CANNABIS LEGALIZATION AND SOCIAL EQUITY: SOME

1003

CANNABIS LEGALIZATION AND SOCIAL EQUITY:

SOME OPPORTUNITIES, PUZZLES, AND TRADE-OFFS

†

BEAU KILMER

, JONATHAN P. CAULKINS

, MICHELLE KILBORN

***

MICHELLE PRIEST

****

& KRISTIN M. WARREN

*****

ABSTRACT

Cannabis prohibition has created disparate harms—especially for Black,

Indigenous, and People of Color (“BIPOC”)—largely through arrest disparities

for possession and their downstream effects. Addressing inequities is

increasingly featured in discussions to legalize cannabis supply and adult

possession for nonmedical purposes. While there is little disagreement that these

inequities exist, those hoping to use cannabis policy to respond to them have

proposed multiple options that each come with their own set of potential benefits

and costs. This Essay describes some of these opportunities as well as some

major puzzles and trade-offs surrounding the use of cannabis policy to advance

social equity. Additionally, it offers insights into the number of people who could

benefit from various social equity efforts related to cannabis policy. In

particular, sealing or expunging cannabis possession convictions could affect

many more BIPOC—possibly close to two orders of magnitude more—than

prioritizing these individuals for entrepreneurship or employment opportunities

in the cannabis industry. These options are not mutually exclusive, but decision

makers should consider the possibility of federal legalization and what it will

mean for small cannabis businesses when developing cannabis equity programs.

†

This Essay is based on research that was supported by the Commonwealth of Virginia’s

Joint Legislative Audit and Review Commission (“JLARC”). We are thankful for the

comments we received from JLARC and the insights provided by decision makers and others

working in the social equity field as part of that project. We would also like to thank James

Anderson, Steven Davenport, Erin Kilmer Neel, and the editors of the Boston University Law

Review for feedback on an earlier draft. The views presented here only reflect those of the

authors.

McCauley Chair in Drug Policy Innovation, RAND; Director, RAND Drug Policy

Research Center.

H. Guyford Stever University Professor of Operations Research and Public Policy,

Carnegie Mellon University’s Heinz College.

***

Independent Researcher, Edmonton, Alberta, Canada.

****

Assistant Policy Researcher, RAND.

*****

Associate Engineer, RAND.

1004 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

CONTENTS

INTRODUCTION .............................................................................................. 1005

I. SOME OPPORTUNITIES FOR ADDRESSING INEQUITIES WITH

CANNABIS POLICY REFORM ............................................................... 1009

A. Arrests and Penalties ................................................................. 1010

B. Addressing Previous Cannabis Offenses ................................... 1011

C. Licensing Preferences ................................................................ 1012

D. Diversity in the Cannabis Workforce ......................................... 1015

E. Government Revenues ................................................................ 1017

F. Health ......................................................................................... 1020

II. THINKING ABOUT THE SCALE OF THOSE WHO COULD BENEFIT

FROM VARIOUS CANNABIS EQUITY PROGRAMS ................................ 1025

III. PUZZLES AND TRADE-OFFS ............................................................... 1031

A. If the Target Group or Area Is Too Large, Finite Resources

Get Spread Thin, and There Is a Higher Risk of Helping

Those Who Do Not Need It ........................................................ 1031

B. Defining Beneficiaries by Race or Ethnicity Could Lead

to Legal Challenges ................................................................... 1032

C. Increased Enforcement Against the Illegal Market Could

Help Equity Licensees ................................................................ 1034

D. Legalization Could Reduce Employment in the Cannabis

Industry ...................................................................................... 1035

E. Increasing the Number of Licensees in an Area Could

Depress Prices and Profits as Well as Increase Availability

of Cannabis in That Community ................................................ 1035

F. Federal Legalization Would Reduce Adult Cannabis

Arrests, but It Could Put Some Equity Licensees Out of

Business ...................................................................................... 1037

G. Compared to the Profit-Maximizing Approach, a State-Store

Model Could Generate More Government Revenue to

Address Inequities and Fewer Health Harms in DACs ............. 1038

CONCLUSION ................................................................................................. 1040

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1005

INTRODUCTION

Cannabis prohibition has contributed to social inequities—especially for

Black, Indigenous, and People of Color (“BIPOC”)—largely through disparities

in arrests and convictions for possession and resulting downstream effects of

having a criminal record.

There are multiple contributors to racial/ethnic

disparities in police contacts, ranging from enforcement strategies,

to racial bias

among certain police officers,

to differences in cannabis purchasing patterns.

The disparities are mostly not specific to cannabis; disparities also exist with

respect to other drug and nondrug crimes. Indeed, the extent of imprisonment

that is disproportionate relative to population is substantially greater for violent

crimes, particularly robbery and murder.

What is special about cannabis is the

growing sense that criminal sanctions are not appropriate in the first place,

particularly for possession of quantities suitable for personal consumption.

