Business ownership within the Washington state cannabis industry has been, since its inception in 2014, predominately white. While there are a number of successful Black-owned businesses here, the breakdown of cannabis business ownership by race does not line up with the state’s population of Black people.
This issue was identified early, by members of both the Black community and the press — see former Seattle Times reporter Bob Young’s work on the topic — but little effort was made to change that until recently. The George Floyd protests sparked urgency in changing systemic racism issues in policy, prompting a society-wide reckoning about the ways Black people have been oppressed.
The fact that the people most criminalized during the “War on Drugs” were noticeably absent at the ownership level in cannabis — an industry that makes a lot of money doing the exact thing those people were arrested for — stands out as a particularly glaring example.
Former State Rep. Eric Pettigrew’s House Bill 2078 “intended to improve equity in the awarding of licenses to participate in Washington’s cannabis industry,” per the House Democrats. The bill made it through the 2019-2020 legislative session and was signed by Gov. Jay Inslee in March 2020. To achieve that aim, it authorized the Washington State Liquor and Cannabis Board (WSLCB) to issue unused licenses to social equity applicants from a pool of 40 licenses that had been canceled, forfeited or revoked.
The Social Equity in Cannabis Task Force (SECTF) has been meeting regularly over the past two years, and WSLCB spokesperson Brian Smith said that, based on the group’s recommendations, the WSLCB hopes to have rules finalized by “mid-summer” and the first social equity licenses issued by fall.
While the purpose of the original bill is relatively close to being fulfilled, another bill was passed in the meantime — HB 1443 — that directed the task force to study the possibility of giving out more licenses and directing funding from the state’s cannabis tax to social equity applicants. Many advocates and experts agree that states won’t see a large crop of successful minority owners without making cannabis licenses plentiful and easy to get.
A 2021 social equity report by Leafly, a major cannabis information and directory site (for which, full disclosure, this journalist has freelanced), includes in its “[c]omponents of an equitable state licensing system list” the recommendation that states “eliminate license caps, or allow licenses commensurate with liquor license caps.” That report also listed Washington as seventh among the 19 legal cannabis states with a social equity score of only 65 out of 100 possible points, despite having had legal cannabis since 2013.
“It lags behind several newer states in equity measures,” according to the report.
Read my lips: No new licenses
“You gotta have new licenses. That’s the steak, the sizzle,” said Jim Buchanan, who sits on the SECTF and is co-owner of cannabis retailer Emerald Haze. Buchanan said that the state needs a lot more than 40 to achieve its social equity goals.
According to Buchanan, the taskforce did as the legislature asked and offered new recommendations, which formed the basis of House Bill 2022 (HB 2022). The bill called for the state to issue 38 new retail licenses and 25 producer/processor licenses a year for seven years, but to only give those new licenses to social equity applicants, give 50 percent of any licenses after that period to social equity applicants, eliminate license fees for social equity applicants and allow new social equity licenses to open in any city or county that doesn’t ban cannabis businesses.
It also set aside money from the state’s cannabis excise tax to the tune of $15 million per year for direct support to social equity licensees, like grants or low and no-interest loans.
The bill gained traction quickly despite not having any financial backing, said Micah Sherman, owner of cannabis producer Raven Grass. Sherman represents producers and processors on the social equity task force.
“He moved that thing forward just on energy and perseverance and hard work,” Sherman said, praising Buchanan.
Ultimately, the bill didn’t pass. Buchanan suggested that industry groups, uninterested in adding to their competition, didn’t want it to.
“The organization WACA, they got to ‘em,” he said, referring to the Washington CannaBusiness Association (WACA), which represents many of the state’s largest cannabis companies. “They weren’t taking it seriously at first, but when it blew through Commerce and Gaming, and was getting out of Appropriations, they were like, ‘Oh, shit. We have to pay attention to this and attack it.’ And then WACA went on it strong while it was in Rules.”
The bill was referred to the Rules Committee on Feb. 7. Per lobbying disclosures from the Public Disclosure Commission (PDC), two members of the House Rules Committee — Rep. Larry Springer (D) and Rep. Dan Bronoske (D) — attended a dinner at WACA executive director Vicki Christophersen’s house, as well as two other lobbyists contracted to the group, on Feb. 9. After Feb. 7, the committee took no further action on the bill, effectively killing it. Bronoske told Real Change that he had nothing to do with the legislation.
“The people that told us that they were supporting it didn’t at the end. You look in their campaign contributions and stuff you’ll see WACA heavily donates to them. You go look on Vicki Christophersen’s list, and you’ll see a lot of them going to lunch, including some from the Black caucus, going to lunch with her,” Buchanan said.
Rep. Jamila Taylor, who Buchanan said was an initial supporter of the bill, is listed on the PDC site as having attended the dinner, although a spokesperson said via email she was not there.
WACA’s position on HB 2022 was pretty clear. In a letter to the legislature from WACA’s board, WACA wrote, “As-is, HB 2022 has a weak spot when it comes to the ongoing challenges in the regulated industry, heedlessly creates vulnerability for the industry that undermines public trust and confidence in the system and should be rejected.”
