Pot prohibition cost Black communities. Can Black firms profit now?

For most of her life, Dr. Chanda Macias has been in the middle of America’s changing attitudes toward marijuana.

Growing up in Washington, D.C., in the 1990s, she witnessed what could be called the old outlook on the plant during the U.S. war on drugs: Marijuana is unqualifiedly dangerous, and those who possess or sell it are criminals who should be locked away.

“We saw a lot of people [in our communities] go to prison,” says Dr. Macias, a cell biologist who studied cancer and who now owns a growing medical marijuana business. “We were being disproportionately targeted and incarcerated, and it destroyed a lot of families.”

Through her research, Dr. Macias played a role in what is becoming the country’s new outlook on marijuana – including an emerging bipartisan consensus that marijuana has medical applications and fewer comparable risks than alcohol and tobacco, and that a half-century of criminalization was both misguided and wrong.

Dr. Macias, who studied biology at Howard University and got her Ph.D. in 2001, was among the first to apply for a business license when the District of Columbia legalized medical marijuana in 2010. In 2014, she launched the National Holistic Healing Center, a D.C.-based medical cannabis dispensary.

In a high-profile example of how Americans’ attitudes toward marijuana have changed, President Joe Biden granted a pardon to people convicted of federal marijuana possession this month. The symbolic gesture expunged the records of about 6,500 people. But he also urged governors to do the same with the far larger number of those convicted under state laws, and urged his administration to “expeditiously” review the federal classification of marijuana as a Schedule I narcotic, which is considered the most dangerous and includes heroin and LSD.

“Sending people to prison for possessing marijuana has upended too many lives and incarcerated people for conduct that many states no longer prohibit,” President Biden said in a statement. “Criminal records for marijuana possession have also imposed needless barriers to employment, housing, and educational opportunities. And while white and Black and brown people use marijuana at similar rates, Black and brown people have been arrested, prosecuted, and convicted at disproportionate rates.”

A new Monmouth poll out this week found that 69% of Americans approve of Mr. Biden’s pardons and 68% support the legalization of small amounts of marijuana. But as the nation’s attitudes continue to change and the sale of legal marijuana becomes a multibillion-dollar industry and the source of a tax windfall for states, there’s a certain irony looming, Dr. Macias and others say. 

Few of those who bore the costs of the war on drugs, particularly through incarceration, are poised to reap its rewards. 

The District of Columbia and 19 states have legalized the recreational use of marijuana, and a total of 44 states have approved it for medical purposes. Legal sales increased 40% in 2021, reaching $25 billion, according to Bank of America. But less than 2% of legal marijuana businesses are Black-owned in a fast-emerging industry that provided over $3.7 billion in tax revenues for states in 2021.

“It’s re-traumatizing a lot of these communities,” says Damian Fagon, chief equity officer for the New York State Office of Cannabis Management, a new agency established after New York legalized recreational marijuana in 2021. “You spend 30 years arresting them for a product that you’re now letting a select few make a profit off of? It’s pretty horrendous.”

New York’s notorious “Rockefeller laws,” passed in the 1970s, were especially severe, he points out. Selling 2 or more ounces of cannabis, or simply possessing 4 or more ounces, were both crimes that carried a minimum sentence of 15 years to life in prison.

Now, many states are trying to address the legacies of criminalization with a number of social equity policies. 

These policies generally include three parts: expunging the records of those convicted of breaking laws no longer on the books, reinvesting a portion of projected tax revenues into communities most affected by prohibition, and providing help for individuals in these communities to launch new businesses.

At least 15 states now include at least one of these policies, and nine of these, including Arizona, Colorado, California, New Jersey, New York, and Illinois, have a version of all three. 

“I think that there is widespread acceptance from the left and the right that the war on drugs was a failed experiment and that there is a better way to address this problem,” says Inimai Chettiar, federal director for the Justice Action Network, a bipartisan coalition promoting criminal justice reform.

New York’s approach

New York has been particularly aggressive as it seeks a restorative course.

Like Illinois and Vermont, New York now automatically expunges possession convictions, and it promises to reinvest 40% of tax revenues into communities disproportionately impacted by criminalization, the most of any state. 

And half of all new business licenses will go to a diverse array of social equity applicants, not only individuals from communities impacted by prior laws, but also other minorities, women, disabled veterans, and struggling farmers.

Texas, by contrast, has a chosen a very different route. As one of about a half-dozen U.S. states where the plant is still mostly illegal, it categorizes possession of up to 4 ounces of marijuana as a misdemeanor, punishable by a maximum of a $4,000 fine and one year behind bars. Possessing more than 4 ounces is a felony.

Kirsten Shepard, founder of TrueStopper, is one of Austin’s first Black female business owners who sell CBD and hemp-related products, the only products derived from the marijuana plant that are legal in the Lone Star State.   

Like Dr. Macias, Dr. Shepard believes legalizing marijuana would especially help cancer patients.

