The trickle-down hope for cannabis social equity licenses — Dan Riffle

My friend Dan Riffle, former staffer for the Marijuana Policy Project and for Alexandria Ocasio-Cortez and who now works for the District of Columbia, says this:

“And you know if your view of wealth inequality, if your view of you know fortune 500 company CEOs and the problems that they pose is that there’s too many white men, which is definitely a problem, if that’s your only view of the problem, then maybe that’s a good solution to you to have you know four or five more millionaire billionaire minority applicants.” 

Trickle-down economics are not the only problem that social equity license plans face.  Other problems include phony licensees pretending to be deserving, and the competition that actual deserving licensees face from well-funded licensees. 

Here’s the transcription. 

I have been tasked with talking about another potential alternative model for making marijuana legal for commercial sales of marijuana, and that is through a government-owned or government-run distribution model. I think, you know, a lot of folks particularly our American attendees, which I assume is all that maybe one person on this call, tend to think of things as either legal or illegal and if they’re illegal they’re in a black market, and if they’re illegal they are bought and sold in stores. And that’s sort of how legalization has gone so far. I think that’s partly just a you know, like I said, a fact that of life in the United States, a capitalist society. And it’s also because some of us who are in the drug policy movement, and that includes me for many, many years before the House, and now where I’m at now. You know, we we ran campaigns that talked about marijuana as a product like other products that are bought and sold in stores. We specifically called the the initiative in Colorado Regulate Marijuana Like Alcohol. And, you know, alcohol is, you know, for the most part, bought and sold in stores. And you know people also draw analogies to tobacco as well and other sort of vice substances. But what I want to suggest is that, and this was sort of touched upon earlier in Amber’s comments, and I think you know Doug’s classes have talked about this, I actually have a slide here, if I can share my screen or not, but I don’t think so. But there’s a RAND report from I think it’s 2000-, way back when, like ‘14 or ‘15 where they were talking about this with with Vermont legislators and they sort of graphed it out and you had over here a couple of options that we see normally which is you know marijuana is illegal and penalties are high or penalties are low and then you have a couple options over here where marijuana is illegal and it’s generally sort of been sold in stores and then there’s you know, eight or 10 other options in the middle that include government monopoly, which I’m going to talk about, government sort of public ownership authorities, you see this sometimes in states that have development authorities where it’s not exactly government run but there’s a public entity that is licensed by the government to run it. You also have what we just heard about from a previous speaker that sort of Spanish cannabis club model, you can have you know, worker-owned cooperatives like she was talking about, you can have other sort of nonprofits you cannot b-corps, you can have you know any sort of range of options, where marijuana is bought and sold that exists between illegal and you know regulated like alcohol. 

And I actually came to this my thinking in support of that model was primarily because of– there we go, we can– she’s got the link to it there, anyway. I can’t do it through a revenue collection model. You know, one of the primary reasons, maybe the primary reason, why I think marijuana should be legal is that it’s just a great deal of revenue that’s being left off the table. There’s demand for it, there’s going to be supply. Why don’t we just you know, have a model where we at least you know capture some of the revenue from that? And you can do you can do that through taxes we do do that through taxes, you can have a 10 or 20 or you know 40 or 60% tax, if you want, but if you do that you’re leaving 90 or 80 or 60 or you know more percent of the revenue on the table. Why not just have the government, if your goal is to collect revenue, why not just have the government grow and sell marijuana itself, or at least sell marijuana itself. And then at that point you’re capturing 100% of the revenue. But the other thing I think that attracted me to it, too, is the public health element of this. You know marijuana is not as dangerous as alcohol. You know, I think it was very smart of us to run campaigns, where we talked about marijuana being less harmful than alcohol. Marijuana is certainly not as dangerous as tobacco or lots of other you know drugs that are out there. There’s no risk of overdose. I think you know the there is some risk of you know, addiction or dependency, depending on how you define those terms, but it’s relatively low compared to other substances. But it is a drug, and it is, it does come with some harm however modest we want to characterize them. And the goal in growing and selling marijuana should not be to grow and sell as much of it, as we can, and to sell it as efficiently and effectively and fastly and cheaply, as we can. It should be to do so somewhat responsibly. And I think a public model, a government run model, can do that, in a way that the private sector, with the profit motive, cannot. I mean if you’re a business, you know, ask Milton Friedman, or you know, William F. Buckley, the goal of the shareholder model is to maximize profits and revenues, and the way that you’re going to maximize profits and revenues if you sell marijuana is to sell as much as you can. And so you’re going to target people who are heavy users, you’re going to try to indoctrinate you know or target young users, the way that you know, tobacco industry did back in the 70s and 80s. And I think you know there’s the real risk and we’re seeing it in some respects now there’s a real risk that we repeat a lot of the mistakes that we made with the tobacco model, and I think frankly we haven’t acknowledged some yet, but some of the the mistakes that we made with the alcohol model as well. 