See, e.g., ACLU, A TALE OF TWO COUNTRIES: RACIALLY TARGETED ARRESTS IN THE ERA

OF MARIJUANA REFORM 29 (2020), https://www.aclu.org/sites/default/files/field

_document/tale_of_two_countries_racially_targeted_arrests_in_the_era_of_marijuana_refor

m_revised_7.1.20_0.pdf [https://perma.cc/BT9W-MT24]; Martin Y. Iguchi, James Bell,

Rajeev N. Ramchand & Terry Fain, How Criminal System Racial Disparities May Translate

into Health Disparities, J. HEALTH CARE FOR POOR & UNDERSERVED, Nov. 2005, at 48, 48-

49.

Andrew Golub, Bruce D. Johnson & Eloise Dunlap, The Race/Ethnicity Disparity in

Misdemeanor Marijuana Arrests in New York City, 6 CRIMINOLOGY & PUB. POL’Y 131, 135-

36 (2007); Bernard E. Harcourt & Jens Ludwig, Reefer Madness: Broken Windows Policing

and Misdemeanor Marijuana Arrests in New York City, 1989–2000, 6 CRIMINOLOGY & PUB.

POL’Y 165, 165, 176 (2007).

See, e.g., Greg Ridgeway & John M. MacDonald, Doubly Robust Internal Benchmarking

and False Discovery Rates for Detecting Racial Bias in Police Stops, 104 J. AM. STAT. ASS’N

661, 667 (2009) (“After using a doubly robust benchmark construction to compare the racial

distribution of the stops of 2,756 officers, we found five officers who appeared to be stopping

a significantly larger fraction of black pedestrians and 10 officers stopping an excessive

fraction of Hispanic pedestrians when compared with stops other officers made at the same

times and places.”). Those fifteen are just 0.5% of the officers in the sample.

Rachel M. Burns, Jonathan P. Caulkins, Susan S. Everingham & Beau Kilmer, Statistics

on Cannabis Users Skew Perceptions of Cannabis Use, 4 FRONTIERS PSYCHIATRY, no. 138,

2013, at 1, 4 (“Non-Hispanic blacks represent 13% of past-year cannabis users vs. 23% of

drug arrests reported by those users, but they report making 24% of the buys. Thus, some of

their higher arrest rate may be a consequence of their purchase patterns.”); Rajeev Ramchand,

Rosalie Liccardo Pacula & Martin Y. Iguchi, Racial Differences in Marijuana-Users’ Risk of

Arrest in the United States, 84 DRUG & ALCOHOL DEPENDENCE 264, 269 (2006) (“[T]here are

racial differences in the acquisition patterns for marijuana . . . . ”).

E. ANN CARSON, U.S. DEP’T OF JUST., NCJ NO. 255115, PRISONERS IN 2019, at 20-23

(2020), https://www.bjs.gov/content/pub/pdf/p19.pdf [https://perma.cc/3WAN-VG99]

(demonstrating that Black and Hispanic individuals have higher rates of imprisonment for

violent crimes).

1006 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

There is a plethora of literature documenting how arrests and convictions can

create long-lasting impediments to various life outcomes. Once someone

becomes involved with the criminal justice system, they can continue to be

negatively impacted via additional profiling and arrests, and this is especially

true for young men of color.

Convictions in particular can reduce employment

options, disqualify applicants from government assistance programs, and lead to

the revocation or suspension of professional licenses.

Authors have discussed a

range of additional consequences such as reduced income for future generations,

deportation, barriers to adoption and child custody, and the inability to vote in

some places.

There are also additional sanctions that are specific to being

convicted for a drug offense.

All these consequences are known determinants

of health and can affect individual and community health outcomes.

Discussions about how cannabis legalization can be used to influence social

equity outcomes have become more prominent and more detailed in recent

years.

When Colorado and Washington passed ballot initiatives legalizing

cannabis in 2012, to the extent that social equity figured into the debate at all,

AKIVA M. LIBERMAN & JOCELYN FONTAINE, URB. INST., REDUCING HARMS TO BOYS AND

YOUNG MEN OF COLOR FROM CRIMINAL JUSTICE SYSTEM INVOLVEMENT 3 (2015),

https://www.urban.org/sites/default/files/publication/39551/2000095-Reducing-Harms-to-

Boys-and-Young-Men-of-Color-from-Criminal-Justice-System-Involvement.pdf [https://

perma.cc/A4P3-34HX].

See J.J. Prescott & Sonja B. Starr, Expungement of Criminal Convictions: An Empirical

Study, 133 HARV. L. REV. 2460, 2468-71 (2020).

PABLO A. MITNIK & DAVID B. GRUSKY, PEW CHARITABLE TRS. & RUSSELL SAGE FOUND.,

ECONOMIC MOBILITY IN THE UNITED STATES 5 (2015), https://www.pewtrusts.org/-

/media/assets/2015/07/fsm-irs-report_artfinal.pdf [https://perma.cc/EUX2-9V6T]; Deborah

M. Ahrens, Retroactive Legality: Marijuana Convictions and Restorative Justice in an Era of

Criminal Justice Reform, 110 J. CRIM. L. & CRIMINOLOGY 379, 424 (2020); Mathew

Swinburne & Kathleen Hoke, State Efforts to Create an Inclusive Marijuana Industry in the

Shadow of the Unjust War on Drugs, 15 J. BUS. & TECH. L. 235, 253 (2020).

