Social Equity Programs in State Level

Cannabis Rules

Natasha N. Varyani*

I. Legalization of Recreational Cannabis & Introduction to

Equity Programs

mong the important news coming from the November 2016 election

A was that the Commonwealth of Massachusetts made legal the

recreational use of cannabis derivatives. 1 In passing this ballot
measure,2 Massachusetts voters took the amending of state laws
into their own hands and approved language that would change the
Massachusetts General Laws to treat Marijuana as a controlled, but legal
substance (not unlike alcohol). This new law also authorized the creation of
the Massachusetts Cannabis Commission, a body charged with oversight
of the creation and regulation of the new cannabis industry.
The Commonwealth of Massachusetts is one of ten jurisdictions to
legalize the recreational use of cannabis products. 3 While the policy
ramifications of this trend are far-reaching, including increasing tax
revenues, changes to criminal justice, and growth of a new industry,
addressing the question of equitable distribution of benefits from the new
industry is a complex question and requires a nuanced consideration of
history as well as an assessment of current values. This article will briefly
explore the Massachusetts Cannabis Control Commission’s Social Equity
Program as a model for the way other jurisdictions may address similar
issues. In conclusion, understanding the goals and mechanics of such

* Professor of Law at New England Law | Boston

1 Massachusetts Question 4—Legalize Marijuana—Results: Approved, N.Y. TIMES (Aug. 1,

2017), https://perma.cc/6KR2-AB34.
2 See MASS. CONST. ART. XL VIII (explaining that in twenty-four states, including
Massachusetts, there exists a process for voters to create, delete, or amend State laws, or even
the State Constitution, in a way that is outside of the normal legislative process).
3 See Barry Weisz & Michael Rosenblum, Cannabis State–By–State Regulations,
THOMPSONCOBUM, https://perma.cc/924N-56L5 (last visited October 10, 2019) (listing Alaska,
California, Colorado, Maine, Massachusetts, Michigan, Oregon, Utah, Vermont, and
Washington with Vermont being the only state that has used the traditional legislative process
to legalize recreational use).

114
2019] Social Equity Program s 115

programs, suggestions will be made to maximize their impact.

The Cannabis Control Commission in Massachusetts is required by law
to ensure that the people and communities most harmed by enforcement of
previous versions of law related to the possession and consumption of
cannabis may have priority to enjoy the benefits of the new law. 4 In effect,
the legalization of recreational use of cannabis was bundled with the effort
to correct some of the harms done to communities that were
disproportionately impacted. This is not an initiative of the Cannabis
Control Commission (“Commission”), but a mandate from the voters that
is inextricably linked to the legalization of recreational use. From a policy
perspective, this should not be taken lightly nor can it easily be undone–
even with a change in leadership of the Commission designed to regulate
the industry.

II. Why We Need “Social Equity” Programs

The idea that social equity programs are baked into the legalization of
cannabis indicates its importance as a tenet of a law that serves as the
foundation for the creation of a new industry. In the view of the
Commission, Black, and Latinx5 populations, while approximately 22% of
the population, account for 75% of the individuals serving mandatory
minimum sentences for drug-related offenses.6 Though the
disproportionate impact made clear from the rate of incarceration is ample
evidence of harm, the Commission recognizes that convictions for drug-
related offenses has an impact not only on the named individual, but more
broadly on that person’s family and community.7 When an individual is
missing from a family structure because of incarceration, the burden of
earning income, parenting, and other responsibilities falls squarely on the
remaining members of the household, who as a result of the extra burden,
may not have the capacity to accomplish what their peers may.
In addition to the harm done to the actual individuals and their
families by conviction and incarceration for drug-related offenses, the
disproportionate impact on communities of color only strengthens the
already existing institutional and cultural bias that exists surrounding
Black and Latinx communities.8 In ways, both social and neurological,

4 2017 Mass. Acts. 55.

5 This paper uses the term “Latinx” instead of the traditional Latino / Latina as a gender
inclusive, non-binary pronoun without investigation into the extent to which gender has
played a role in incarceration.
6 Defining Disparities, MASS–CANNABIS–CONTROL, https://perma.cc/7VRD-UR53 (last
visited October 10, 2019).
7 Equity Programs, MASS–CANNABIS–CONTROL, https://perma.cc/F4Z7-LGKR (last visited

October 10, 2019).

8 See generally EBERHARDT, JENNIFER L., BIASED: UNCOVERING THE HIDDEN PREJUDICE THAT
116 New England Law Review [Vol. 53 | 100

police officers, attorneys, judges, and juries, as well as people wholly

outside of the legal system, perpetuate a negative bias about people of
color that exists on a social and institutional level. Seeing Black and Latinx
communities convicted over and over again will only confirm already
existing biases about criminal conduct.
In recent years, however, there has been a recognition that these biases,
both institutional and personal, have had a profound impact on our system
of justice. The Commission “in order to redress the historic harm done to
those specific individuals and communities” has created a robust social
equity program in Massachusetts.9 The enabling statute in Massachusetts
requires that the Commission prioritize licensing related to the cannabis
industry for those who “demonstrate experience in or business practices
that promote economic empowerment in communities disproportionately
impacted by high rates of arrest and incarceration for offenses.”10

III. How Do Social Equity Programs Work

The stated purpose of the Massachusetts Social Equity Program is

threefold: (1) to “create and build sustainable pathways into the cannabis
industry”; (2) to use the “Track System” to pair applicants with qualified
vendors in an attempt to maximize the likelihood of success; and (3) to
create a pipeline and network that will help to connect job seekers and
employers.11 The purpose and mechanics of the social equity programs are
thoughtful responses to the problems and historic harms suffered by some
communities. Given the potential economic impact of the cannabis
industry, social equity programs are a targeted way to ensure that social
ills caused by an unfair application of illegal substance laws are addressed
and that impacted populations are given some advantage.
In Massachusetts, there are several “tracks” by which to make best use
of the Social Equity Program. Once an applicant has established eligibility12
for participation in the program, they may choose to apply for a track that
is best matched to their skills and needs. An applicant may apply to be on

SHAPES WHAT WE SEE, THINK AND DO (2019).