But setting all that aside, this is a social equity panel, and so I want to talk about one of the other benefits of a public run model which is that social equity thing. You know, I don’t want to go on at length about talking about the ways in which we have tried, and I think failed, so far to do efficient, effective, you know public equity implementation thus far. I think you know Cat and Shaleen, with their experience and their positions can do a much better job of that than I can and maybe they have different views on it. 

I’ll defer to them. But, generally, the way that we have tried to do social equity, aside from collecting a little bit of tax revenue and devoting some of that tax revenue, but not all of it, you know to you know rebuilding communities and distribution to communities that were targeted by the war on drugs, the primary way that we tried to do it is through licensure and setting aside a certain number of licenses for minority applicants, or you know applicants who were maybe have a you know, an arrest or other sort of police interaction in their history. 

You know, again I’ll defer to Cat and Shaleen in terms of the experience with doing that, but you know we’ve seen examples of people putting together applications where they have a minority applicant you know as part of the ownership team and that person who’s on the team has no real role in running the business. You know their their ownership stake is is is there basically just to help had points to the application for the you know likelihood of them getting the license. Even if that weren’t the case even if you have you know above board application and let’s say it goes through, and let’s say this person gets a license, generally speaking, that is going to be a person who’s already got a great deal of wealth and money and power. The way that it works in getting these licenses in these states, I mean they’re just so valuable that it requires you know, having a team of lawyers, having an army of consultants. We’re talking not just dozens, not just hundreds, but thousands of pages of you know, like when you see people submit their application, you know it’s not like you applying for a job, where you send in your resume and cover letter and references. I mean, people are we literally wheeling in pallets of paper with all of their documentation you know, showing the you know investment team and the amount of money that they have in the medical experts there. So it’s it’s a very, very expensive process. Generally speaking, if you look at the experience in other states it’s going to require you know greasing the wheels politically, so to speak, and most of these, a lot of these licenses go to people who have friends in legislatures. We’ve seen you know actual corruption stories in a number of places: Florida and Maryland. So, you know if you if you want to do it by licensure set aside, it’s gonna be hard to target, you know it’s going to be hard to get a license to a real small mom and pop operation. Generally it’s going to be people who are highly educated, come from affluent backgrounds, have a lot of political power already, and so you know you’re not exactly picking somebody out of a hay stack. You know it tends to go to somebody who’s already got the power. And even if that we’re working, even if, even if the model, the license to set aside we’re working, you’re just giving you know, a lottery ticket, a winning lottery ticket to one or two or four five minority applicants. And you know if your view of wealth inequality, if your view of you know fortune 500 company CEOs and the problems that they pose is that there’s too many white men, which is definitely a problem, if that’s your only view of the problem, then maybe that’s a good solution to you to have you know four or five more millionaire billionaire minority applicants. 

But I think if you really want to do structural reform, if you really want to do social equity and rebuild entire communities, and not just make another millionaire or billionaire, I think you have to have more broad-based distribution of the benefits of marijuana legalization. And so, I think you can do that through a government run monopoly. The statistics on this are very clear. Minority hiring, minority retention, minority pay, minority promotion are all much higher in the public sector than they are in the private sector. And you know, in terms of job creation, you could have one license holder, who is you know, a 

minority applicant, maybe he hires one or two managers who are you know minority employees, or you can have actual hiring quotas in the in the public sector, and you can have dozens, you know, depending on the number of stores, that you have in your state, hundreds of jobs that are going to these communities to you know target folks who have arrest records, who have you know felonies on the record from you know marijuana growing or distribution or possession and sales. You can, you know, instead of having one billionaire you can have a dozen hundred-thousand-aires. Or you know, depending on, you know, however you want to structure it. 

But the point is even if the models that we’ve seen in terms of licensure set-asides, they really haven’t worked with us far. I haven’t read a lot of ringing endorsements of them being effective in terms of targeting the benefits of legalization to minority communities and reinvestment in those communities. But even if it were effective, you know the best that we can hope to do is create a half a dozen extra millionaires from those communities and hope and pray that they pass on some of the benefits to their neighbors and other folks in their communities. I think there’s a better way to go about it, I think that you can you know actually direct to the benefits wholly to those communities rather than to you know, a small subset of them and do it in a more-broad based and effective way. I could go on and on a little bit more about this, but I think I’ll stop right there and let Professor Berman go and save any anything else for the Q & A. Thanks again, Shaleen. 

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