But for her, too, the most important aspect of legalization would be to address the ongoing injustices of prohibition. “Many people are still behind bars and incarcerated for those offenses, and then we have another group of individuals able to profit and make millions and millions of dollars off that industry? That’s injustice at its best,” she says.

The equity efforts of other states “even the playing field,” Ms. Shepard says, noting how few marijuana-related business owners look like her. “Because if we look at how those profits would be used, they would be creating jobs in the community, advancing our community.”

Texas casts a skeptical eye

Reforming Texas’ marijuana penalties is unlikely, experts say. State lawmakers from both parties have sought to decriminalize possession of marijuana in recent years, arguing in part that Texas would benefit from the tax revenue, but those efforts have been stymied by conservative Republicans.

Texas would have plenty of reasons to want to reduce penalties for marijuana possession, says Pamela Metzger, director of the Deason Criminal Justice Reform Center at Southern Methodist University.

“You’re saving prosecutorial resources,” she says. “You’re also saving policing resources,” she says.

It’s also costing taxpayers. Housing pretrial inmates cost local governments almost $1 billion a year in 2016, the Texas Judicial Council calculated.

“It’s in all our best interests to not engage [people] in the criminal legal system if we don’t have to,” says Professor Metzger. “Every dollar that goes to a marijuana arrest or a marijuana prosecution is a dollar that isn’t going to make your streets safe; it’s a dollar not going to a hospital, or to improving a street or a road.”

Gov. Greg Abbott, who is facing reelection this year, has expressed an openness to reducing penalties for marijuana crimes in the state.

“Prison and jail is a place for dangerous criminals who may harm others,” he said during a campaign event in January. “Small possession of marijuana is not the type of violation we want to stockpile jails with.”

But others disagree. President Biden’s announcement “is another attempt to normalize marijuana possession,” says Jimmy Perdue, chief of the North Richlands Hills Police Department and president of Texas Police Chiefs Association.

“Look across the country where they’ve started these conversations, it’s never just” legalizing small amounts, he adds. “It’s a dangerous, slippery slope.”

“Should [casual users] be going to jail? No, I don’t think so. So I agree with the governor on that,” he continues. “But there should be a consequence, because it’s illegal in the state of Texas.”

Public sentiment is trending differently. Fifty-one percent of Texans either support or strongly support legalizing marijuana for recreational use, according to a survey last month from The Dallas Morning News and the University of Texas at Tyler. Support grew to 67% in the survey when it came to legalizing the drug for medical use.

Texas is unlikely to follow the equity-focused policies of other states, but even for conservative states, “the trend continues to be towards legalization,” says Professor Metzger.

Even so, the effort to implement equity policies remains a structural challenge, experts say, especially when trying to increase the number of minority-owned marijuana businesses.

“The issue of access and equity in the cannabis industry is something that goes beyond marijuana arrests and incarceration and race,” says Mr. Fagon at New York State Office of Cannabis Management.

“There are legal markets where, in order to get a license, you may need $20 million to be able to open up these vertically integrated giant operations,” he says. “There is often no ability for you to enter the market without access to that kind of capital. And so what we’re trying to say here in New York is that small businesses and medium-size businesses are essential to creating an equitable supply chain. It can’t just be large corporations dominating the entire industry state by state.”

New York’s program will help provide low-cost loans for approved equity applicants. “You need to create regulatory frameworks so that entrepreneurs with maybe $50,000 can get something off the ground,” he says.

Dr. Macias describes the kinds of barriers that make the process both prohibitively expensive and difficult to navigate.

“I wrote [National Institutes of Health] grant applications when I was a researcher, so I had the skill set,” says Dr. Macias, who also mortgaged her house just to apply. “But for the normal person out here today, not many of us are skilled in application writing.” 

“The second barrier is definitely real estate,” she continues. “You have to have real estate within your possession at the time of applying, and that can run anywhere from $25,000 to $100,000 a year,” she says. “And the last thing is that you have to show proof of funds that you can cover all the operational costs with at least 2 1/2 to three years in reserve.”

“So if you put all those realities together, that’s why we have to have social equity programs,” says Dr. Macias, who also has an MBA in supply chain management. “Because historically, we haven’t been able to produce the amount of money for the financial demands of this industry.”

Early on, she reached out to women involved with Women Grow, at the time a Denver-based organization seeking to be a catalyst for women to succeed in the emerging industry.

“I told them I have a license and I just need help, and women from Oregon, women from California, women from other states – I realized how I was being empowered by other women,” Dr. Macias says. 

Today she’s become one of the most successful Black Latinas in the field, and she’s expanded her ventures to include Ilera Holistic Healthcare, an integrated company that develops and produces medical marijuana in Louisiana. 

She also became the CEO of Women Grow. “As I evolved, I always wanted to give that back. And now we have women in multistate operations, women who have their brands in multiple states. It’s like, we have to start at the bottom, and now build up.”

Editor's note: This story has been edited to correct a misspelling of the first names of Dr. Chanda Macias and Dr. Kirsten Shepard.