9 Equity Programs, supra note 7.
10 MASS. GEN. LAW. ch. 94C.
11 Shekia Scott, Social Equity Program, CANNABIS CONTROL COMMISSION (June 26, 2018),

https://perma.cc/Z4X4-RTKH.
12 See Shekia Scott, Social Equity, CANNABIS CONTROL COMMISSION, https://perma.cc/EW3Z-

CHDK (last visited October 10, 2019) (The MA Cannabis Control Commission defines
eligibility for the Social Equity Program as applicants who demonstrate meeting the showing
of one of the following three criteria: (1) Residence in an area of disproportionate impact for at
least five of the last ten years with an income that does not exceed 400% of the Federal
Poverty Level; (2) A drug conviction and residence in Massachusetts in the past twelve
months; and (3) Being the spouse or child of a person with a drug conviction and residing in
MA for at least the past twelves months.).
2019] Social Equity Program s 117

the “Entrepreneur” track, where they will get priority licensing and seek to
own a retail recreational cannabis business. The “Core” track is intended
for those individuals interested not in ownership, but in executive and
managerial experience, and has two categories to account for varying levels
of business experience. There is a “Re-Entry & Entry” track, which is for
those who are re-entering society or who have entry level experience in
business. Lastly, the “Ancillary” track is intended for those with skills that
are transferrable to supporting the cannabis industry. 13
In addition to priority access to licensure and fee waivers 14, individuals
selected to participate in the Social Equity Program will have access to
training and technical assistance in a number of areas including tax
prediction and legal compliance, business plan creation and operational
development, and assistance in identifying / raising funds or capital.15 The
strength of these services to Social Equity Investors will determine the
success of the program, as discussed in the next section.
In California, where the sale and use of recreational marijuana has also
recently been made legal, the City of Los Angeles has created a Licensing &
Social Equity Program that will grant licenses for retail and delivery to
qualifying individuals. Similar to the Social Equity Program in
Massachusetts, Los Angeles’ program shares similar goals and ways of
identifying individuals disproportionally impacted by drug-related
convictions.16
Social equity programs are born of good intentions to correct past
harms and crafted thoughtfully in order to serve a population that has been
historically disenfranchised. Providing support in key areas to those
individuals awarded licenses in the quickly growing cannabis industry is
necessary to protect the program goals and the people social equity
programs are designed to serve.

IV. Padding the Path to Success for Social Equity

In those states that have decriminalized the recreational use of

cannabis products, there is potential for tremendous and exponential
growth. Investors are aware of the earnings potential in this industry and
are eager to partner with whomever necessary to build this industry from

13 Cannabis Control Commission, Equity Programs, https://perma.cc/CJT4-EZH8 (last visited

October 10, 2019).

14 See Shieka Scott, Social Equity Program, Cannabis Control Commission, (June 26, 2018),

https://perma.cc/HUR6-B79M.
15 Cannabis Control Commission, Guidance for Equity Provisions, https://perma.cc/MKH3-
437Z (last visited October 10, 2019).
16 See Department of Cannabis Regulation, Social Equity Program, https://perma.cc/QW6H-

HLVP (last visited October 10, 2019).

118 New England Law Review [Vol. 53 | 100

scratch.17 The populations that social equity programs are designed to

benefit may fare well by partnering with some of these investors, but those
partnerships may come to undermine the initial goals of benefitting
communities disproportionally impacted by drug-related convictions. The
large investors, whether they are individuals, hedge funds, or private
equity firms, are very well equipped with access to capital as well as
business and legal expertise necessary to secure the best return for their
investors. The individuals who benefit from social equity programs are
very unlikely to have access to similar resources. Accordingly, even
thoughtful social equity programs like the ones in Massachusetts and the
City of Los Angeles, which will set the stage for other jurisdictions, should
pay close attention to providing support in at least three areas: access to
capital, legal services, and business services.
Where the Massachusetts Social Equity Program will provide
mentoring in the area of identifying and raising capital, there should be
some safeguard in place to ensure that the Social Equity Program applicant
is the primary beneficiary of the grant. Though very few resources (both
legal and business) are likely to equal that of the investor pool made up of
private equity and hedge funds, government sponsored equity programs’
intervention to ensure fairness and equity in partnerships would ensure a
fulfillment of the goal of empowering the intended individuals and
businesses. For many social equity applicants, access to capital will be a
barrier to entry, so seeking funding from private investors will be
necessary. Access to strong legal and business counseling services that are
embedded into the social equity benefits will help to ensure at the very
least that large firms do not take advantage of those individuals and
communities disproportionately impacted by drug-related convictions.

17 See Frank Robison, Going Green: Legal Considerations for Marijuana Investors and

Entrpreneurs, 6 AM. U. BUS. L. REV. 57, 63 (2015).