Aaron Pickus, WACA’s spokesperson, said that the dinner, despite Christophersen disclosing her employer for that occasion as WACA, was not focused on HB 2022. Rather, it was a semi-regular and informal dinner with “no set policy agenda, simply the opportunity to break bread and get to know one another,” per an email invite forwarded by Pickus. He also noted that many lobbyists who do not work with cannabis companies were present.
WACA does donate to a lot of the lawmakers. And a lot of them are on the Rules Committee. Seven of the committee’s 27 members have received at least one WACA donation, with Springer having gotten more than five separate campaign contributions. The committee’s chair, Rep. Laurie Jinkins (D), has received three. The Craft Cannabis Coalition (CCC), another group that Sherman said was part of efforts to stop HB 2022, donated to two other members of the committee. Rep. Melanie Morgan (D), a Rules Committee member who also chairs the WSLCB’s social equity task force, has received one from each organization.
“The legislature didn’t give a damn about what the task force said,” Buchanan said. He believes that progressive legislators were too beholden to Christophersen. “The bottom line is, ‘Money on the wood makes the deal go good.’ The relationship these blue red Democrats have with her is more important than equity.”
Especially frustrating, Sherman said, is that the bill died in a Democratically controlled legislature.
“There was zero interest from a majority of the Democratic party to move a bill forward that substantially changes the cannabis industry and, in particular, substantially changes it in a way that’s going to benefit marginalized people. That wasn’t something they could put a majority of their party together to vote on. And none of the Republicans will,” he said.
In February, Crosscut’s Melissa Santos reported that Rep. Emily Wicks (D) “said House Democratic leaders told her they didn’t see a way for HB 2022 to advance out of the House.” Jinkins, the Rules Committee’s chair, is the House Speaker, while Rules Committee member Rep. Pat Sullivan (D), who has received more than five donations from WACA, is the House majority leader.
The legislature, for its part, did pass a follow-up equity bill that WACA supported over HB 2022. Instead of issuing new licenses and carving out $15 million a year, Senate Bill 5796 ups the amount of cannabis excise tax set aside for technical assistance grants to social equity licensees from about $1.5 million a year to $3 million a year, as well as a small increase for the amount set aside for the social equity mentorship program.
This bill did not include any provisions for new licenses. Its primary sponsor was Sen. Rebecca Saldaña, who was responsible for an amendment to the original social equity bill specifically prohibiting the WSLCB from issuing new licenses and requiring any new ones to be approved by a vote of the legislature. WACA donated $1,000 to her campaign in 2018 and $500 this year. She also received $500 from the CCC. Both Saldaña and WACA’s Christophersen appeared at a Jan. 19 hearing in the Senate Committee on Labor, Commerce & Tribal Affairs to testify in favor of SB 5796. Saldaña’s office did not return a request for comment.
Making up for past mistakes
What’s particularly frustrating about the roadblocks to increasing Black ownership in cannabis, said Aaron Bossett, executive director of the now-defunct Black Cannabis Commission, is that the state passed up an easy opportunity to do this a long time ago. He was one of the first vendors at Seattle’s famous cannabis farmers market, where growers, retailers and patients would meet to swap product and make deals.
Bossett remembers a thriving medical cannabis industry in Seattle. Between Rainier Beach and West Seattle, he estimated, the city’s medical cannabis industry had seven to nine Black-owned cannabis shops alone.
“None of them exist. Not one person got to slide into legal. Not as a processor, not as a retailer, not as a grower. And I know several white boys that did,” he said.
Joy Hollingsworth, director of operations for the Hollingsworth Cannabis Company, which is one of the few Black-owned cannabis producers in Washington State, concurred with Bossett.
“A lot of those people that we saw on social equity calls down in Olympia or who have joined these advocacy groups, you hear the same thing: they’re Black, they’re male and they owned medical stores. It was like the new War on Drugs,” she said.
What they’re referring to is the shutdown of the state’s medical market, mandated by SB 5052, a bill passed with full-throated support from the recreational industry in 2015. It was the only time the state issued new retail licenses, offering up 222 new ones to replace the nearly 1,500 operating medical cannabis businesses closed by the bill. That number, based on data the WSLCB itself was questioning internally, was widely criticized as not being enough.
Sherman said that, given the imbalance between retailer and producer/processor licenses and the extreme consolidation in retail — about 200 people control more than 500 licenses — the state could have used more. It still can.
“We need more paths to market, we need new paths to market,” he said. “There’s plenty of capacity in the Seattle market for more stores that would do well, absolutely.”
Instead of an orderly rollover of all existing medical cannabis dispensaries into the legal framework created by Initiative 502, what ended up happening was a mad scramble to game the state’s byzantine priority licensing system.
The priority system also fast-tracked applications from people who had done extensive recordkeeping and held longstanding business licenses, something that Bossett noted many Black dispensary owners shied away from, fearing that, in a market where Drug Enforcement Administration raids were still a reality, they would be singled out for federal enforcement. In fact, he added, the relative lack of bureaucracy is what drew many Black people to the industry. It was an opportunity to create actual wealth without already having a lot.
