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When the Medical Cannabis Business Conference and Expo rolls into St. Louis’ Union Station Monday, March 11 and Tuesday, March 12, the speakers, vendors, exhibitors, and participants will probably be overwhelmingly white. That’s because the regulations governing the medical and recreational marijuana industries in states where they’re legal require two things many black people with experience in the cannabis trade don’t have: lots of start-up money and clean criminal records.

Worst Victims of Marijuana Laws

Consider: the 2016 National Survey on Drug Use and Health found that black and white people use marijuana at similar rates, but a 2018 study by the Southern Poverty Law Center found that black people are three times as likely to be arrested for marijuana possession. That’s only slightly better than the 2010 study from the American Civil Liberties Union, which discovered that African Americans are four times as likely to be arrested for possession as whites.

In many states, an arrest for even a tiny amount of weed, at least until recently, meant that you would have a felony arrest on your record. And that – along with taxes, fees, and non-refundable deposits demanded by state regulators – means that around one percent of marijuana dispensary owners are black, accounting for fewer than 40 of the over 3,000 retail cannabis dispensaries across the United States.

Take Missouri, where medical marijuana was approved by voters in November. In prior years, Missouri was notorious for having some of the nation’s most draconian marijuana laws. It was only in 2015 that Jeff Mizanskey was released by then-Gov. Jay Nixon after having served over 20 years on marijuana charges. He had been sentenced to life for charges that involved just weed. No violence, no heavier drugs, simply marijuana. Mizanskey is now 65 years old.

The new medical cannabis process in the Show-Me State is regulated by the Missouri Department of Health and Human Services, which won’t begin accepting applications for dispensaries or cultivation facilities until June. But before you can even apply, you first have to fill out a pre-filed license application fee form, sort of a pre-application.

But just to submit the pre-application, you have to pay hefty non-refundable fees just as a tiny first step to process the paperwork. How hefty? If you apply to grow medical cannabis, the application fee is $10,000. If you want to run a dispensary, the pre-application fee is $6,000. Those fees are non-refundable, and there is no guarantee you will even make it through the first step of the screening process.

If an entrepreneur has to pay 10 grand just to have a pre-application considered, imagine what the real application fee will be. Plus regulatory fees. Plus taxes. Plus license fees. Plus buying a building, or land, or equipment. And remember, normal bank financing isn’t available. That’s because financial institutions are federally chartered, and under federal law marijuana is still a Schedule One drug, the same as heroin, so banks won’t touch the business.

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Unless you have a few hundred thousand dollars in ready cash, you won’t be able to get into the game. Add those bruising financial requirements to the strict requirements about criminal records, and it’s plain why the vast majority of people in the industry are white and upper-middle class.

All that means unless you have a few hundred thousand dollars in ready cash, you won’t be able to get into the game. Add those bruising financial requirements to the strict requirements about criminal records, and it’s plain why the vast majority of people in the industry are white and upper-middle class.

Small steps are being taken across the country to rectify the problem. In St. Louis city, possession of small amounts of marijuana has been effectively legalized by city ordinance. In St. Louis County, newly elected prosecutor Wesley Bell will no longer prosecute possession cases under 100 grams (roughly 3.5 ounces). Prosecutors from Brooklyn to Denver have been expunging marijuana arrest records, and in California prosecutors have until July to review weed possession cases statewide, some going back decades, that may be wiped clean.

On the financial front, there are people like Marvin Washington, defensive end for the Super Bowl champ Denver Broncos in 1998. Washington has become a medical cannabis campaigner and entrepreneur. Tuatara Capital, a New York investment management firm, makes investments in minority-owned cannabis firms. Mazakali, an online investment banking platform, is also involved in minority cannabis financing. The Los Angeles-based Minority Cannabis Business Association is the first non-profit aimed specifically at minority entrepreneurs wanting to enter the medical or legal weed business.

While only a handful of states have legalized recreational cannabis, 39 states now have laws legalizing marijuana to one degree or another for medical uses, and everyone knows how this will end up. A patchwork of wildly divergent laws about weed, varying from state to state, is only necessary because of the federal classification of cannabis as a Schedule One drug. It’s a sure bet that sometime in the next decade, Congress will lift that Schedule One classification, paving the way for recreational marijuana to be as available, and as regulated, as alcohol is now.

Even given that, present experience seems to indicate that the current black market marijuana infrastructure will continue to operate. After recreational cannabis was legalized in California, Marketview Research did a survey and found that 18 percent of all weed users continued to buy from unregulated, black market sources. One big reason was price. With a California tax of $9.25 per ounce of cannabis flowers, plus a 15 percent excise tax, taxes and fees make up over 40 percent of the price of legal weed sold in licensed shops. With lower overhead and zero taxes, black market entrepreneurs can easily undercut the price of legal marijuana.

Despite that, the growth in the legal and medical cannabis market has been accelerating. Marijuana is generating over $20 million per month in Colorado tax revenue. California is raking in around $33 million every month. Nevada’s last financial reports showed cannabis tax revenue of $8 million per month.

charles jaco

As the green wave grows, it seems there’s plenty of money to be made. And, just maybe, more of it can end up in the hands of black communities most victimized by discriminatory enforcement of the old marijuana laws.

Charles Jaco
St. Louis American