As operators in New Jersey work toward launching the state’s new recreational cannabis market, many Black applicants are beginning to feel frustrated and excluded from the process, citing obstacles blocking their business dreams. From the limited number of cultivator licenses to losing money on overhead costs, a number of these cannabis professionals spoke with New Jersey Monitor, expressing their concern that Black businesses are being left out of the state’s new market.
New Jersey voters legalized adult-use cannabis with the approval of Question 1 in the November 2020 general election, passing with 67 percent of the vote. The law set a September 2021 deadline for the state’s Cannabis Regulatory Commission (CRC) to begin accepting applications for business licenses, though they began accepting cannabis licenses late last year.
New Jersey has also pledged to prioritize applicants from marginalized populations in response to the War on Drugs and its effect on communities of color, though some point to established operators trying to enter the industry through that equity measure. Specifically, the Monitor caught up with Jersey City Plant shop owner Shayla Cabrera, a Black woman who has eyed the cannabis industry for years.
Cabrera said that a California cultivator found her in a directory of diverse business owners and offered her an “attractive business deal,” along with a flight to their West Coast farm, but she turned them down.
“It’s a predatory practice that’s happening in multiple states, under the guise of social equity,” she said. “The government says they’re encouraging social equity, but straight up, Black people are being left out.”
Regulators have indicated that they are working to ensure multi-state and established out-of-state operators don’t corner the state’s cannabis market. Dianna Houenou, chair on the New Jersey CRC, said that this happens across the country, and the commission is aware that it’s happening in New Jersey as well. She said it’s something the CRC is trying to figure out exactly how to mitigate.
“There are a lot of fears being expressed about New Jersey’s adult-use industry being dominated by multi-state operators, boxing out New Jerseyans and tokenizing people just for a leg up into the industry and then siphoning all the economic value away from those tokenized people of color or women or veterans.”
As Houenou noted, it’s something many states are trying to combat, despite diversity efforts. New Jersey specifically wrote into law that 30 percent of recreational cannabis licenses be awarded to businesses owned by women, minorities and veterans with disabilities, and while commission spokeswoman Toni-Anne Blake said there are “more than zero” Black-owned awardees, the commission leaders won’t reveal how many of the 44 additional medical cannabis licenses awarded are Black-owned.
John Harmon spoke out about this last month and said that, for the commission, transparency is a choice.
“This was a public process that led to people being awarded a public opportunity,” Harmon said. “Therefore, the public stakeholders should have information on it. It’s a simple question. This is not a long conversation. The lack of transparency makes no sense and is insulting, frankly.”
Houenou said that the 44 recently approved medical cannabis licensees applied well before the CRC existed, under a different state law that didn’t mandate diversity for recipients of licenses.
“The CRC inherited two- and three-year-old applications that we had to act on,” she said. “They’re all pretty much multi-state operators.”
She added that the CRC has put some rules in place to prevent predatory partnerships in the industry, like requiring minority applicants to hold a majority stake in the business, licenses needing an annual renewal, and business owners entering the industry through the diversity door having a continuous obligation to show they still qualify.
And, as of right now, it’s still not clear when New Jersey residents will be able to buy recreational cannabis. Houenou said that rushing to open the market now would lock out local entrepreneurs and put supply at risk, since smaller applicants aren’t ready. Though, Harmon notes, the “unjustifiably protracted process” creates barriers for applicants, like the CRC’s requirements to first secure a site, leaving many struggling to pay lease payments while the agency considers their application.
While Governor Murphy defended the pace of the cannabis market’s setup last month, Cabrera said it’s not enough, and standing her ground as a small business, rather than partnering with a well-known brand, makes it even harder.
“Every month this is delayed, it edges more people out of the market who are the little guys. And as Black people, as the underdog, we’re really bootstrapping this already,” she said.