Marah A. Curtis, Sarah Garlington & Lisa S. Schottenfeld, Alcohol, Drug, and Criminal

History Restrictions in Public Housing, 15 CITYSCAPE, no. 3, 2013, at 37, 38; Brittany T.

Martin & Sarah K.S. Shannon, State Variation in the Drug Felony Lifetime Ban on Temporary

Assistance for Needy Families: Why the Modified Ban Matters, 22 PUNISHMENT & SOC’Y 439,

441 (2020); Lahny R. Silva, Collateral Damage: A Public Housing Consequence of the “War

on Drugs,” 5 U.C. IRVINE L. REV. 783, 799 (2015); Chesterfield Polkey, Most States Have

Ended SNAP Ban for Convicted Drug Felons, NAT’L CONF. OF STATE LEGISLATURES: THE

NSCL BLOG, https://www.ncsl.org/blog/2019/07/30/most-states-have-ended-snap-ban-for-

convicted-drug-felons.aspx [https://perma.cc/D8QA-WZZ5] (last visited Apr. 13, 2021).

About Social Determinants of Health (SDOH), CTRS. FOR DISEASE CONTROL &

PREVENTION, https://www.cdc.gov/socialdeterminants/about.html [https://perma.cc/2WSG-

W9S2] (last updated Mar. 10, 2021) (“Resources that enhance quality of life can have a

significant influence on population health outcomes. Examples of these resources include safe

and affordable housing, access to education, [and] public safety . . . .”).

Beau Kilmer & Erin Kilmer Neel, Being Thoughtful About Cannabis Legalization and

Social Equity, 19 WORLD PSYCHIATRY 194, 194 (2020).

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1007

much of the focus was on minimizing disproportionate arrests and incarceration.

Over time, states and localities began to include provisions for expunging some

past cannabis offenses from criminal records. More recently, discussions about

cannabis and social equity have expanded to encompass the allocation of

cannabis tax revenues, business ownership, and employment in the newly legal

industry.

There are many options for legalizing supply, but figuring out the “right”

approach is not straightforward. Much depends on the amount and types of

cannabis supplied, who supplies it, the regulations instituted, and how those

regulations are enforced. It also depends on which outcomes the decision makers

prioritize. Indeed, this complexity may help explain why there can be

disagreement among similarly focused organizations about the potential effects

of legalization on social equity outcomes. For example, while the NAACP

supports cannabis legalization,

the Illinois NAACP chapter is opposed.

fact, the latter teamed with a national antilegalization group on a

“#DecriminalizeDon’tLegalize” campaign, which argues that “[t]his new

addiction industry is already targeting communities of color like its predecessors

Big Tobacco and the liquor industry have always done.”

It is also noteworthy that in the United States, where the commercial model

for cannabis supply dominates in legalization states, the head of one of the

leading organizations advocating for the legalization of cannabis—Drug Policy

Alliance—noted on a cannabis and social equity panel that “when we have the

conversation about regulation, it’s how do we expand the frame about what that

actually means, and that we must actually disentangle regulation from

commercialization because commercialization is a violent, violent act . . . .”

Thus, there is tension. Legalization for nonmedical purposes may create new

sources of disproportionate harm even as it alleviates some inequities associated

with cannabis prohibition. The potential equity benefits range from reduced

criminal justice interactions to increased economic opportunities in the newly

legalized industry to targeted spending of tax revenues. The potential equity

costs primarily pertain to health, broadly construed to include mental and

NAACP, RESOLUTIONS RATIFIED BY THE NATIONAL BOARD OF DIRECTORS AT ITS

OCTOBER 2019 BOARD OF DIRECTORS MEETING 12-13 (2019), https://www.naacp.org/wp-

content/uploads/2020/01/2019-Resolutions.pdf [https://perma.cc/FB9U-SH94].

Teresa Haley, Legalizing Weed Won’t Eliminate Risk of Discrimination, CRAIN’S CHI.

BUS. (Nov. 25, 2019, 3:40 PM), https://www.chicagobusiness.com/forum-ideas-cannabis

/legalizing-weed-wont-eliminate-risk-discrimination [https://perma.cc/7RB4-D8HL].

#DecriminalizeDon’tLegalize, SMART APPROACHES TO MARIJUANA,

https://learnaboutsam.org/decriminalizedontlegalize/ (last visited Apr. 13, 2021).

Transform Drug Policy Foundation, Social Justice Must Be at the Forefront of Cannabis

Law Reform, YOUTUBE, at 20:58 (June 5, 2020), https://www.youtube.com/watch?v

=Qy6PJlCmTXQ (statement of Kassandra Frederique, Exec. Dir., Drug Pol’y All.).

