The Difficulties for People of Color Attaining Funding in the Weed World

Business Hand holding pile of dollar banknote, and another hands

Bianka Anguiano|

May 12th 2020

Edited by: Kimberly Morris

Let’s be real, the cannabis industry is not as friendly and diverse as it claims to be to people of color. As an $11 billion industry monopolized by men and huge corporations, it’s not surprising that less than a fifth of marijuana business owners identify as racial minorities. Why aren’t there more POC opening dispensaries or starting marijuana businesses? A number of factors add to the lack of funding opportunities available for POC such as cannabis remaining a schedule one drug and federally illegal, a growing racial wealth gap, past convictions and a lack of skills or expertise in the industry. But the biggest issue facing POC breaking into the marijuana industry is money. POC don’t have enough of it and don’t have generational wealth on their side as a source of financial support. These factors make it especially difficult for POC to get a marijuana business off the ground considering the mountain of costs associated with starting a new business. In order to grow and sell cannabis legally, an application must be filed to attain a license which can cost up to $120,000. After adding business insurance, security, legal fees, taxes, marketing and rent , opening and running a cannabis business can cost millions of dollars, which is why POC more often seek investors or banks for financial support. However, as marijuana remains a schedule one drug under the Controlled Substances Act and federally illegal, banks and investors are hesitant to jump into this market. Both banks and investors that choose to do business with a marijuana business run the risk of being criminally prosecuted for “aiding and abetting” a federal crime as well as money laundering.costs of opening a cannabis dispensaryA growing wealth gap between POC and our white counterparts is an added factor that contributes to the challenges of funding for minority business owners in the cannabis space. The wealth gap measures the difference between the median wealth of blacks versus the median wealth of whites. Wealth can be calculated by adding up total assets such as cash, retirement accounts, home, etc., then subtracting liabilities which can include credit card debt, student loans, and a mortgage among others. The total is going to yield net worth—arguably one of the best indicators of financial health. As of 2016, the average net worth of white families was almost 10 times more than of black and Latino families. According to the Economic Policy Institute, “More than one in four black households have zero or negative net worth, compared to less than one in ten white families without wealth”. Without money to fund a costly cannabis business, POC are falling behind in the marijuana industry and opportunities to make a profit as the wealth gap continues to widen. Screen Shot 2020-04-05 at 1.16.05 AMThe legalization of cannabis has not stopped unjust and disparate policing of cannabis users, which has impacted the chances of the legal participation for POC in this market. According to the ACLU, “Marijuana use is roughly equal among Blacks and whites, yet Blacks are 3.73 times as likely to be arrested for marijuana possession,” this distressing statistic puts POC at a disadvantage for participation in the industry. In many states where cannabis is now legal, past convictions from a participant and the participant’s spouse, may disqualify them from applying for a cannabis business license, making participation in this market extremely difficult for communities who were targeted and affected most by the war on drugs. Despite the many barriers that face POC trying to break into this industry, we’re starting to see an increase in opportunities aimed at leveling the cannabis playing field. There are a number of organizations, like the Minority Cannabis Business Association dedicated to providing equity programs and resources for alternative funding, holding workshops to help POC develop and strengthen their business skills, and leading movements to expunge cannabis records and decriminalize marijuana and organizing. There is still a lot of work to do in order to make this industry an inclusive and diverse one, but together we can build a market that welcomes diversity instead of pushing it out.

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