Addressing Systemic Racism and Barriers to Entry in the Cannabis Industry

By Naina Kamath

While in recent years the main critique of the legal cannabis industry has revolved around its profitability despite high drug-related incarceration rates, a new focus, inspired in part by the Black Lives Matter movement, has been placed on the underrepresentation of Black business owners and executives in the legal cannabis industry. This underrepresentation is thought to be the result of overwhelming barriers to entry, particularly for Black business owners in the cannabis industry, who must initially rely on the discretion of investors and dispensaries.

Barriers to entry, though helpful to prevent overcrowding in any industry, have resulted in underrepresentation and implicit discrimination in the cannabis industry. Black business owners comprise of 4% of business owners in the legal cannabis industry. This problem is multifaceted and starts with underrepresentation at lower levels of the supply chain; despite prior experience at those levels being crucial to success at the executive and ownership levels.

Entrepreneurial spirit and experience in the industry are merely prerequisites. Many business owners must rely on the unregulated discretion of investors, dispensaries, and other purchasing parties to establish themselves in the industry due to high licensing fees and the complex licensing process. As a result, the success of cannabis business owners, particularly when entering the industry, is dependent on parties that exercise unlimited discretion, which in turn allows for and results in discrimination– ultimately leading to underrepresentation.

As the industry acknowledges that this pervasive issue has led to a tangible, quantifiable disparity in ownership in the legal cannabis industry, all parties would benefit from being mindful of their discretionary powers and cautious of exercising these powers in a way that contributes to underrepresentation in this industry.