1008 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

behavioral as well as physical health.

It is often argued that cannabis is less

dangerous than alcohol,

but that is not saying much since roughly 100,000

Americans die from alcohol-related causes each year.

Although moderate

cannabis use is usually unproblematic, daily and near-daily use can pose

multiple health risks,

and most sales are to daily and near-daily users.

The

social equity concern is that a for-profit legal cannabis industry will concentrate

marketing and sales in vulnerable populations, as the alcohol and tobacco

industries have done.

This Essay focuses on the opportunities, puzzles, and trade-offs associated

with using cannabis legalization to address inequities. It should be of interest to

decision makers in states that have legalized cannabis as well as those

considering alternatives to cannabis prohibition. Part I describes various ways

cannabis policy can influence these inequities—for better or worse—by

focusing on policy levers in six areas: arrests and penalties, addressing previous

cannabis offenses, licensing preferences, fostering diversity in the cannabis

workforce, government revenues, and health. Emerging insights about the

effects of these levers are also discussed. Of course, the number of people

Wayne Hall, Daniel Stjepanović, Jonathan Caulkins, Michael Lynskey, Janni Leung,

Gabrielle Campbell & Louisa Degenhardt, Public Health Implications of Legalising the

Production and Sale of Cannabis for Medicinal and Recreational Use, 394 LANCET 1580,

1585 (2019).

Dirk W. Lachenmeier & Jürgen Rehm, Comparative Risk Assessment of Alcohol,

Tobacco, Cannabis and Other Illicit Drugs Using the Margin of Exposure Approach, 5 SCI.

REPS., no. 8126, 2015, at 1, 5-6.

Marissa B. Esser, Adam Sherk, Yong Liu, Timothy S. Naimi, Timothy Stockwell,

Mandy Stahre, Dafna Kanny, Michael Landen, Richard Saitz & Robert D. Brewer, Deaths

and Years of Potential Life Lost from Excessive Alcohol Use — United States, 2011–2015, 69

MORBIDITY & MORTALITY WKLY. REP. 981, 985 (2020), https://www.cdc.gov/mmwr

/volumes/69/wr/pdfs/mm6939a6-H.pdf [https://perma.cc/7GKL-VMK2]; Alcohol and

Public Health: Alcohol-Related Disease Impact (ARDI), CTRS. FOR DISEASE CONTROL

& PREVENTION, https://nccd.cdc.gov/DPH_ARDI/Default/Report.aspx?T=AAM&P=1A04A

664-0244-42C1-91DE-316F3AF6B447&R=B885BD06-13DF-45CD-8DD8-AA6B178C4E

CE&M=32B5FFE7-81D2-43C5-A892-9B9B3C4246C7&F=&D= [https://perma.cc/WS6A-

WTDR] (last visited Apr. 13, 2021).

Wayne Hall & Louisa Degenhardt, The Adverse Health Effects of Chronic Cannabis

Use, 6 DRUG TESTING & ANALYSIS 39, 39 (2014).

B. KILMER, S. EVERINGHAM, J. CAULKINS, G. MIDGETTE, R. PACULA, P. REUTER, R.

BURNS, B. HAN & R. LUNDBERG, RAND CORP., WHAT AMERICA’S USERS SPEND ON ILLEGAL

DRUGS: 2000-2010, at 18 (2014), https://obamawhitehouse.archives.gov/sites/default/files

/ondcp/policy-and-research/wausid_results_report.pdf [https://perma.cc/LV36-V5PT] (“It is

the daily/near-daily users who account for most of the consumption [of cannabis] . . . .”).

Sonya A. Grier & Shiriki Kumanyika, Targeted Marketing and Public Health, 31 ANN.

REV. PUB. HEALTH 349, 363 (2010) (noting that low-income populations, because of their

status as vulnerable populations, must be considered when evaluating public health

considerations and targeted marketing).

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1009

affected will depend on the policies being pursued, and Part II offers a case study

of Virginia that focuses on how many people from communities

disproportionately affected by cannabis prohibition could benefit from

expungement as well as from entrepreneurship and employment opportunities

in a state-legal cannabis industry. Part III describes seven puzzles and trade-offs

confronting those seeking to develop cannabis equity programs.

I. SOME OPPORTUNITIES FOR ADDRESSING INEQUITIES WITH CANNABIS

POLICY REFORM

There are multiple definitions of social equity; some use it as an umbrella

term for all types of equity—e.g., race, gender, environmental, health—while

others argue that it is just one type of equity that needs to be considered alongside

others. For this Essay, we take the umbrella approach.

Equity, as used here, is very different from the concept of equality. While

equality generally focuses on ensuring that everyone has access to the same

resources, we consider equity as accounting for different starting points and the

unique needs of different populations as a result of long-standing systemic and

legislated barriers to opportunities to access those resources.

Several authors have attempted to categorize the available cannabis policy

options in terms of social equity.

