WHO SHOULD BE ELIGIBLE FOR A SOCIAL EQUITY LICENSE?
Individuals with past va marijuana convictions.
Residents in specific areas are targeted disproportionately by prohibition enforcement, but legal arguments in other states could eliminate residency criteria
Other possible criteria meaningful to the area such as those impacted by eviction or attended an underfunded public k-12 school
Race Criteria based exclusively on race may be legally risky. Virginia has opted out of this criterion due to landmark cases like the City of Richmond v. J.A. Croson Co., where the Supreme Court ruled that Richmond’s minority business enterprise program violated the Fourth Amendment by setting aside government construction contracts for minority-owned firms.
Set Firm ownership requirements There should be mandates of reporting on what persons/ body control the cannabis companies. As a result, states like Massachusetts recognize that some loopholes allow partners to take advantage of social equity license owners by having executive control even without majority ownership.
Be careful with income limitations
Income limitations can be restrictive, given how expensive it is to launch a cannabis business. If states decide to impose income limitations, implement a regular review to ensure the limits are working as desired.
What Benefits Should Social Equity License Participants Receive?
Access to capital. States should provide funds for grants and forgivable loans for social equity businesses. Initial funding must be available before applications for licenses are released, to allow for outreach and technical assistance.
Technical assistance and wraparound benefits, including legal and accounting services. Social equity programs should offer a variety of technical assistance with applications, compliance, and operation of a business.
Fee waivers. Fee waivers/discounts should be available for application fees, licensing fees, software fees, any mandatory inventory tracking fees, site review fees, and background check fees. Given that equity applicants are frequently small businesses, fee discounts can range from smaller discounts to full waivers depending on the size of the business and the type of license being sought.
Exclusive access to a pool of licenses or a specific license type. In some municipalities certain licenses or a portion of certain licenses are reserved for social equity license applicants. Such policies mean exclusive access for eligible applicants to certain types of licenses, such as home delivery, until it can be determined that the people most affected by the drug war are meaningfully included in the industry.
Access to Property Regulators should encourage reasonable zoning requirements to avoid unreasonable prices for suitable real estate. Separately, states should allow and incentivize shared commercial kitchens and cultivation spaces for social equity program participants, further reducing barriers to entry.
Workforce development. Social equity programs should offer different types of workforce training and job placement for workers who are not seeking business ownership.
Advantages in the licensing process. Some states with competitive licensing processes offer social equity applicants additional points when scoring applications. Others offer priority or expedited review of social equity applications. Both can be valuable if they are combined with well-designed licensing policies and other types of assistance.
Design different “tracks” of benefits. Different applicants may have different interests in the industry, such as ownership, jobs, executive positions, or entrepreneurship in related industries. Coordinate with other parts of government to ensure cannabis tax revenue is used to benefit people in disproportionately harmed communities who are not interested in the cannabis industry.
Principles for creating an effective licensing program in Virginia?
✓ Hire the right people
✓ License sequentially
✓ Provide guidance to local governments
✓Give yourself time
✓ Limit big business but do not cap the total numbers of licenses available
✓Consider alternative enforcement measures for unlicensed operators
Virginia Social Equity License Eligibility Criteria passed in 2021
Lived in Commonwealth for 12 months AND
Person with 66% ownership in cannabis business OR
Person who was convicted & adjudicated marijuana possession misdemeanor OR
Parent-child sibling or spouse of a person convicted & adjudicated of misdemeanor marijuana possession OR
Person convicted & adjudicated marijuana possession misdemeanor/ 66% owner + lived at least 3 out of the past 5years in census area ruled to be overpoliced
Convicted & adjudicated marijuana possession misdemeanor / 66% owner and lived at least 3 out of the past five years in census area ruled to be economically distressed OR
A Virginia HBCU graduate
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