Battling the racial roadblocks to joining the legalized marijuana trade
Darryl Hill, hailed for integrating college football in his youth half a century ago, was a successful entrepreneur with no criminal record and plenty of capital when he applied for a license to grow marijuana in Maryland — a perfect candidate, or so he thought, to enter a wide-open industry that was supposed to take racial diversity into account.
To his dismay, Hill was shut out on his first attempt. So were at least a dozen other African American applicants for Maryland licenses. They were not told why.
Now, Hill, who has a long history of helping minority firms get financing and federal contracts, has a new game plan for breaking into the industry — just as a number of jurisdictions are turning to address the yawning racial disparities in the legal marijuana business.
States generally do not track the race and ethnicity of license applicants, but industry analysts and researchers say that dispensaries and the more-profitable growing operations across the country are overwhelmingly dominated by white men.
The lack of minority representation is especially fraught, given that research shows African Americans were disproportionately arrested and incarcerated during the war on drugs. Now that marijuana is seen as a legitimate business, advocates argue that minorities should also reap the profits.
“Here’s a drug that for years has been the bane of the minority community, sending young people to jail by the boatloads,” Hill said. “Now, it could be a boon to these communities, but minorities have been left out.”
So the 73-year-old great-grandfather who was the first black football player at the University of Maryland sought an ally in his quest to help other minorities — and himself — break into the closed ranks of cannabis cultivation and sales.
Hill’s new business partner, Rhett Jordan, happens to be a groundbreaker in his own right. The 33-year-old Colorado industry pioneer, who is white, founded one of the largest legal marijuana operations in the nation.
“The way minorities get into the game is they need top management, technical expertise and money,” Hill said. “If Jordan is involved, there’s automatic respect and credibility when it comes to raising money.”
The marijuana trade, legal in some form in 29 states plus the District of Columbia, is one of the country’s fastest-growing industries. The $6.6 billion in medical and recreational marijuana sales in 2016 is expected to expand to $16 billion by 2020, according to New Frontier Data, a cannabis data analytics company headquartered in the District.
But African Americans seeking to go into business as growers or retailers face a host of hurdles, researchers say. Many states bar convicted drug felons from the industry, disproportionately hurting minorities because of historically higher conviction rates. Others have set high investment requirements. Some dole out licenses through appointed commissions that industry researchers say reward the politically connected, who by and large are wealthy and white.
“Marijuana legalization without racial justice risks being an extension of white privilege,” said Bill Piper, a lobbyist for Drug Policy Alliance, which advocates for drug policy reforms.
The disparities have become such a source of consternation for some lawmakers and industry leaders that more than half a dozen states and municipalities, including Oakland and the District, are taking steps to boost minorities in the competitive licensing process.
Hill and Jordan plan to test their new partnership in Pennsylvania, where they are applying for one of the state’s first marijuana licenses, to be issued in June.
Unlike in Maryland, those licenses will award points for diversity and community impact — potentially giving African American applicants like Hill an advantage.
“Maryland is a blueprint for Pennsylvania for what not to do. There should be additional efforts put in place to ensure that groups that have been marginalized could be a part of this brand new industry,” said Pennsylvania state Rep. Jordan Harris (D-Philadelphia), chairman of the Legislative Black Caucus. “For years, people of color have been arrested and incarcerated for participating in this industry. The least we can do is to make sure they are included now that we want to make it legal.”
Hill and Jordan say they plan to lobby other state legislatures for inclusive regulations like Pennsylvania’s and to act as consultants or active business partners for other minority entrepreneurs.
They also hope to start a marijuana training academy in southwest Philadelphia to help minorities from Maryland, New York and Pennsylvania acquire the technical cultivation, extraction and retail skills to apply for their own licenses.
Jordan, who is expected to hold around a 15 percent interest in Hill’s dispensary, said he saw an opportunity to expand his potential customer base by increasing the diversity of growers and dispensary owners.