Building on these previous efforts, we offer

a framework focused on policy levers in six areas: arrests and penalties,

addressing previous cannabis offenses, licensing preferences, fostering diversity

in the cannabis workforce, government revenues, and health. While our

discussion of these six areas is not exhaustive, we highlight some of the major

choices available and examine some emerging insights about how they are

playing out in jurisdictions that have legalized cannabis.

This definition is inspired by RACE FORWARD, RACE REPORTING GUIDE 27 (2015),

https://www.raceforward.org/sites/default/files/Race%20Reporting%20Guide%20by%20Ra

ce%20Forward_V1.1.pdf [https://perma.cc/D56M-DHY6] (“Equity means fairness and

justice and focuses on outcomes that are most appropriate for a given group, recognizing

different challenges, needs, and histories.”). See also KAREN RIDEOUT, B.C. CTR. FOR DISEASE

CONTROL, FIVE THINGS TO KNOW ABOUT EQUITY IN ENVIRONMENTAL PUBLIC HEALTH 2

(2016), http://www.bccdc.ca/resource-gallery/Documents/Educational%20Materials/EH/BC

CDC_primer_1.pdf [https://perma.cc/3D4K-6DQA] (defining health equity as when

everyone has a fair opportunity to achieve their full health potential without social, economic,

or environmental barriers).

See, e.g., MAKADA HENRY-NICKIE & JOHN HUDAK, BROOKINGS INST., IT IS TIME FOR A

CANNABIS OPPORTUNITY AGENDA 1, 4 (2020), https://www.brookings.edu/wp-

content/uploads/2020/03/Big-Ideas_HenryNickieHudak_CannabisOpportunityAgenda.pdf

[https://perma.cc/G352-BKMY]; Bryon Adinoff & Amanda Reiman, Implementing Social

Justice in the Transition from Illicit to Legal Cannabis, 45 AM. J. DRUG & ALCOHOL ABUSE

673, 681 (2019); Christopher Nani, Social Equity Assessment Tool for the Cannabis Industry,

OHIO ST. J. CRIM. L. (forthcoming) (manuscript at 8), https://papers.ssrn.com/sol3

/papers.cfm?abstract_id=3312114 [https://perma.cc/X3DU-JCPS].

1010 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

A. Arrests and Penalties

Choices. Legalizing cannabis for adults dramatically reduces cannabis arrests

and convictions for adults, but it will not eliminate all police contact related to

cannabis. Public consumption, intoxication, and driving under the influence will

still lead to police contact, as will supply to minors and other unlicensed

distribution. Important decisions will have to be made about the sanctions for

these offenses and the extent to which they will be enforced. Decision makers

will also have to consider what cannabis legalization means for drug testing in

contexts that permit testing (e.g., those subject to probation or parole

supervision).

Emerging insights. Overall, arrests and convictions for cannabis offenses

declined sharply in the states that have legalized possession and supply for

adults, but legalization—particularly of supply—is not necessary to produce

large declines. Andrew Plunk and colleagues examined cannabis possession

arrests in thirty-eight states between 2000 and 2016, including four that had

legalized possession and supply for adults and seven that had only

decriminalized the possession of cannabis and found that

[t]he adult arrest rate decreased by 131.28 (95% CI, 106.23-154.21) per

100 000 population after the implementation of decriminalization and

168.50 (95% CI, 158.64-229.65) per 100 000 population after the

implementation of legalization. The arrest rate for youth decreased by 60

(95% CI, 42-75) per 100 000 population after decriminalization but did not

significantly change after legalization in a state (7 per 100 000 population;

95% CI, −15 to 30).

The reductions, however, may be greatest for groups that were already at a

lower risk. Caislin Firth and colleagues evaluated data from Washington and

concluded that

[m]arijuana arrest rates among both African American and White adults

decreased significantly with legalization of possession, and stayed at a

dramatically lower rate after the marijuana retail market opened. However,

relative disparities in marijuana arrest rates for African Americans

increased for those of legal age, and remained unchanged for younger

adults.

Of course, changes in subgroup arrest patterns can vary across jurisdictions.

Examining juvenile cannabis arrest data for Oregon from January 2012 to

September 2018, Firth and colleagues in a different article concluded that

Andrew D. Plunk, Stephanie L. Peglow, Paul T. Harrell & Richard A. Grucza, Youth

and Adult Arrests for Cannabis Possession After Decriminalization and Legalization of

Cannabis, 173 JAMA PEDIATRICS 763, 763 (2019).

Caislin L. Firth, Julie E. Maher, Julia A. Dilley, Adam Darnell & Nicholas P. Lovrich,

Did Marijuana Legalization in Washington State Reduce Racial Disparities in Adult

Marijuana Arrests?, 54 SUBSTANCE USE & MISUSE 1582, 1582 (2019).

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1011

“[a]dult cannabis legalization in Oregon was associated with increased juvenile

cannabis allegations; increases are not explained by changes in underage

cannabis use. Relative disparities decreased for black youth but remained

unchanged for American Indian/Alaska Native youth.”

