DEI Practices in the Growing Cannabis Industry | Circa

[author: Katie Coleman]

Over the last several years, the legalization of marijuana in the U.S. on a state-by-state basis has led to a booming cannabis industry that is projected to expand into more states in the near future.

As of this year, 18 states have fully legalized medical and recreational use of marijuana, and there are only four states in which it remains completely illegal. However, ever-changing regulations cause disparities in how cannabis businesses establish appropriate policies while remaining compliant with state laws. This includes a focus on diversity, equity, and inclusion (DEI) initiatives within the industry to work on providing more work for diverse candidates.

Below is a break down of certain state-by-state regulations of equity and inclusion in the cannabis industry and how they lend to necessary DEI initiatives going forward.

California

• In 2018, the California Cannabis Equity Act was signed into law to provide those most harmed by cannabis prohibition “assistance to enter the multibillion-dollar cannabis industry as entrepreneurs or employees with high-quality, well-paying jobs.”
• California’s Department of Cannabis Regulations has increased technical and financial assistance for equity applicants and has sought amendments to the city’s municipal code to refine the process.

Illinois

• The Cannabis Regulation and Tax Act in Illinois established a “social equity applicant” status — someone with at least 51% business ownership who has resided in a disproportionately impacted area for at least five years. An applicant could also be someone who has been arrested for or convicted of any offense eligible for expungement under this Act.
• For applicants with a minimum of 10 full-time employees, an applicant with at least 51% of current employees who:
  • Currently reside in a disproportionately impacted area; or
  • Have been arrested for, convicted of, or adjudged to be a ward of the juvenile court for any offense that is eligible for expungement under this Act or member of an impacted family.

Maine

• Bill LD 1957 aims to promote greater diversity in the cannabis industry by repealing prohibitions on hiring of applicants with past criminal convictions for certain marijuana offenses.

Massachusetts

• The Cannabis Control Commission is required by law to establish procedures that encourage full participation in the industry by people who have been disproportionately harmed by marijuana prohibition and enforcement. They are required to study the participation and adopt diversity licensing goals to provide meaningful participation.
• The Commission’s regulations require license applicants to submit a Diversity Plan outlining the diversity and inclusivity goals, strategies, and measurements the entity plans to follow. The applicant should detail the strategies and programs it will use to effectuate each listed goal, which should include the realistic timeline, metrics they intend to use to assess the progress, and targeted audience of each program. Applicants will be required to demonstrate progress or success annually starting one year after they are approved for provisional licensure. This information is required to be disclosed on the first and supplemental license renewal applications.

Michigan

• Michigan’s Social Equity Program provides resources and fee reductions to eligible communities (based on marijuana convictions and poverty). Communities with 20% or more living below the federal poverty level qualify, and a 40% fee reduction has been added for applicants who have been convicted of a marijuana-related felony.
• Section 8 of the Michigan Regulation & Taxation of Marijuana Act requires the Marijuana Regulatory Agency to develop a plan to promote and encourage participation in the marijuana industry by people from communities that have been disproportionately impacted by marijuana prohibition and enforcement.

Nevada

• AB341 from the 2021 legislative session requires at least 10 of the first 20 independent consumption lounge licenses to be issued to social equity applicants disproportionately affected by previous criminalization policies.

New Jersey

• The seven medical cannabis operators in New Jersey who have been approved to serve the recreational market will be assessed on diversity in hiring and management, support for community programs, and the percentage of minority-owned vendors or suppliers they contract.
• These operators are required to submit social equity plans, including hiring individuals who were previously convicted of cannabis-related offenses or live in economically disadvantaged areas. This is intended to hold adult-use cannabis businesses to the same hiring and employment standards as any other employer.

New Mexico

• Under The Cannabis Regulation Act in New Mexico, legalization law included language that required “procedures that promote and encourage full participation in the cannabis industry … by representatives of communities that have been disproportionately harmed by rates of arrest through enforcement of cannabis prohibitions.” This includes procedures to encourage diversity among applicants, licensees, and staff.

New York

• Approximately 50% of cannabis business licenses in New York will be issued to social and economic equity applicants, and priority will be given to minority-owned, women-owned, and veteran-owned businesses.
• In January, Governor Hochul announced the plan for a $200 million public-private fund to support social equity applicants with direct capital and startup financing. It noted that the licensing application needed to ensure a plan to hire diversity.

Virginia

• The Cannabis Equity Reinvestment Board is a policy board in the executive branch of Virginia’s state government. Their purpose is to directly address the impact of economic disinvestment, violence, and historical overuse of criminal justice responses.
• They have created a Cannabis Business Equity and Diversity Support Team to identify barriers to inclusion, offer technical assistance, and develop requirements for DEI plans.

Washington

• In 2020, House Bill 2870 created the Marijuana Social Equity program with the goal of helping people of color who have been harmed by the war on drugs, providing the opportunity to be part of the growing marijuana industry.
• This bill also created the Social Equity in Cannabis Task Force consisting of lawmakers, government representatives, and industry experts to help promote diversity in business ownership and retail licenses. In order, to be considered for a retail license an applicant must submit a social equity plan along with other retailer license application requirements.

The future of DEI in the cannabis industry

As shown, many states have already put diversity laws and regulations into place requiring and encouraging cannabis businesses to operate inclusively.

Much like Nevada and New Mexico — states that are mature markets in the timeline of legalization — still have yet to write social equity provisions after legalization of recreational marijuana. Even in states that have promised social equity in the cannabis industry, many people still face incredible diversity challenges when trying to license a business or become an employee.

More and more states will continue to legalize marijuana and we may see more regulations being passed that focus on diversity in the cannabis industry. At Circa, we help companies to recruit and retain a diverse workforce and create an inclusive workplace.

When it comes to diverse hiring and management practices, consider this:

• Are there certain stages where underrepresented groups are falling off the hiring process?
• Are certain groups underrepresented because of job description language or criteria?
• Is there consistent education among both leadership and employees regarding the importance of DEI?

These things, among many others, are significant factors in creating and maintaining an authentically inclusive work environment. Learn more about how we can help businesses recruit diverse candidates and foster a truly forward-thinking workplace — plus, check out the additional DEI resources in our library for more information!