Building a better industry?
State offered marginalized groups a leg up in legal market; some say it’s failed to live up to promise
BALBUQUERQUE obbi Martinez grew up fast.
As she met with clients in an Albuquerque cannabis dispensary, Martinez pointed a carefully manicured nail to a list of mandates in a state compliance book.
She was flanked by clients on either side, both Hispanic women who also were raised in the tightknit South Valley neighborhood that has struggled against poverty, high crime rates and drug abuse for as long as its residents can remember.
“I was born and raised here, seventh generation,” Martinez said. “I come from a Hispanic family.”
She is the first generation in her family to graduate from college.
As New Mexico’s first cannabis compliance officer and then later compliance manager, Martinez ensured those applying for and receiving cannabis licenses followed the mandates in the state’s Cannabis Regulation Act, which legalized the recreational use of cannabis for adults 21 and over in June 2021 and allowed sales of cannabis products in starting in April 2022.
But Martinez, 28, became disillusioned, finding the state was failing to provide clear pathways into the cannabis industry for minorities and those affected by the nation’s so-called war on drugs to enter the cannabis industry — a key goal of lawmakers and advocates who drafted the law.
The state, she said, has abdicated its own social equity mandates, leaving her clients even further removed from provisions designed to help them.
Martinez, who left her job at the state Cannabis Control Division to serve as a compliance program manager for Albuquerque-based cannabis consulting firm Weeds, is one of many critics of the division who say it has failed to establish required social equity practices that “promote and encourage participation” in the cannabis industry by those harmed by criminal justice policies and procedures that disproportionately targeted certain communities.
“It’s something I’m extremely passionate about. It’s something I have a tremendous interest in,” Martinez said. “When I heard the governor’s vision, I thought maybe this could benefit people like me and people who come from backgrounds like me, but we should be further into it. … There’s not even a process that would evaluate these potential social equity applicants to get priority in licensure.”
Others vested in the growth of the state’s cannabis industry and the laws that govern it agree — calling the social equity mandates key to leveling the playing field.
“Social equity is the cornerstone of cannabis legalization because of the war on drugs and the impact it had on communities, specifically Black and brown communities and some historically disenfranchised communities,” said Kristen Thomson, the former director of the Cannabis Control Division who wrote its social equity policy and now works alongside Martinez as Weeds’ chief strategy officer.
“Some people call it the war on drugs, but it’s really the war on race,” said Ernest Toney, founder of Colorado-based Bipocann. His company helps minorities expand their economic growth potential within states that regulate cannabis.
It can be difficult to educate people about the effects of the drug war’s policies and the need for change, he said. “If you look at what prohibition did to communities, that requires you to acknowledge that it actually happened, and it existed.”
Toney added, “If you’re going to have legislation and policies that say you want to make the industry more equitable, there needs to be a pathway for people to actually go through that process.”
‘Deep discussions’ but little action
Social equity is two-pronged, Thomson said: to expunge records of those convicted of crimes that are no longer crimes and to create a space for resources and opportunities for people and communities disproportionately affected by the war on drugs.
According to the Cannabis Control Division’s published policy, Martinez herself would fit the definition of a social equity applicant because she is Hispanic, comes from a marginalized community and is a victim of the war on drugs. She said she had a parent who is battling drug addiction and still feels “the harm that the war on drugs had on my community and my family directly.”
But so far, there’s no place for people like Martinez or her clients to apply for help.
The Cannabis Control Division’s social equity plan was developed and published on its website in February 2022 in response to a memo released by the division’s Cannabis Regulatory Advisory Committee, which reiterated the state law’s mandate to develop a social equity program.
According to the law, the Cannabis Control Division is tasked with promulgating rules that encourage minority participation in the cannabis industry, particularly “in communities that have been disproportionately harmed by rates of arrest through the enforcement of cannabis prohibitions in law and policy.” It also is charged with assisting people negatively effected in rural communities likely to be impacted by cannabis production and to develop “procedures that promote and encourage racial, ethnic, gender and geographic diversity.”
The Cannabis Control Division’s social equity plan says an eligible applicant is a cannabis operator who is Native American, Black, Hispanic or of another nonwhite origin; earns below median income; has been arrested on felony charges involving cannabis; or was subject to civil asset forfeiture.