B. Addressing Previous Cannabis Offenses

Choices. A crucial question is whether to address the ongoing harms of prior

records for cannabis offenses by sealing or expungement.

The number of

people benefitting from sealing or expungement depends not only on which

offenses are covered (e.g., possession versus any cannabis conviction) but also

on whether this is automatically done by the state for everyone or if it will require

each individual to petition for relief. The petitioning process can require time

and expense (especially if a lawyer is needed) that create barriers that will

disproportionately fall on people with lower incomes. A related set of questions

is in regard to whether to commute sentences for those currently incarcerated

(which will mostly involve those arrested for production or sales) or under

community supervision for cannabis-related offenses.

Emerging insights. Adult-use legalization states and Washington, D.C. have

taken different approaches to the sealing or expungement of previous cannabis

offenses. Chris Nani argues that most jurisdictions that allow cannabis

convictions to be sealed or expunged have generally followed five guidelines.

Specifically, the cannabis conviction must have (1) been nonviolent, (2) not

included any element of diversion (e.g., illegal supply), (3) involved only small

quantities of cannabis, regardless of form, (4) not occurred contemporaneously

or in close timing to a disqualifying offense, such as a violent crime, and

(5) occurred before legalization.

The majority of jurisdictions require

individuals to petition the court for relief instead of doing so automatically.

State governors can also pardon individuals who have been convicted of a

crime. The day before legalization went into effect in Illinois, the governor

Caislin L. Firth, Anjum Hajat, Julia A. Dilley, Margaret Braun & Julie E. Maher,

Implications of Cannabis Legalization on Juvenile Justice Outcomes and Racial Disparities,

58 AM. J. PREVENTIVE MED. 562, 562-63 (2020) (“Allegations include all cannabis-related

offenses that are referred by law enforcement to juvenile departments before adjudication and

disposition (before appearing in court and sentencing).”).

The terms “sealing” and “expungement” are sometimes used almost interchangeably,

and we do not draw out distinctions here, but they can differ, with particulars varying by state.

See Prescott & Starr, supra note 7, at 2472.

Chris Nani, Cannabis Convictions, in UNDERSTANDING SOCIAL EQUITY 36, 37 (Chris

Nani ed., 2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3622268 [https://

perma.cc/R5R8-PCB5].

HARVEY SLADE, TRANSFORM DRUG POL’Y FOUND., ALTERED STATES: CANNABIS

REGULATION IN THE US 18-20 (James Nicholls & Steve Rolles eds., 2020),

https://transformdrugs.org/assets/files/PDFs/altered-states-fulltext-2020.pdf

[https://perma.cc/JWB9-AZCU].

1012 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

granted pardons to more than 11,000 individuals who had been convicted of

possessing less than thirty grams of cannabis; this pardon effectively expunged

the offense from their criminal records.

There are tens of thousands of other

individuals in the state who are eligible for pardons, and many are expected to

have their offenses automatically expunged in the upcoming years.

The

governor of Washington used his executive power to pardon cannabis

misdemeanor possession convictions between 1998-2012.

We are unaware of empirical analyses that evaluate the consequences of

pardoning, sealing, or expunging cannabis offenses specifically, but a review of

the empirical literature about how clearing criminal records generally can affect

employment concluded that

the record clearing intervention delivers on its promise. People with

criminal records seek the unmarking remedy after a period of declining

earnings, in spite of active labor market participation. During or

immediately after the intervention, average employment rates and earnings

appear to rise, though the staying power of such increases is still unclear.

C. Licensing Preferences

Choices. Those creating legalization regimes get to choose the type or class

of organization that can supply cannabis. It could be home producers, co-ops,

nonprofits, government entities, or, as has been passed in eighteen states, for-

profit companies. That creates opportunities for lucky or smart entrepreneurs to

get rich and so raises the question of who will get those licenses. States can take

various actions to give preferential treatment to applicants and licensees from

communities that have been disproportionately affected by cannabis prohibition,

and take additional actions to reduce barriers for these individuals (e.g.,

trainings, fee waivers/reductions, legal support, loans, or grants), depending on

how eligibility is defined. There are some limits because normally preference

programs must be specifically designed to redress past discrimination within that

industry. Yet, no matter how severe the disparate impacts of cannabis

prohibition were, they did not arise because of disparate treatment within the

modern legal cannabis industry, since that industry did not exist prior to

legalization.

Elvia Malagón, On Eve of Legal Pot, 11,000 Are Pardoned, CHI. TRIB., Jan. 1, 2020,

§ 1, at 1.

Id.

Ahrens, supra note 8, at 408.

Jeffrey Selbin, Justin McCrary & Joshua Epstein, Unmarked? Criminal Record

Clearing and Employment Outcomes, 108 J. CRIM. L. & CRIMINOLOGY 1, 58 (2018); see also

Prescott & Starr, supra note 7, at 2533-34.

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1013

Figure 1. Twelve Alternatives to Status Quo Cannabis Supply Prohibition.

