Boston grapples with lack of diversity in marijuana industry

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There are 27 marijuana business applicants who have reached the second step of the City of Boston's licensing process.

But only one is an equity applicant, a status given to marijuana businesses run by people involved in communities that were disproportionately affected by marijuana enforcement.

As the first marijuana stores are opening in Massachusetts, the city of Boston is still grappling with its licensing process. One priority for city officials is ensuring that the city's minority residents are not left out and are able to tap into the lucrative industry -- even if that slows down the industry's growth. 

"We need a policy to help us correct the harms and right the wrongs that have been inflicted by mass incarceration," said Boston City Councilor Kim Janey, chairwoman of the Committee on Small Business and Consumer Affairs.

Janey said the city saw in its issuing of liquor licenses that people of color were often locked out of the industry, as wealthier companies were able to obtain licenses. "We have a chance to get the cannabis industry right from the beginning," Janey said.

The Boston City Council's Committee on Small Business and Consumer Affairs held a hearing Tuesday focused on equity in the marijuana industry in Boston. The hearing was proposed by councilors Timothy McCarthy and Congresswoman-elect Ayanna Pressley.

Pressley said she learned from liquor licensing that, "It is damn hard to build equity into an existing industry."

"Here we have an opportunity to be proactive and deliberate and inclusive and intentional and set the blueprint, be an example for the nation how to codify and implement equity in this industry," Pressley said. "No one has gotten this right."

Nationally, in states that legalized marijuana, less than 2 percent of shops are owned by people of color, Pressley said.

So far, the trends appear similar in Massachusetts. Of 192 license applications under review by the Cannabis Control Commission as of Nov. 20, only five businesses are minority-owned. Another 13 identify as owned by someone who meets two or more criteria for a disadvantaged business, which includes businesses owned by minorities, women, veterans, LGBTQ people, or people with a disability. 

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Marijuana agents -- employees who work at marijuana businesses -- must register with the Cannabis Control Commission. Among 1,306 agents who have applied for approval so far, 73 percent are white, according to the commission. Only 6 percent are Hispanic, and 4 percent are black.

Although the Cannabis Control Commission gave priority status to some "economic empowerment" applicants, which refers to people from communities that were disproportionately affected by marijuana enforcement, many of those applicants have struggled to get their businesses going.

In Boston, Mayor Marty Walsh opposed legalization, and the industry has been slow to roll out. 

The city has signed host agreements with just two recreational marijuana businesses: Green Line Boston, which wants to grow marijuana and manufacture products, and Ascend Mass, which wants to open a retail store. But those companies have not yet submitted completed applications to the state.

The two proposed Boston businesses that have submitted state applications -- retailer JOF Enterprise and research and retail facility Leah -- have not yet signed host agreements with the city. 

John Barros, Boston's chief of economic development, said the city is trying to figure out how to make sure the industry "leaves a legacy of equity, inclusion and opportunity," acknowledging the damage marijuana had on communities but also its potential to create jobs and wealth."This is a journey that needs to be deliberate, intentional and should not be hurried because some people remember the mayor was no (on legalization)," Barros said.

Barros said he thinks the difficulty facing minority businesses is less about Boston's application process, but more about difficulties businesses face before applying. 

Existing city programs to help small businesses with things like technical assistance and loans are not available to marijuana businesses because the programs are federally funded and marijuana remains federally illegal. 

"There's interest, and there's local interest, but the ramp up to get there is fraught with banks not trying to lend to these type of businesses, not having a lot of technical assistance out there," Barros said. 

Barros said he has been helping local applicants form partnerships with larger, national marijuana companies that have the money and knowledge to open businesses.

Alexis Tkachuk, director of emerging industries for the city of Boston, said city officials have also been urging large marijuana companies that want to operate in Boston to help smaller, diverse businesses. 

Sira Naturals selected a Boston-based business run by a minority husband and wife, along with a Holyoke business, for an incubator program aimed at helping marijuana microbusinesses. MadMen underwrote a marijuana job fair in Boston and provided legal assistance there to help residents seal marijuana-related criminal records.

Some possibilities Boston could consider to boost minority businesses include tying the number of total businesses that open to the number of equity businesses that open, offering loans and grants, providing technical assistance, helping with zoning variances, adding a residency requirement and giving some kind of preference to equity applicants.

The cities of Cambridge and Somerville have already established social equity programs to help minority-owned businesses through the licensing process. Boston could potentially craft its own version of a program.

City Councilor Lydia Edwards expressed frustration that Boston is just now having these conversations. She noted that city officials have known since 2016 that the marijuana industry was coming.

"I feel like we're just behind the ball," Edwards said.

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