Extra priority is given to applicants who are disabled or who are service-disabled veterans; women; members of the LGBTQ community; people over the age of 55; and those who have a parent, sibling, child or grandchild who was arrested on drug-related charges.
The division reported earlier this month a total of 2,423 applications for business licenses since the law was passed last year, with about a third of those applicants identifying as Hispanic or nonwhite. Advocates say the number who might be identified as social equity candidates could be higher due to the state’s high poverty rate.
Andrew Vallejos, interim director of the Cannabis Control Division who also serves as director of the Alcohol Beverage Control Division, said about 40 percent of the 1,800 cannabis business licenses issued so far went to people who identify as Hispanic — or those who could, under the division’s own social equity plan, qualify for enhanced benefits.
Vallejos said Cannabis Control Division Deputy Director Carolina Barrera oversees the social equity program.
According to the division’s policy, Barrera is tasked with creating and implementing a “navigator program” to assist applicants who would qualify for social equity. Those identified and certified would receive assistance in applying for a license and developing business structures, operations and employment practices that “demonstrate a commitment to justice and equality.”
Additionally, certified social equity applicants are to be screened to determine if they qualify for fee waivers or reduced fees.
According to the policy, Barrera also is tasked with creating a community advisory group formed by participants in a Social and Economic Equity Survey posted on the Cannabis Control Division’s website.
Barrera did not respond to requests for an interview.
Vallejos said division employees have had “deep discussions” regarding the navigator plan, but no other action has been taken to identify social equity applicants or to certify them.
“The big push in the first quarter was getting all the applicants who applied up to speed, and there wasn’t a separate track for social equity applicants,” he said.
Vallejos referred to the division’s social equity policy as “suggestions and different approaches, a lot of good ideas thrown out.”
Thomson disagreed, describing social equity as “a major impetus to cannabis legalization. It is the main value of the Cannabis Regulation Act. It was written as policy. It was policy that was intended to be implemented once we got beyond opening day.”
“There should be social equity applications and programming within the CCD to ensure that those applicants receive the assistance they need to be successful in their business endeavors,” she said. “That is what is contained within that document.”
Still a chance to ‘right this ship’
The Governor’s Office says it has made good on the state’s promise to deliver social equity in the cannabis industry by removing barriers for everyone.
“In enacting legalized recreational cannabis, the governor sought to ensure social equity by removing barriers to licensure in order to allow for broader participation in the cannabis economy, which is exactly what has happened,” Nora Meyers Sackett, a spokeswoman for Gov. Michelle Lujan Grisham, wrote in an email.
She noted the licensing process was designed to be affordable, and New Mexicans have an opportunity to apply for a variety of types of licenses.
But Pat Davis, the governor-appointed chairman of the 22-member Marijuana Legalization Work Group — which spent months reviewing the social equity policies of other states with legalized cannabis, then drafted the framework that would become New Mexico’s law — suggested those practices miss the point.
Sackett’s statements reflect social “equality” but not “equity,” he said.
“Equity is eliminating the discrepancies. Right now when we help a licensee, if they have $100,000 in the bank they pay the same fees and meet the same standards as someone who has $10,000 in the bank,” Davis said. “The equity plans are supposed to identify those persons who can meet the standards but lack some of the resources to be successful as someone who has been impacted in the war on drugs.”
He doesn’t believe all is lost. “The Legislature and the CCD can still right this ship,” he said. “There’s still a chance for us to do the right thing.”
Sackett argued the state is “prohibited from placing policies in effect that could be considered discriminatory, like establishing a separate application process for different kinds of applicants.”
Davis countered social equity is an application status, rather than a separate application process, that identifies the minority base, most of whom need training in business acumen to successfully navigate regulations.
“There is a sector of consumers who want to buy locally grown, but no one can identify who that is,” he said.
Davis fears many business owners who need the help they aren’t receiving from the state will struggle to survive without it.
“There are a lot of small businesses and families who will be at stake when the tax bill comes due this year,” he said. “This has to be the year for social equity, or we will miss that train.”