Emerging insights. All states that have legalized cannabis have adopted a for-

profit commercial approach; Washington, D.C. implemented a “grow and give”

model that allows individuals 21 years of age and older to grow and give small

amounts of cannabis to others who are over 21.

The standard commercial

model creates a lot of legal business opportunities; one estimate put the total

number of cannabis businesses that touch the product (as opposed to ancillary

services like cannabis marketing firms) close to 10,000 in 2017.

Figure 1 is reproduced from JONATHAN P. CAULKINS, BEAU KILMER, MARK A.R.

KLEIMAN, ROBERT J. MACCOUN, GREGORY MIDGETTE, PAT OGLESBY, ROSALIE LICCARDO

PACULA & PETER H. REUTER, RAND CORP., CONSIDERING MARIJUANA LEGALIZATION:

INSIGHTS FOR VERMONT AND OTHER JURISDICTIONS 50 fig.4.1 (2015) [hereinafter CAULKINS

ET AL., CONSIDERING MARIJUANA LEGALIZATION], https://www.rand.org/content/dam/rand

/pubs/research_reports/RR800/RR864/RAND_RR864.pdf [https://perma.cc/LPV7-B3D5].

Id. at 53, 117 n.4. Vermont implemented a “grow and give” model in 2018, but in

October 2020, the Governor signed a bill to create a commercial industry for nonmedical

cannabis supply. S.B. 54, 2019-2020 Sess., Reg. Sess. (Vt. 2020); Bruce Barcott, Vermont

Finally OKs Retail Cannabis Stores, Years After Legalizing, LEAFLY (Sept. 23, 2020),

https://www.leafly.com/news/politics/vermont-finally-oks-retail-cannabis-stores-years-after-

legalizing [https://perma.cc/BQ7J-JCRG].

Aaron Smith, The U.S. Legal Marijuana Industry Is Booming, CNN MONEY (Jan. 31,

2018, 4:03 PM), https://money.cnn.com/2018/01/31/news/marijuana-state-of-the-union

/index.html [https://perma.cc/SJR5-NJDT].

1014 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

Most of those legal cannabis businesses are owned by White people.

Marijuana Business Daily conducted a survey of individuals with any ownership

stake in a cannabis business and estimated that 81% of cannabis businesses are

owned by those who identify as White.

Asian, Black, and Hispanic/Latinx

people make up 2.4%, 4.3%, and 5.7%, respectively, of cannabis business

owners.

While this survey did not cover all cannabis businesses and may suffer

from selection bias, the share of cannabis businesses owned by White people is

consistent with ownership for noncannabis businesses in the United States.

As a result, an increasing number of states and localities are undertaking

efforts to define disproportionately affected communities (“DACs”) and

increase cannabis business opportunities for members of DACs, especially

BIPOC communities. Yet progress in that direction has been slow in some

jurisdictions. Illinois was supposed to start issuing social equity licenses by

April 30, 2020, but as of December 2020, a piece in the Chicago Tribune

reported that “[n]ot one social equity license has been issued and there’s still not

one licensed cannabis business in the state with a majority owner who is a person

of color.”

Massachusetts has arguably the most aggressive social equity program in the

country, but of the more than seventy licenses issued to social equity, economic

empowerment, and Disadvantaged Business Enterprise applicants, only three

had opened up as of July 16, 2020.

To help accelerate diversity in the

Eli McVey, Chart: Percentage of Cannabis Business Owners and Founders by Race,

MARIJUANA BUS. DAILY (Sept. 11, 2017), https://mjbizdaily.com/chart-19-cannabis-

businesses-owned-founded-racial-minorities/ [https://perma.cc/BC7P-PTZX].

Id. 6.7% of survey participants responded “other” when asked about their race. Id.

NORA ESPOSITO, U.S. SMALL BUS. ADMIN., SMALL BUSINESS FACTS: SPOTLIGHT ON

MINORITY-OWNED EMPLOYER BUSINESSES (2019), https://cdn.advocacy.sba.gov/wp-

content/uploads/2019/05/31131339/Small-Business-Facts-Spotlight-on-Minority-Owned-

Employer-Businesses.pdf [https://perma.cc/M7X6-ASNW] (“20 percent of all employer

businesses were at least 51 percent owned by minority entrepreneurs . . . .”). It is also

consistent with the racial/ethnic composition of Canada’s cannabis market. See NAZLEE

MAGHSOUDI, INDHU RAMMOHAN, ANDREA BOWRA, RUBY SNIDERMAN, JUSTINE TANGUAY,

ZACHARY BOUCK, AYDEN SCHEIM, DAN WERB & AKWASI OWUSU-BEMPAH, CTR. ON DRUG

POL’Y EVALUATION, HOW DIVERSE IS CANADA’S LEGAL CANNABIS INDUSTRY? 2 (2020),

https://cdpe.org/wp-content/uploads/dlm_uploads/2020/10/How-Diverse-is-Canada%E2%

80%99s-Legal-Cannabis-Industry_CDPE-UofT-Policy-Brief_Final.pdf [https://perma.cc

/3SL3-UHTT] (finding that non-White people made up 16% of leaders of licensed cannabis

producers and parent companies).

