Lost in the back and forth of negotiations regarding another coronavirus relief package is a growing focus forming in Congress on cannabis legalization.
Before criticism from Republicans caused Democrats in the House to delay a September vote on the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which would legalize cannabis at a federal level and expunge the records of certain cannabis offenders, policy makers were increasingly realizing the disproportionate economic impact imposed on communities of color.
Despite roughly equal reported cannabis use across racial groups, a study by the American Civil Liberties Union shows Black Americans are more than 3.6 times more likely than white people to be arrested for marijuana possession. That simple stat can have incredible and lasting consequences for economic gaps among racial groups, according to Wes Moore, the chief executive of New York City-based philanthropic organization Robin Hood Foundation.
“I think that we still very much have policies that are both putting people and keeping people in poverty. And frankly, we have policies that are actually increasing the type of gaps that we see,” Moore said at the Yahoo Finance All Market Summit. “We have seen how cannabis and the war on cannabis have had this not just disproportionate, but disastrous impact on communities of color.”
Moore, who is also a board member at Chicago-based cannabis company Green Thumb Industries, points to a recent study investigating how imprisonment and convictions can reduce earnings potential. Data from the Brennan Center shows people who have spent time in prison suffer the greatest losses, with subsequent annual earnings falling by an average of 52%. Even people convicted of a misdemeanor without serving prison time see their annual earnings reduced by an average of 16%. While white offenders eventually see a recovery in earnings, Blacks and Latinos experience a flat earnings trajectory.
“They suffer lifetime earning losses of $358,000 and $511,000, respectively,” Moore said. That’s more “than their white counterparts who have lost at around $260,000. These are massive disparities, when we're talking about people who are there for the exact same issues.”
‘A real moonshot opportunity for wealth creation’
That disparity for convicted cannabis offenders could be wiped out with the expungements offered through the MORE Act, but recent states have also shown what more cannabis legalization can offer to help close the wealth gap. In Illinois, which became the eleventh state to legalize the sale of cannabis, a portion of cannabis tax revenues are redistributed to communities suffering the worst lingering consequences of a drug war.
“We now are on the cusp of something that’s not only a veritable conversation that this country needs to have, but also something that is a real moonshot opportunity for wealth creation and supplying opportunities for people that that have been historically left out of this,” he said.
The cannabis industry as a whole, however, has not proven to be very inclusive, at least when it comes to the boards of the largest operators. A Yahoo Finance review of the 65 board members at the largest publicly traded cannabis companies revealed that only two were people of color — Moore, and Dexter John, a director at New Brunswick-based Organigram Holdings. That 3.1% minority representation trails the nearly 20% minority board representation for Fortune 100 companies as measured by the Alliance for Board Diversity by a wide margin.
As large of an opportunity cannabis represents as a tool to close the racial wealth gap, Moore believes there is still a long way to go.
“It needs to be everything from the way we're thinking about distributors to the way we're thinking about producers to the way we're thinking about the you know, the large scale owners and the board memberships and the C suites of these companies that are growing and scaling and becoming very profitable on this,” he said. “That cannot happen without real inclusion as being one of our core principles.”