“Ultimately, old or young, black or white, it’s an entrepreneur’s game,” said Jordan, who got his start by growing marijuana in his Denver basement and opened his first dispensary in 2010. “Cannabis only knows green.”
Colorado, one of the earliest states to legalize marijuana, has nearly 1,000 dispensary licenses and nearly 1,500 cultivation licenses. African Americans make up less than a handful of license holders, according to cannabis entrepreneurs in the state.
Wanda James, a former Navy lieutenant who says she’s one of the few black growers and dispensary owners in Colorado, blames regulations barring those convicted of drug crimes from owning, and working in, a dispensary or cultivation center.
“In Colorado, if you sell 10 pounds of cannabis today, you probably get written up in Forbes about what a great businessperson you are, but if a young black man sells a dime bag on a street corner in Alabama, he’s probably going to jail for 10 years,” she said.
A black person is nearly four times more likely than a white person to be arrested for marijuana possession, even though the two groups use marijuana at similar rates, according to a 2013 American Civil Liberties Union report that examined arrests in every state using a decade’s worth of FBI crime data.
James’s brother was arrested at 19 for possessing 4.5 ounces of marijuana. He spent 10 years in the criminal justice system, including four and a half years picking cotton in Texas, where he was incarcerated, followed by probation. He moved to Colorado to work as James’s grower in 2009, but she said she had to fire him after a new state law forbade drug felons from working in the industry.
“In America right now, your Zip code determines whether you are a felon or a millionaire,” she said.
Jesce Horton, an Oregon marijuana entrepreneur who started the Minority Cannabis Business Association in 2015 to diversify the industry, said that as a college student in Florida, he was arrested three times for marijuana possession. His criminal record would have barred him from entering the business in other states.
“It’s really a slap in the face to communities who have been targeted,” Horton said. “A lot of people see these as racist regulations. These are fear-based tactics by legislators who are more than willing to go along with the business interests sitting in the room.”
Some states also require applicants to have financial holdings upward of $1 million, a particularly high bar, given the documented wealth disparities between blacks and whites. Those without ready access to capital cannot turn to banks, which are unwilling to provide business loans for an industry that is still illegal at the federal level.
The Trump administration’s new focus on drug control and law enforcement has injected additional uncertainty into the industry, especially in the eight states that have legalized marijuana for recreational use.
A temporary provision in effect since 2014 prohibits the Justice Department from spending money to interfere with state medical marijuana programs. But Attorney General Jeff Sessions, who has declared marijuana a dangerous drug, has launched a task force to review current charging and sentencing under the drug laws.
Sessions also recently directed federal prosecutors to get tougher on drug defendants, a prospect that some industry leaders fear could perpetuate racial disparities.
The threat of federal raids could further deter minorities. Corey Barnette, the only black cannabis cultivator in the District, suggested that minority communities “might be somewhat skeptical” and reluctant to participate in an industry in which “they no longer even believe opportunity actually exists for them.”
Even with potential shifts in federal drug-enforcement policies, several jurisdictions have moved to address racial disparities in the industry.
Oakland recently voted to set aside half of all marijuana business permits for people who had been arrested for drug crimes in the city or lived in neighborhoods with high marijuana arrests.
Illinois, like Pennsylvania, awards extra points to minority applicants. Ohio requires 15 percent of licenses to be issued to minorities. Florida has reserved one of its future marijuana-cultivation licenses for a member of the state’s Black Farmers and Agriculturalists Association.
In February, the District lifted its prohibition against felons convicted of possession with the intent to distribute marijuana from entering the industry.
Maryland marijuana regulators, meanwhile, are fending off a lawsuit that threatens to halt its program after no black-owned businesses won cultivation licenses.
Hill, despite his first loss, is still hoping to enter the industry next year after receiving a preapproved license to open a Maryland dispensary in 2018.
It’s progress, Hill said, but he still hasn’t won the game.
“Before you can sell marijuana,” he said, “someone has to be growing some.”