cannabis. National policy would be doing a huge disservice to those that have been harmed by discrimination and cannabis prohibition by only giving them opportunity to have a cannabis business.      

Our organization has created a USPTO-approved seal to help consumers and customers at every level of the supply chain in multiple industries to identify products and businesses with Social Equity status. The seal is currently in use in California and we are working towards a national launch with partners in other states. Our Certification Mark indicates the following about a product’s owner/operator(s):

The certification mark, as used or intended to be used by persons authorized by the certifier, certifies or is intended to certify that the goods provided have been produced by a business that meets the standards set by a U.S. state, county, or city social equity program that seeks to address social inequalities and policy concerns related to gender and sexuality, race, age, mental or physical disability, class, ethnicity, language, education, civil rights, socioeconomic status or religion, by requiring that a business's ownership structure, operations, employment practices or charitable contributions demonstrate a commitment to justice and equality.

  1. Rethink Taxation Structure for Equity Operators

Current Tax Structures have Proven Detrimental to Operators

It is well-documented in mature cannabis markets that onerous regulations and taxation keep small and minority-owned operators in the unlicensed and underground market. The presumed burden of complying with local, state, and federal regulations, as well as licensing requirements, discourages operators who lack large capital reserves or revenue to support dedicated legal and regulatory personnel.

In its current form, the CAOA’s proposed language will effectively force small business, and Social Equity operators, out of the industry. This is in large part due to the proposed tax structure. Also problematic is the excise taxation of businesses that are defined as having owners disproportionately impacted by the War on Drugs. Taxing these businesses in order to repair community harm is counterproductive and goes against the spirit of the bill.

To incentivize legacy operators and future Social Equity businesses to apply for formal licensing, federal legislation must provide real pathways for success, including creative and equitable tax structures. A strategic, tiered approach that takes into account both revenue thresholds and type of license should be strategically analyzed and implemented, and operators who qualify as Social Equity businesses using the aforementioned definitions and standards should be exempt from paying excise taxes altogether.

  1. Fund Social Equity Programs through Reappropriation of Existing Funds

Depending on Cannabis Tax Dollars for Equity Programming Does Not Work

While the CAOA includes restorative justice components such as the creation of a Community Reinvestment Grant Program, the bill must go a step further by funding these grant programs in infinitum through sources other than taxes on operators.

Local and state level programs have faced 1-3 year delays in implementing financial assistance programs for Equity operators due to insufficient funding, proving that other revenue streams should be explored for national legalization efforts.

According to research by the University of Pennsylvania, the US has invested nearly a trillion dollars fighting the failed War on Drugs, with billions each year earmarked for drug enforcement that has historically targeted Black and Brown people disproportionately.  By reinvesting some of these enforcement dollars in social justice and equity programs, the CAOA will boldly acknowledge the history of trauma and violence inflicted by drug enforcement in marginalized communities, as well as provide a more sustainable and common sense approach to funding affordable housing, legal and financial support, reentry services, violence prevention and mental health services, as well as Social Equity programs through opportunities for affordable real estate acquisitions, capitalization, funding for education, and technical assistance.

4. Create a New Regulatory Body Designed to Oversee Adult Use and Medicinal Plant Programs

States and local governments across the nation have found a need to create either Offices of Cannabis or complete Cannabis Departments. Because cannabis has both medicinal and adult-use markets, a unique regulatory classification and approach is required. Existing regulators such as the Bureau of Alcohol, Tobacco & Firearms are not designed to govern and regulate cannabis programs.

With states like Colorado, Oregon and Washington also examining public health policies and therapeutic application of plants such as phyliscibin, federal leaders should develop a big-picture, long-term approach to regulating medicinal plants and create a department that is not focused on enforcement but is dedicated to research, public health, and safety as well as racial diversity, equity and inclusion.

As written, the CAOA discussion draft re-codifies a drug war harming those that the policy intends to help. We urge leadership to create a new regulatory agency that prioritizes racial and economic justice values and best practices in all of its activities to prevent repetition of past discrimination.

This new department should consider incorporating the following practices and priorities into its structure:

  • Direct Social Equity qualified individuals to technical assistance and business resources      
  • Expedite applications processing for Social Equity qualified businesses
  • Fund research led by Black and Brown scientists, policy leaders, and practitioners
  • Report out on new developments and findings about medicinal herbs as well as annual reports on the progress of Social Equity programs around the nation
  • Provide support for states and municipalities developing or struggling to stabilize their Social Equity Programs

  1. No More Criminalizing Cannabis

Possession vs Purchase

While the age for cannabis purchase is 21, the age for possession should be lowered to 18. Additionally, an exemption for medical cannabis patients that are under 18 and have a written, verbal, or digital consent of a legal guardian to possess and consume cannabis, should be made.

End Incarceration

Criminalization is no longer an option for enforcing regulations, especially with youth. To truly work towards justice, alternative punishments and restorative processes must be carefully designed before regulating cannabis. There are numerous examples across local and state regulations that decriminalize cannabis and provide pathways to education for compliance. Some of them are below:

  • Ensuring that police is not able to use odor of marijuana as pretext for pedestrian or vehicle stop, search or seizure
  • Allowing the smoking of cannabis wherever cigarettes are
  • Minors and those found producing, carrying or selling beyond the legal limits go through a diversion program:
  • First Offense for: No officer may detain someone for penalties related to underage consumption or carrying/selling/producing beyond the legal limit. A verbal warning may only be issued.
  • Second and subsequent Offense: No officer may detain someone for these penalties. Only educational pamphlets related to a persons’ cannabis civil rights and cannabis educational opportunities may be given.

Thank you for your time and attention to our comments. We look forward to continued dialogue and partnership in efforts to create restorative, equitable drug policies


Equity Trade Leadership Coalition

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