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Illustration: Aïda Amer/Axios

Efforts to help Black and brown people succeed as cannabis entrepreneurs are not working — despite efforts in weed-legal states to encourage diversity in ownership and management.

Why it matters: People of color have been disproportionately targeted by the "war on drugs," so, as the pot industry expands, cities and states have tried to make social justice a priority in granting licenses.

  • But people in underrepresented groups often lack access to the capital they need to go up against "big marijuana."
  • They also lack the family-and-friends connections that give others a boost.

Driving the news: In July, three Democratic senators (Cory Booker, Chuck Schumer and Ron Wyden) released a discussion draft of legislation to remove cannabis from the federal list of controlled substances — a move meant "to end the decades of harm inflicted on communities of color."

Comments have poured in on the Cannabis Administration and Opportunity Act, which would:

  • Automatically expunge federal nonviolent marijuana crimes.
  • Enable medical research on cannabis.
  • Give legitimate cannabis businesses access to banking services.
  • Keep people from being denied public housing or federal student loans because they used cannabis in states where it's legal.
  • Create an “Opportunity Trust Fund” from federal cannabis tax revenue "to reinvest in the communities most impacted by the failed War on Drugs, as well as helping to level the playing field for entrepreneurs of color who continue to face barriers of access to the industry."

The big picture: Some states that legalized cannabis have set aside licenses for underrepresented operators, but that hasn't moved the needle.

  • "Ownership and C-suite representation — it’s mostly white men still," Morgan Fox, spokesman for the National Cannabis Industry Association, a trade group, tells Axios. "It’s trending in the right direction, but it has a long way to go."
  • "Most social equity programs have failed — even programs that were designed to yield a multitude of minority owners," says Amber Littlejohn, executive director of the Minority Cannabis Business Association.
  • Too many winners of the social equity license lotteries "have sold their licenses or, in truth, are backed and managed by companies that are not minority owned," Littlejohn tells Axios.
  • The set-aside programs are "shiny and pretty and everyone feels good about them, but they don't actually oftentimes kick in until the tax revenue funding comes in" from cannabis sales.

By the numbers: A 2017 survey by Marijuana Business Daily found that less than 10% of marijuana business owners are Black or Latino —a percentage that plummets when you only count "plant-touching" businesses like dispensaries and farms.

  • Littlejohn, whose organization submitted 30 pages of comments on the Booker-Schumer-Wyden draft, said she suspects the numbers have actually gone down since then.
  • Too many winners of the social equity lotteries "have sold their licenses, or, in truth, are backed and managed by companies that are not minority owned," Littlejohn says.

Black consumers nationally are 3.6 times more likely than white consumers to be arrested on cannabis charges, despite roughly equal rates of use, according to New Frontier Data, a cannabis consultancy.

  • An estimated 40,000 people are incarcerated for cannabis-related offenses, according to a report by New Frontier Data.
  • "At the end of the day, what is truly necessary is more education at the police force level" to close the enforcement gap, Giadha A. DeCarcer, founder and CEO of New Frontier Data, tells Axios.

What they're saying: Nicholas Vita, CEO of Columbia Care, one of the largest multistate cannabis operators, says that federal legalization is inevitable but not imminent — and that BIPOC operators must be an essential part of industry expansion.

  • Vita — a white graduate of Columbia University and whose company is public — says that so many Fortune 500 companies are sniffing at the cannabis market that it'll be an ongoing challenge for underrepresented operators to compete.
  • "How do you create a nationally legal entity, where you have a lot of minority entrepreneurs coming into an industry with a lot of historical associations, and not disenfranchise them before they have a chance to get out of the starting gates?" he asks.

Reality check: Any federal legislation is going to be a tough sell.

  • On the right, there are objections to legalizing pot, amnesty programs and expunging the records of offenders.
  • On the left, there are complaints that the draft bill doesn't go far enough in redressing racial inequities or compensating targeted communities.

Go deeper

Updated Sep 14, 2021 - Axios Events

Watch: A conversation on post-pandemic recovery for Black-businesses

On Tuesday, September 14, Axios markets reporter Courtenay Brown and business reporter Hope King discussed the economic recovery of Black-owned small businesses, featuring Congressional Black Caucus Chair Rep. Joyce Beatty (D-Ohio) and U.S. Black Chambers President & CEO Ron Busby. 

Rep. Joyce Beatty addressed how the Congressional Black Caucus and Congress are working together to help Black-owned businesses in a post-pandemic era, the primary challenges that the Black-owned business community endured during the pandemic, and how unemployment rates among Black communities vary across the nation. 

  • On government efforts to provide financial relief to small businesses: “When we think about the value of the Congressional Black Caucus and how we had to work with them, many of us small business owners, I know firsthand as a former small business owner how hard it is to make payroll in a normal time. Here’s the good news: 95% of the Biden-approved PPP loans went to small businesses with 20 or less employees, and that was very helpful.” 
  • On consistently disparate unemployment rates in Black communities: “When we hear, 'Oh, unemployment has gone down and people are working,' well, those numbers were never the same for minority-owned businesses, especially Black-owned businesses. The numbers were always double, and we’re still dealing with that.” 

Ron Busby illustrated the progress of Black small businesses in post-pandemic recovery, how efforts from Federal entities and the private sector have assisted in that recovery, and what types of aid he believes are most essential in helping Black-owned small businesses thrive. 

  • On the current state of recovery for Black-owned businesses: “Businesses that are owned by African-Americans and Black people across the country are starting to feel extremely optimistic about the future, but the challenges still exist. The number one challenge for Black-owned businesses is obviously access to capital.” 
  • On adjusting government-run initiatives to better serve Black communities: “We had to go back and make sure that we adjusted those packages, those stimulus opportunities, to make sure that our Black businesses could participate. As you see new programs being rolled out, you’ll see that the US Black Chamber is there to make sure that small, diverse, and primarily Black firms are included in the conversation, as well as being included in the stimulus packages.”  

Axios SVP of Events & Creative Strategy Kristin Burkhalter hosted a View from the Top Segment with Facebook’s Vice President of Business Engineering and Partner Solutions, Alvin Bowles, who discussed how Facebook is supporting Black-owned businesses through various digital exposure initiatives. 

  • “It’s just important to note that individuals are trying to leverage the digital economy to be able to actually decrease that distance between innovation and execution, and trying to figure out the best way to be able to leverage opportunities to have individuals discover their businesses. We feel like there’s an enormous responsibility that we have. As we head into this holiday season, it’s now more important than ever to really focus on the discovery economy and that every good idea deserves to be found.”  

Thank you Facebook for sponsoring this event. 

10 mins ago - World

Trudeau's government projected to win Canada election

Canadian Prime Minister Justin Trudeau. Photo: Jeff Vinnick/Getty Images

Canadian Prime Minister Justin Trudeau's Liberal government has been reelected in the national election, the CBC and CTV News projected on Monday night.

Yes, but: "It's still too early to say whether it will be a minority or majority government," the Canadian Broadcasting Corporation reports.

Pelosi's back-to-school math problem

Illustration: Sarah Grillo/Axios

House Speaker Nancy Pelosi (D-Calif.) may need votes from an unlikely source — the Republican Party — if she hopes to pass the bipartisan infrastructure bill by next Monday, as she's promised Democratic centrists.

Why it matters: With at least 20 progressives threatening to vote against the $1.2 trillion bipartisan bill, centrist members are banking on more than 10 Republicans to approve the bill.