ARLINGTON, Wash. — When Washington state opened some of the country’s first legal marijuana stores in 2014, Sam Ward Jr. under electronic house arrest in Spokane, where he had been indicted on federal drug charges. He would soon go to prison to serve the lion’s share of a four-year sentence.
Ten years later, Ward, who is black, recently posed on a blue-and-gold throne used for photo ops at his new cannabis store, Cloud 9 Cannabis. He greeted customers who came in for early 4/20 deals. And he reflected on being an early beneficiary of a Washington program to make the predominantly white industry more accessible to people harmed by the war on drugs.
“It feels great to know that I am the CEO of a store, with employees and people who depend on me,” Ward said. “Just the fact that you are part of something makes you feel good.”
A major argument for legalizing adult cannabis use was to stop the harm caused by disproportionate enforcement of drug laws, which sent millions of Black, Latino, and other minority Americans to prison and perpetuated cycles of violence and poverty. Research has shown that minorities were more likely to be incarcerated than white people, despite similar rates of cannabis use.
But efforts to help those most affected participate in — and benefit from — the legal marijuana sector have stalled.
Since 2012, when voters in Washington and Colorado approved the first ballot measures to legalize recreational marijuana, legal adult use has spread to 24 states and the District of Columbia. Nearly all countries have “social equity” provisions designed to repair the damage caused by the drug war.
These provisions include expunging criminal records for certain marijuana convictions, granting cannabis business licenses and financial assistance to people convicted of cannabis crimes, and redirecting marijuana tax revenue to communities that have suffered.
“Social equity programs are an effort to undo the harm done to Black and brown communities, which are over-policed and disproportionately impacted,” said Kaliko Castille, past president of the Minority Cannabis Business Association.
States have different ways to determine who can apply for social equity marijuana licenses, and these are not necessarily based on race.
In Washington, an applicant must own more than half the business and meet other criteria, such as having lived in an area with high poverty, unemployment or high cannabis arrest rates for at least five years between 1980 and 2010; have been arrested for a cannabis-related crime; or have a household income below average.
Legal challenges over the permitting process in states like New York have delayed implementation.
After settling other cases, New York — which regulators say has issued 60% of all cannabis licenses to social equity applicants — is facing another lawsuit. Last month, the libertarian-leaning Pacific Legal Foundation claimed it favors candidates owned by women and minorities, in addition to those who can demonstrate harm from the drug war.
“It is this type of blanket racial and gender preference that the Constitution prohibits,” said Pacific Legal attorney David Hoffa.
Elsewhere, deep-pocketed companies operating in multiple states have acquired social equity licenses, potentially frustrating the intent of the laws. Arizona lawmakers this year raised concerns that licensees had been pressured by predatory companies to relinquish control.
Difficulties in finding locations due to local cannabis retail bans or in obtaining bank loans due to ongoing federal prohibition have also deterred candidates from opening stores. In some cases, the very things that qualified them for licenses – living in poor neighborhoods, criminal records and lack of assets – have made it difficult to secure the money needed to open cannabis businesses.
The authors of Washington’s landmark law were concerned with preventing the US Department of Justice from shutting down the market. They needed background checks to keep criminals out.
“Many of the early states simply did not have social equity on their radar,” said Jana Hrdinova, administrative director of the Drug Enforcement and Policy Center at The Ohio State University Moritz College of Law.
Many states that have recently legalized — including Arizona, Connecticut, Ohio, Maryland and Missouri — have had social equity initiatives from the beginning.
Washington established its program in 2020. But only in recent months has it issued its first retail licenses for social shares. Only two have opened, including Ward’s.
Washington Liquor and Cannabis Board member Ollie Garrett called the progress so far disappointing, but said officials are working with applicants and pushing some cities to rescind zoning laws so cannabis businesses can open with social equity.
The state, which collects about half a billion dollars a year in tax revenue from marijuana, is making $8 million in grants available to social equity licensees to help with expenses such as security systems and renovations, as well as business coaching.
It also provides $250 million to communities harmed by the drug war, including housing assistance, small business loans, job training and violence prevention programs.
Ward’s turnaround is one that officials hope to see repeated.
He started dealing marijuana in his teens, he said. In 2006, a customer pulled a gun on him and Ward was shot in the hand.
As a single father of seven children, he continued to deal drugs to support them, he said, until he was indicted in 2014 — along with 30 other people — in a conspiracy to distribute oxycodone. He was in prison for almost three years.
Ward, now 39, spent that time taking classes, playing sports and training other inmates. He started a personal training business after being released, got a job at a restaurant and joined a semi-pro football team, the Spokane Wolfpack.
There he met Dennis Turner, a black entrepreneur who briefly owned the team. Turner had worked as a restaurant manager on cruise ships, for the Postal Service and as a corrections officer before investing his savings — $6,000 — in a friend’s medical marijuana growing operation. They used the proceeds to help open a medical dispensary in Cheney, a small college town southwest of Spokane, which eventually became an adult-use marijuana store.
In Washington’s social equity program, Turner saw an opportunity to turn Ward into a businessman. The two joined Rashel Palmer, whose husband is a co-owner of the football team, in launching Cloud 9 for a fee of approximately $400,000. They chose Arlington, Washington — 315 miles away — because it is a fast-growing city with limited cannabis competition, they said.
Ward “saw me as a guy he looked up to, who did good business, was self-made and came from the trenches, and he just wanted to pick my brain,” Turner said.
Turner is working to open cannabis stores in New Mexico and Ohio through social equity programs in those states. He hopes to one day sell them for tens of millions of dollars. In the meantime, he plans to use his businesses to support local charities such as the Boys and Girls Club of Arlington and the Carl Maxey Center, which provides services to Spokane’s black community.
Another new social equity licensee is David Penn Jr., 47, who helped convince Pasco, in south-central Washington, to repeal the ban. Penn, who is black, was arrested as a teenager on a crack cocaine charge. In 2011, he was evicted from his apartment after a marijuana burglary.
A friend with two other cannabis stores is financing Penn’s store. His location, a building with a dirt floor next to a gas station, still needs to be developed. State subsidies will help, but will not be enough.
“It’s like they give you the carriage, but you need the horses to get this thing going,” Penn said.