Opinion: Why legal marijuana is one of the most successful, yet disappointing, social movements

Marijuana prohibition remains at the heart of America’s failed war on drugs. More than half a million people were arrested for marijuana-related crimes in the US in 2018, accounting for more than 43% of all drug-related arrests.

But times are changing. Marijuana reform has been one of the most successful social movements in recent history. Currently, 24 states and Washington, D.C., legalize marijuana for adult use.

While the drug remains prohibited at the federal level, the Biden administration recently began the process of reclassifying cannabis as a less dangerous substance (from Schedule I to Schedule III), which would result in a significant relaxation of federal regulations on the U.S. cannabis industry, which is projected to exceed $30 billion in retail sales in 2024.

But legal cannabis has been somewhat disappointing. High barriers to entry keep many small business owners from breaking into the industry. A 2023 study found that less than 25% of U.S. cannabis businesses are profitable, with most of that revenue flowing to a small group of large, interstate business owners led by a group of mostly white owners. A 2021 report found that less than 2% of U.S. cannabis business owners are Black.

These are some predictable concessions by cannabis activists to the business community, and states that have yet to legalize marijuana should heed the dangers of such compromises, or risk recreating the very dynamics that legalization was meant to disrupt.

Equity has always been a priority for some legal cannabis activists. Washington state legalized cannabis for adult use in 2012 through legislation drafted by a small team of local activists and supported by the American Civil Liberties Union. Activists were primarily interested in protecting small, independent operators, including residency requirements for cannabis license holders, caps on the number of licenses that could be held, and strict restrictions on the amount of “canopy” that cannabis growers could cultivate. This allowed small operators to capture a larger market share in Washington than in other states.

But companies realized the huge profit potential of legal marijuana by the time California legalized it in 2016. Local activists spent years drafting a plan for gradual legalization in California that included many of the same protections in place in Washington state.

The effort was backed by prominent national cannabis advocacy groups, including the Drug Policy Alliance and the Marijuana Policy Project. But before they could put the amendment to a vote, Silicon Valley billionaire Sean Parker backed another legalization campaign with $8.5 million of his own money. Some groups pressured local activists to pull funding from earlier drafts of the bill and instead support a better-funded new campaign. The result was a more business-friendly bill with no residency requirements or license caps.

In other states, activists have worked to craft legalization bills that focus on consumers and patients. Michigan’s cannabis industry, for example, has relatively low barriers to entry, making it easier for small businesses to get started, increasing competition and lowering costs for consumers.

This happened only because local activists resisted corporate influence: In the run-up to the 2018 Michigan elections, they faced pressure from national groups and corporate donors seeking the same kind of market advantage enjoyed in California to draft a business-friendly marijuana legalization bill.

They resisted the pressure and lost significant funding as a result. On average, pro-legalization ballot measure campaigns raised 400% more money than their opponents, but in Michigan campaign spending was much closer. Voters still overwhelmingly supported the measure.

Still, Michigan has struggled with one of legalization’s toughest challenges: racial equity: Only about 3.8% of cannabis business owners in the state are Black and only 1.5% are Latino, according to a 2021 survey.

Several states have experimented with ways to address these concerns, with mixed results. In 2019, Illinois became the first state to include racial equity provisions in its cannabis law, creating a social equity application program, providing technical and financial assistance to first-time business owners, and distributing 25% of cannabis taxes to communities disproportionately affected by the war on drugs. A recent report estimated that 27% of legal cannabis business owners in Illinois are black, while only 5% identify as Latino and 3% are Asian.

New York’s cannabis law passed in 2021 has been hailed as the most progressive cannabis law, following in the footsteps of Illinois with a goal of awarding at least 50% of cannabis licenses to equitable applicants. But delivering on that promise has so far proven difficult. After New York’s cannabis market gained momentum this year, the initial results have been disappointing for equity advocates.

Still, these more progressive laws make it easier to achieve equity. The biggest barriers people of color face when trying to enter the industry are excessive regulations and fees, which tend to disproportionately impact small businesses. Reforms have been difficult to pass because stakeholders who profit from the current system fight hard to protect their market share, even when the regulations they seek to protect make no practical sense.

And the reforms that made that possible face an uphill battle. In Washington state, activists finally passed reforms designed to ensure a fair number of applicants can succeed in the cannabis industry in 2020, eight years after marijuana was legalized in the state. But in recent years, the percentage of Black cannabis business owners in the state has stagnated at 4%.

It may be too late to prevent corporate domination of the cannabis industry. Consolidation is already having an impact in the California market. The number of cannabis licenses in the state has dropped from a high of 18,000 to 4,000. Californians once had about 6,000 cannabis brands to choose from, but now only 1,600 are legally sold in the state. According to a 2022 LA Times analysis, the 10 largest grow operations in California own 22% of the state’s cultivation licenses.

But the beer industry has signaled it could reserve more benefits for small operators, who are more likely to be people of color. Independently owned craft breweries are gaining market share, reaching a small but significant 13% in 2021.

Unless marijuana legalization is pushed in a more diverse and progressive direction, it will not bring about the social change that motivated many activists to pursue marijuana legalization in the first place.

Joseph Mello He is an associate professor of political science at DePaul University and most recentlyMarijuana for Profit: Marijuana Legalization, Racial Capitalism, and the Expansion of the Carceral StateArticle originally published in the Los Angeles Times.

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