Repair, Restore, Reclaim Series Part 2: Community Benefits Agreements in the Cannabis Industry

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During this four-part series, join Marijuana Matters as we break down the regulatory barriers to social equity in the cannabis industry. This is part 2.

When a white-owned multistate operator (MSO) in the cannabis space posts #BlackLivesMatter, it gets to jump into a global discussion many of its customers are vigilantly paying attention to and often a part of. It gets to symbolically join a movement while growing its business in and near the communities at the center of the conversation.

But what do the predominantly Black communities harmed by the war on drugs get? What do the mostly Black men and women sitting in prisons and jails (for selling the same weed now on that MSO’s shelves) get? What do the disproportionately Black individuals with cannabis arrest records get? What do Black lives get? Symbolic gestures aren’t worthless. They also aren’t nearly enough.

True social equity is created when the collateral consequences of cannabis criminalization are materially addressed. When pocketbooks are opened, checks are written, and laws are changed. When fair access to living wage jobs, quality education, safe and affordable housing, and effective healthcare becomes the rule rather than the exception for everyone.

In theory, social equity programs exist to make that happen. However, when the communities these programs seek to serve are left out of the decision-making, the cycle of exclusion remains unbroken.

We see this unfolding in the cannabis industry. States are increasingly legalizing weed, often citing the injustice of cannabis prohibition as a reason for the move. But when pen gets put to paper, the communities most negatively impacted by cannabis criminalization aren’t in the room to guide the strokes.

There’s a way to deal with that equity barrier, and it’s called a Community Benefits Agreement (CBA), a legally enforceable contract developers and communities have been using to settle disputes for a couple of decades now.

Social Equity Spotlight: Community Benefits Agreements

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To secure rights to build, developers are accustomed to negotiating a CBA with a coalition of community stakeholders. In exchange for living wages, employment opportunities for locals, and affordable housing from developers, the community promises to publicly and politically support the proposed development project.

Cannabis regulators should consider how a CBA between a representative community coalition and a cannabis establishment might benefit the community. Requiring cannabis businesses to financially contribute to resident-identified needs in areas disproportionately impacted by the war on drugs is one way to hold cannabis businesses accountable to social equity standards.

CBAs are not invulnerable. Challenges legislators should prepare to meet as they develop avenues for CBAs include the following:

· Organizing inclusive coalitions

· Distributing power between coalitions and public offices

· Enforcing the implementation of CBAs

· Preventing extortion and abuses of power

The following two examples of CBA-type policies in the cannabis space created two diverging pathways: the first led to continued racial disparities and the second led to social equity. We can learn from both.

To receive a license in the state of Massachusetts, a prospective marijuana establishment or medical marijuana treatment center must form a Host Community Agreement (HCA) with the municipality where it plans to operate. The terms are negotiated between the marijuana establishment and the host community but should fall within these two limits:

· The HCA can’t last longer than five years.

· Community impact fees cannot exceed 3% of the marijuana establishment’s gross sales.

Despite these requirements, the majority of municipalities in Massachusetts have exceeded the 3% limit, asking for additional financial contributions toward programs the city believes are important. In Northampton, for example, marijuana establishments were required to contribute at least $10,000 to cannabis education and prevention programs.

In late 2019, Fall River’s former Mayor Jasiel Correia was arrested for allegedly taking $600,000 in bribes from prospective marijuana establishments in exchange for the political support needed to acquire licensure. While Correia’s actions don’t represent those of most Massachusetts public officials, they demonstrate the need for multiple levels of accountability in the execution of CBAs or HSAs.

HSAs in Massachusetts may be the reason why zero economic empowerment applicants have opened for business since 2016. Municipalities favor granting licenses to cannabis establishments that have more money to spend on community impact fees. That makes it especially difficult for economic empowerment applicants, individuals who have been economically disadvantaged by the war on drugs at a disproportionate rate, to compete.

In early March, the Cannabis Equity Illinois Coalition signed a CBA the first of its kind with Nature’s Care Company, a cannabis operator seeking to open a new dispensary in the City of Chicago. Partnering with the Chicago Lawyers’ Committee for Civil Rights, the Cannabis Equity Illinois Coalition negotiated economic benefits from the Nature Care Company including the following:

· 100% of disproportionately impacted individuals hired by the Chicago-based dispensaries will receive a living wage job.

· 75% of employees will be hired from disproportionately impacted areas within 2 years.

· 10% of the dispensary’s net profits will be donated to community organizations in disproportionately impacted areas.

· 10% of dispensary products, services, or both will be sourced from minority or social equity qualifying businesses.

In exchange for these benefits, the Cannabis Equity Illinois Coalition pledged its support of the opening of Nature’s Care Company dispensaries in Chicago area neighborhoods.

Focus on Solutions

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Although the Illinois CBA described above was just signed in March, it’s hard to imagine that it will not yield better results than Massachusetts’ HCAs did. Community organizers, cannabis businesses, and policymakers can focus on the following as they develop regulations guiding the implementation of CBAs:

Asking for a community impact fee to compensate a municipality for the costs associated with hosting a cannabis business is reasonable. However, for the sake of equity, not all cannabis establishments should be treated equally. Allow applicants disproportionately impacted by the war on drugs to be exempt from community impact fees for a certain period of time or ask for contributions from them at a discounted rate.

Historically, depending on public officials to advocate for marginalized groups doesn’t work. It is essential that equity programs empower private representatives of communities most harmed by the war on drugs. Community coalitions should be vested with the authority of holding stakeholders accountable to CBAs and assisting with the distribution of economic benefits.

The Cannabis Equity Illinois Coalition successfully negotiated on behalf of the individuals most harmed by the war on drugs because it knew what to ask for. Equity is not uniformity. It takes the ever-evolving form of fairness. Advocates must know what their communities need by asking the people who live in them on an ongoing basis.

Form an inclusive social equity committee tasked with the oversight of CBAs, including the power to modify and terminate contracts and revoke or suspend licenses. Such a committee should periodically review CBAs to ensure that they are fair for both the community and the cannabis establishment.

CBAs present cannabis businesses and disproportionately impacted community members with a way to leverage legal enforcement while working outside of the traditional boundaries of the law. It is the kind of solution we must seriously consider as we fight to untangle structural racism from the American dream.

Marijuana Matters is a non-profit centering those disadvantaged by the criminalization of marijuana. M2 identifies and eliminates barriers to economic opportunity in the regulated cannabis industry through advocacy, entrepreneurship, and education. Support our work.

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