“A lot of those people who owned stores, they helped support their family, they paid taxes, they supported their community,” Hollingsworth said. Plenty of dispensaries didn’t pay taxes, but instead of asking them to get into compliance, Bossett said, the city and state worked actively to shut them down.
In 2016 the city passed the Title Six ordinance creating a special license to operate any cannabis business in Seattle, which would only be issued to businesses that had or qualified for an I-502 license. Passed shortly after SB 5052, it allowed any dispensary with a business license dating back to January of 2013 to continue operating but outlawed all others. The city conducted a few high-profile raids of dispensaries and fined several others for continuing to stay open.
Worse yet, Bossett said, is that David Mendoza, former senior policy advisor to former Seattle Mayor Ed Murray, now sits on the SECTF.
“David Mendoza sits on the social equity task force but was also the brown person that [the city of Seattle] put up in the front that attacked the Black and brown existing businesses,” he said. “Then to sit on the task force and say which minorities get licenses. That is the epitome of Washington racism.”
Mendoza, who served as a lobbyist for retail chain Have a Heart in 2019, said at the time that Title Six would help “identify the good actors from the bad actors” and that it “makes sure all medical marijuana comes from reputable places.”
What Murray’s administration should have done, Hollingsworth said, was use the transition as a way to bring Black businesses into the fold.
“The state really missed the mark in not allowing those medical owners to be able to transfer over into the recreational market, to be able to continue running their business and add more stores,” she said. “Essentially, you know, they’re the ones who started it.”
Is 40 enough?
For the foreseeable future, anyone left jilted by SB 5052 has just 40 licenses to look forward to. As part of SB 5052’s issuance of new licenses, which was supposed to be carefully pegged to population, each one of these leftover licenses is already assigned to a location. With a majority of these licenses landing in disproportionately white areas of Washington, it doesn’t look good for anyone looking to open back up in Rainier Beach. The local areas most impacted by the War on Drugs — Seattle and Tacoma — don’t have a lot of licenses between them. Tacoma’s one new license is the only one allotted to all of Pierce County, which is home to the state’s largest population of Black people. Seattle is slated for two, while King County gets two more.
Because of state and federal prohibitions on giving out preferential treatment based on race, Bossett said, these licenses could also conceivably go to a white applicant, as the process is very explicitly race neutral. The currently proposed requirements are only that the applicant make less than Washington state’s average income, have been arrested or have a family member who has been arrested for a cannabis crime, and live in a Disproportionately Impacted Area (DIA), the definition of which the WSLCB’s Smith said is still being worked out with help from the University of Washington.
“By those requirements, Ian Eisenberg qualifies for the same things. The Central District was definitely impacted,” Bossett said.
While Eisenberg does live in an area that’s likely to be a DIA, he likely doesn’t slide under the requirement of earning less than the Washington state average income. However, you only need two out of the three, so if he or anyone in his family ever got popped for pot, Bossett’s got a point. Sherman, who is white, cautioned that the rubric could end up applying to a lot of people who may have had a brush with the law over pot, but didn’t have their lives derailed by it in the way that many Black people did.
“You could have a white Amazon employee that makes $200,000 a year and lives on Capitol Hill that got arrested when they were 20 years old for cannabis, and they would qualify,” he said. Another hurdle here is that plenty of places in Washington still ban cannabis businesses or have a moratorium on new ones. Such restrictions would apply to about half of the social equity licenses. The WSLCB is considering adopting a rule that would allow a social equity license allotted to a specific city to go anywhere in the county, which would evade some bans, but still wouldn’t do anything to bring more licenses to where Black people actually live. The WSLCB has also tried asking nicely, requesting that areas with bans or moratoriums consider lifting them for the social equity applicants.
The best time to build social equity in Washington was ten years ago; the second best time is now
All this amounts to a pervading feeling among advocates and activists that it’s too little too late. Sherman, Hollingsworth, Buchanan and Bossett all said that if serious progress isn’t made before federal legalization occurs, BIPOC applicants will be cut out of a very important moment in the cannabis industry.
“In the amount of time it’s going to take for those licenses to be issued, we’re already going to have a federal system and the barrier to entry is going to be so massive. The existing white cannabis owners will absorb those social equity licenses,” Bossett said. Buchanan, who sat on the task force, estimated that the recommendations produced after two years could have just as easily been done in two weeks of intensive work.
But, Bossett said, making the bureaucracy move faster wouldn’t fix anything. The bureaucracy itself is the issue, he said, contending that it is designed to stave off radical change.
“In the state of Washington racism is done through policy. It’s not white hoods and burning crosses. The first thing they do is create a task force.”
Tobias Coughlin-Bogue is the associate editor for Real Change.
Update: This story has been updated to reflect that David Mendoza served as a lobbyist for marijuana chain Have a Heart in 2019.
Tobias Coughlin-Bogue is the associate editor at Real Change.
Read more of the Apr. 20-26, 2022 issue.