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Black pot entrepreneurs fight for piece of Washington's very white marijuana industry

‘They were prosecuting us the most for cannabis ... now, they’re on the street corners in our neighborhoods, selling that stuff to us.’

Three people talk in a cannabis warehouse

Chamel Simmons, right, chats with a community member who had dropped by The Hollingsworth Cannabis Company warehouse in Renton on Feb. 8, 2020. Simmons is being mentored by Joy Hollingsworth, left, on how to work in the cannabis industry. "She wants to get into the industry," says Hollingsworth. "What better way than to come down and be mentored to learn firsthand?" (Shaminder Dulai/Crosscut)

Dedrick Hairston once dreamed of making fresh-baked cinnamon rolls infused with weed.

It was late 2012, and Washington voters had just legalized recreational use of marijuana by passing Initiative 502. Hairston ran two local bakeries at the time, as well as a medical marijuana collective garden.

His hope was to unite his disparate businesses and start selling high quality, marijuana-infused baked goods.

Eight years later, however, his vision continues to go unrealized.

Hairston said he and other aspiring Black pot entrepreneurs were effectively locked out of the state’s legal marijuana industry from the beginning — partly a result of a maze of bureaucracy, as well as lacking the resources to hire lawyers to navigate the process.

It’s a common story recounted by people who tried unsuccessfully to get in on the ground floor of the state’s legal pot market: Either they never got their questions answered, or, by the time they fixed certain aspects of their application, they found themselves at the back of the line for a limited number of licenses.

Now, nearly six years after Washington’s first licensed pot retail shops opened, state officials are trying to ensure communities of color can share the wealth generated by legal weed. During the 2019 fiscal year, retail sales of legal marijuana topped $1 billion statewide, according to state data.

Addressing the overwhelming whiteness of the industry is particularly important, state officials and advocates say, given how the past decades’ war on drugs disproportionately affected people of color, especially African Americans.

Before Washington voters approved marijuana legalization, Black people in the state were 2.8 times as likely as white residents to be arrested for marijuana possession, according to crime data analyzed by the American Civil Liberties Union.

Those disparities, too, served to limit opportunities for Black people in the new legal industry, since prior convictions for marijuana offenses can keep a person from getting a pot business license in Washington state.

“... They were prosecuting us the most for cannabis — and now, they’re on the street corners in our neighborhoods, selling that stuff to us,” said Peter Manning, a leader of an organization called Black Excellence in Cannabis, during a meeting at the Skyway Library this month.

“If anybody should be doing that, it should be us making the money from that,” Manning told the small crowd at the library Feb. 1. “That’s my stand.”

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people in warehouse

Joy Hollingsworth, right, talks with Chamel Simmons as they pack boxes of cannabis lotions for shipment, on Feb. 8, 2020. (Shaminder Dulai/Crosscut)

Different proposals

Yet, as this year’s legislative session in Olympia has demonstrated, identifying the best way to address the lack of diversity in the state’s legal cannabis industry is not a simple task. 

One proposal, initially backed by a leading marijuana industry group, was later criticized by Manning’s organization and others as going in the wrong direction. The plan, which would have allowed out-of-state investors to pour money into Washington pot enterprises, stalled amid fears that a large influx of outside money could force small, local marijuana operations out of business. 

Some predicted the few Washington pot businesses run by people of color would be among the first casualties of that bill, had the measure passed. 

“This does not help us,” said Paula Sardinas, a member of the Washington State Commission on African American Affairs, during a legislative hearing last month on the proposal to allow out-of-state capital. She told lawmakers the bill would actually make the existing situation in Washington’s cannabis industry worse.

“This is what happened to the African American community under I-502: Those with the gold, make the rules,” Sardinas said. “And so we’re here to say, not today — not on our watch.”

That bill is now considered dead in the Legislature. 

But in the meantime, another social-equity effort has attracted a broader base of support and is steadily gaining momentum.

House Bill 2870 looks to reallocate marijuana retail licenses that have been revoked, forfeited or are otherwise going unused. The licenses would be set aside for members of communities of color that have been disproportionately impacted by marijuana arrests.

