Opposition to Cannabis Wholesale Delivery is Systemic Racism

The attempt to shut down wholesale cannabis delivery licenses for Minority-owned companies, is a campaign of institutional racism by wealthy, mostly white-owned, established retail companies.

I am a cannabis attorney and lifetime member of the National Organization for the Reform of Marijuana Laws (NORML) Legal Committee. I have counseled companies big and small, and currently represent a prospective Wholesale Delivery Licensee that is minority owned, and a certified participant in the Cannabis Control Commission’s (CCC) Social Equity program. I am also a Bar Advocate—a private court-appointed lawyer in criminal cases. I have a front row seat to see minorities charged with cannabis offenses at disproportionate levels.

All delivery licenses are set aside for Economic Empowerment and Social Equity applicants. These groups are comprised of individuals who have been traditionally left out of the regulated cannabis industry: Minorities, poor people, and those whose lives have been affected by incarceration on cannabis charges. While some unscrupulous hedge funds and moneyed interests have gamed the system to attain status under these application types, the overwhelming majority of participants are from vulnerable communities. Delivery licenses were reserved for these classes of applicants, because starting a delivery business is far less capital intensive than starting a retail business.

Originally, the delivery licenses were for delivery of licensed retailers’ products only. Delivery companies would be dependent on retailers to provide a “delivery agreement” in order to obtain licensure. Rather than selling cannabis, they would be selling delivery services to consumers and retailers. Under this model, retailers were eager to partner up with delivery companies. They loved the idea of having a weaker “little brother” to do their errand work, so long as they sat in the driver seat. They could set prices, delivery fees, and terms of service. They knew full well that applicants wouldn’t be able to get a license without making deals with retailers, so they negotiated as if they held all the cards. Arguably, they did.

When it became apparent that the retailers wouldn’t stomach the commissions required to allow these companies to be profitable, the CCC began considering changes. They proposed draft regulations where delivery companies would be allowed to buy wholesale directly from cultivators and distributors and sell their own supply. Suddenly the retailers no longer had the leverage in negotiations with delivery applicants. They could no longer bully the less-experienced newcomers with refrains of, “You need us.”

The retailers have been very loud in proclaiming their commitment to inclusivity and diversity. Indeed, most of the larger ones have some sort of accelerator, or mentorship program, aimed at Social Equity and Economic Empowerment applicants. The one thing that all these programs have in common: The big company sets the terms, and the minority-owned business is the junior partner with hat in-hand. In many cases, minority-owned companies are even asked to give up equity in exchange for the assistance. We also know that such programs have been an utter failure in leading to licenses for Social Equity and Economic Empowerment applicants. The lack of results strongly suggests that these programs are intended more for public relations than actually giving a leg-up to potential competitors. They are required by law to have, “positive impact” plans, so the illusion of inclusivity is required.

So why is this racism, rather than merely protecting business interests? It is the racial discrimination by banks, landlords, investors, and municipalities, that prevented minorities from obtaining retail ownership in the first instance. Then, these folks get to pass the buck to each other when they’re called out. The investor claims it is not racism, but the lack of a viable property. The property owner says it is not racism, but a lack of capital. Taking a page from this book, the retailers now say, it is not racism, but protecting the bottom line. It is useful to distinguish between outright bigotry and institutional racism. Bigotry can be a component of institutional racism, but it need not be. Regardless of intent, the retailers are demanding a racist outcome, where minorities are unlikely to be able to compete against retailers’ White ownership. If successful, their campaign against wholesale delivery licenses will keep minority-owned delivery businesses unregulated, and subject to criminal penalties if they try to operate.

The campaign to obliterate wholesale delivery licenses for minority-owned companies is the epitome of institutional racism at work. Wholesale delivery must go forward.