The first Western Front marijuana retail store in Chelsea has taken nearly three years to open its doors since the company’s inception in early 2018. Black and Latinx – approximately $ 3.5 million burned.
High upfront costs – such as renting a display case and hiring lawyers to familiarize yourself with local permits and zoning laws. – are the norm in a highly regulated cannabis economy. These costs are one of the main reasons why it was so difficult for entrepreneurs of color to penetrate an industry that was supposed to create economic opportunities for them in particular. Fewer than a handful of retail marijuana stores certified under the government’s economic empowerment program, created to improve the communities of color in the industry, have been able to open. The western front is one them.
Nearly five years after voters have legalized recreational marijuana with a central premise of inclusion, it may not surprise anyone why justice remains elusive: people of color simply face too many obstacles to raise the massive capital needed to enter the cannabis realm. One easy way to lower some of these barriers to entry is to create a government fund that will provide government loans to qualified marijuana startups owned by people of color. This is a long-overdue measure that Beacon Hill lawmakers should take urgently.
American poet Ralph Waldo Emerson once said that “money is often too expensive,” a phrase that is especially relevant to aspiring black and Hispanic entrepreneurs trying to enter the cannabis industry. “You have to make sure you can afford to bear the costs over the long term,” Dennis Benzan, CEO and co-founder of Western Front, said in an interview. The process for obtaining a municipal permit can take several months. Generally, the location must be rented before applying for a local permit. That means paying a month’s rent, said Benzan, an African-Hispanic of Dominican and Puerto Rican descent. In essence, this is lost money.
“When the local communities became gatekeepers, it made the process much more difficult,” Jim Smith, a local cannabis lawyer, told me in an interview. “I will not take clients with me until they have a location, which is very difficult to find. Once they find it, homeowners usually add a premium for marijuana and. … … will inevitably increase the rent. ” Lawyers like Smith also cover this overhead.
What is exacerbating these problems for people of color seems self-evident. Banks do not provide commercial loans because marijuana remains illegal under federal law. “People who lend you money [charge] huge interest rates, ”Smith said. Of course, attracting investors is possible, but minority investors or firms “must continue to prove that they control the majority,” Benzan said. “If I want to sell my stake, I need to find another minority investor, and to begin with, not many have this wealth.” This is yet another irony in the cannabis justice mystery. “It was supposed to be like [people of color] build wealth, ”Benzan told me. “But many minority companies, creeping forward to open up, take on debt every day.”
State Senator Sonia Chang-Diaz two years ago submitted an amendment to the budget which would establish a government-run trust fund to provide interest-free loans to economic empowerment applicants (e.g. Benzan’s Western Front) and members of the Cannabis Control Commission social justice programwhich provides technical assistance to qualified business owners from communities of color. The amendment failed. But there are currently four bills that establish a public fund for social justice in one form or another.
The Legislature’s Joint Committee on Cannabis Policy held hearings on such bills last week. Nurys Camargo, a member of the CCC, testified in favor of the creation of a state fund “which can offer capital for business development” she said in her speech, as reported by the State House News Service.… “Only 10 licenses to participate in the equity capital program were open for business,” Camargo said at the hearing.
This is a no brainer. “If we’re going to implement a social justice program, it takes capital,” Smith told me. “And there is money at the state level. … … the state takes too much of a piece, ”he said. “Set aside one of those tax percentage points to fund the equity lending program.” Do the math: gross recreational cannabis sales recently exceeded $ 1.5 billion in gross sales since the opening of retailers in November 2018.
Indeed, the Legislature should make it its priority for this session to create and operate a government loan fund. Otherwise, the promises of fairness, restorative justice, and economic empowerment in Massachusetts cannabis law will never materialize.