As the bill currently stands, people could be eligible for one of the available licenses if they have lived several years in an area that suffered from especially high marijuana arrest rates. Those who have been convicted of misdemeanor marijuana offenses could also be eligible, as could family members of people impacted by aggressive enforcement of marijuana prohibitions.

The measure cleared a key legislative deadline this week, passing out of the House Appropriations Committee on Tuesday.

Still, some think the social-equity proposal doesn’t go far enough, mainly because of how it focuses on redistributing a limited number of unused pot retail licenses. Right now, there are fewer than 40 such licenses available statewide.

Aaron Bossett, executive director of the Black Cannabis Coalition, said the limited scope of the bill makes it “a joke and a slap in the face to the Black community.” 

One of his chief complaints is that the bill would not affect the distribution of producer and processor licenses, which make up the majority of licensed marijuana operations in Washington state. Hairston, for instance, would need a processor license to start his pot-enhanced cinnamon roll business. 

“Why would you pigeonhole the Black community into one-third of the industry?” Bossett asked this week.

Bossett said he would like to see a more expansive social-equity program that uses marijuana tax revenues to reinvest in Black business owners more broadly. To him, that would mean setting up a fund that offers small-business loans to Black entrepreneurs of all kinds — not just for those trying to enter the marijuana industry.
 

We’ve seen … a lot of people who look like us go out of business’

For their part, supporters of HB 2870 agree that doling out a few unused retail licenses won’t be enough. 

To look further toward the future, the measure would establish a task force to examine whether other marijuana licenses should be made available to applicants through the social-equity program. That task force also would be charged with making additional recommendations about how to improve the industry.

On top of that, the bill would spend $1 million per year to provide technical assistance to people who get licenses through the bill’s social-equity program, with the goal of helping them navigate compliance rules and other state requirements.

Joy Hollingsworth, the chief operating officer of her family's marijuana farm in Shelton, said the educational piece of the bill is extremely important. 

Right now, she and her family members are working to set up their own formal mentorship program with a similar idea in mind: helping people of color not only get started in the industry, but stay in it and thrive.

“We’ve seen, unfortunately, a lot of people who look like us go out of business, or just get forced out for different reasons,” said Hollingsworth, whose family started The Hollingsworth Cannabis Company in 2013.  “We’ve been blessed to learn by trial and error — but a lot of people don’t have that opportunity.”

“This is definitely that first step, to get those licenses — and then, we show everybody how to keep those,” Hollingsworth said. “So that after you get this retail license, you don’t lose it.”

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woman in a warehouse

Joy Hollingsworth, who is the chief operating officer of her family’s marijuana farm in Shelton, supports a bill that would create a $1 million annual grant fund to help people navigate the cannabis industry. “We’ve been blessed to learn by trial and error — but a lot of people don’t have that opportunity,” Hollingsworth says. (Shaminder Dulai/Crosscut)

 

State officials seek to help

It’s not totally clear how many people of color have dropped out of Washington state’s legal weed industry since it began. The state Liquor and Cannabis Board, which issues marijuana business licenses, says it doesn’t have data on the race or ethnicity of license holders from 2014 and 2015, the first two years of legal sales. 

There’s even some disagreement regarding how bad the racial disparities are today.

According to the Liquor and Cannabis Board, 1% of marijuana producers and processors in the state self-identified as Black in 2019. By comparison, about 4% of Washington residents are Black. 

For pot retail shops, the picture is a little better: About 3% of total licenses are majority-owned by Black people, according to the Liquor and Cannabis Board’s latest numbers. 

Members of the Black Excellence in Cannabis group, however, say the agency’s estimates seem too high and possibly outdated.

Ollie Garrett, a member of the Liquor and Cannabis Board, said she has personally vetted the 3% figure for retail licensees and believes it is accurate.

Even so, she said, representation in the industry still needs to improve.

While about 79% of the state population is white, about 85% of pot producer and processor licenses are owned by people who identify as white, the agency’s data says.

Garrett has been working on the social-equity issue since joining the liquor board more than three years ago. She and other board leaders are key supporters of HB 2870, which the agency drafted and is urging lawmakers to pass this year.

“When you have a whole community that is left out and they think it is because of race, you need to ask, ‘Why are people thinking that?’ ” said Garrett, who is African American, “Instead of just going straight to, ‘I’m not racist.’ ” 

Rick Garza, director of the Liquor and Cannabis Board, has said repeatedly in recent months that the state’s implementation of I-502 missed an opportunity to focus on  social equity from the outset. 

Now, part of the agency’s challenge is to make sure its efforts to correct that oversight stand up to judicial scrutiny, Garrett said. 

That’s especially important given that Initiative 200, Washington state’s longstanding ban on affirmative action in state programs, remains in effect.

The offices of Gov. Jay Inslee and Attorney General Bob Ferguson are assisting in the work to make sure HB 2870 is legally sound.

Sheri Sawyer, a senior policy adviser in Inslee’s office, said the bill needs to ensure the method used to select people for the social-equity licenses is race-neutral. That means basing decisions on data that shows someone is part of a community that has been discriminated against in a harmful way, rather than simply setting aside licenses for members of certain racial or ethnic groups. 

“First we have to have to establish there is a compelling interest in remediating racial discrimination,” said Sawyer, who noted that the data and evidence need to be specific to Washington state. 

In addition, any proposed remedy needs to be narrowly tailored to addressing the specific discrimination that occurred, Sawyer said. 

For that reason, Sawyer said, the bill might still need to be refined further as it moves through the legislative process.

Even then, some aspects of the plan could prove controversial.

While Democrats, who control both chambers of Washington’s Legislature, have largely supported the social-equity measure, some Republicans have concerns about using state resources to help one particular group succeed in the market, said state Rep. Drew Stokesbary, R-Auburn, who voted against the bill in committee.

Stokesbary said he agrees with the goal of decreasing racial disparities in the legal pot industry. But he said he and some of his GOP colleagues “question whether additional state bureaucracy to lift up one particular group is the best way to accomplish that.”

“I think we just keep thinking we need to keep searching for a better way to address racial injustice,” Stokesbary said.

Maurice Gordon, another member of the Black Excellence in Cannabis group, has a different view. He said Black people helped build the market for marijuana in the first place before being shut out.

“They built this industry on our backs — I hate to say it, but they really did,” Gordon said. “Because they were coming to our neighborhoods to get it, and now they arrested us, and they put stores back in our neighborhoods. And now they’re gentrifying our neighborhoods with money from our pockets.”
 

Looking to other states

To help craft their approach, Washington leaders have looked to other states to see how they have addressed social-equity issues.

In Denver, officials use marijuana tax revenue to help pay for affordable housing units and after-school programs, with a focus on helping underserved communities and people who were economically disadvantaged by the war on drugs. Denver’s pot revenue also has been used to help upgrade park and recreation centers.

Massachusetts, too, has a social-equity program that provides training and resources to aspiring business owners from communities that were heavily policed over marijuana. But WBUR, a Boston public radio station, reported last year that the program was slow to get off the ground.

Other jurisdictions have also hit roadblocks in their attempts to ensure legal pot sales benefit communities that were hurt by marijuana criminalization.

One such program run by the city government in Los Angeles, for instance, has not gone nearly as well as hoped, according to a recent report in The Guardian.

Sardinas, the member of the Washington state Commission on African American Affairs, said Washington’s proposal is different than some of the most high profile city-by-city or county-by-county efforts pursued elsewhere, as it would be statewide and more comprehensive.

At the same time, that reality means there isn't a great roadmap for how Washington state should proceed, said Sawyer, the governor’s senior adviser. 

“We don’t have a real model to follow,” Sawyer said. “We can’t even look to another state and say, ‘they’re doing well, let’s just do what they’re doing.’ So we’re all trying to figure it out.”

Hollingsworth, the chief operating officer of The Hollingsworth Cannabis Company, said that means there’s an opportunity for Washington state to set a new nationwide standard.

With the measure now before the Legislature, Hollingsworth said Washington is positioned to be a true leader when it comes to social equity in the cannabis industry.

“We understand and know this social-equity bill is extremely important,” Hollingsworth said. “Because if we pass this bill, so will go the entire nation.”

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