Ross Morreale, Opinion, Illinois’ Booming Cannabis Business Is Leaving People of

Color Behind, CHI. TRIB., Jan. 4, 2021, § 1, at 15.

Melissa Hanson, ‘We’re Talking About Restorative Justice;’ Marijuana Business

Applicants, Advocates Call Out for More Equity in Massachusetts Cannabis Industry, MASS

LIVE (July 16, 2020), https://www.masslive.com/marijuana/2020/07/were-talking-about-

restorative-justice-marijuana-business-applicants-advocates-call-out-for-more-equity-in-

massachusetts-cannabis-industry.html [https://perma.cc/5EFF-3YV6].

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1015

marketplace, Massachusetts’s Cannabis Control Commission voted in May 2020

to allow licenses for delivery services to be exclusively issued for the next two

years to social equity and economic empowerment applicants.

The City of Los Angeles has also hit some stumbling blocks with its social

equity program, and the city council voted in July 2020 to massively overhaul

its approach to increasing diversity in the cannabis industry. Among other

measures, the city has focused its definition of DACs (from zip codes to police

reporting districts), and for the next round of licenses, social equity applicants

must have had a California cannabis arrest or conviction to be eligible.

Los

Angeles has also taken steps to help prevent predatory investors from buying out

equity stakeholders below the fair market value of their shares.

This underscores a key choice point: Does the DAC to be advantaged consist

of everyone in a demographic group or neighborhood that experienced high rates

of arrest, or just those who were themselves arrested or convicted? The latter is

a much more narrowly defined group that suffered the ill effects of prohibition

directly. On the other hand, with the exception of the few who were wrongfully

convicted, those convicted of cannabis offenses are by definition people found

guilty of breaking the law.

To the extent that oversight of licensees in regulated

industries depends on trust and cooperation, the more common approach is to

favor people without criminal records.

D. Diversity in the Cannabis Workforce

Choices. There are relatively few business owners and licensees compared to

the number of workers in state-legal cannabis industries; however, some

research has shown that BIPOC-owned businesses are more likely to hire

BIPOC employees.

So, it is possible that license preferences discussed above

Melissa Hanson, Massachusetts Marijuana Delivery License Applications on Track to

Launch in May, Reserved for Economic Empowerment and Social Equity Applicants, MASS

LIVE (May 7, 2020), https://www.masslive.com/marijuana/2020/05/massachusetts-

marijuana-delivery-license-applications-on-track-to-launch-in-may-reserved-for-economic-

empowerment-and-social-equity-applicants.html [https://perma.cc/Z62P-7JC9].

Emily Alpert Reyes, L.A. Revamps Rules for Cannabis, L.A. TIMES, July 2, 2020, at B3.

John Schroyer, Divide Opens over L.A. Cannabis Social Equity Licenses, Management

Contracts, MARIJUANA BUS. DAILY (July 22, 2020), https://mjbizdaily.com/dispute-over-los-

angeles-cannabis-social-equity-licenses-management-contracts [https://perma.cc/ZG4P-

SRA4].

This is an important distinction. The injustice of past cannabis arrests and convictions

stems from disagreement about the law itself, its sanctions, and disproportionate punishment

among different groups; it is not (primarily) injustice in the sense that innocent people were

wrongfully convicted.

Timothy Bates, Utilization of Minority Employees in Small Business: A Comparison of

Nonminority and Black-Owned Urban Enterprises, REV. BLACK POL. ECON., June 1994, at

113, 118 (“While over 93 percent of black business employers rely upon minorities to fill 50

percent or more of their available jobs, nearly 60 percent of the nonminority employers have

1016 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

could have secondary benefits for promoting diversity in the cannabis industry

workforce.

Jurisdictions seeking to increase workforce diversity in the legal cannabis

industry could fund and target recruitment or training efforts to individuals in

DACs. They could also require or encourage licensees to have equity plans that

lay out how they will make efforts to create a diverse workforce.

Another option would be to implement government cannabis stores and use

affirmative action policies to increase public employment (and promotion) for

groups that have suffered from discrimination in that state. Of course, not all

states allow for affirmative action in government hiring (e.g., California banned

affirmative action in 1996, and a 2020 ballot initiative to reinstate it did not

pass). There is considerable variation in how this is operationalized in places

that have allowed it, ranging from “‘hard quotas’ to softer methods of outreach,

recruitment, and scrupulous enforcement of antidiscrimination norms.”

Emerging insights. There are no federal estimates of the number of people

working in the state-legal cannabis industry. One industry source put the 2019

figure of workers “who support the marijuana industry” between 165,000-

200,000 full-time equivalents (“FTE”),

and another source estimated that legal

cannabis supported 211,000 FTE jobs in 2019 and 243,700 jobs as of early

2020.

It is hard to know the characteristics of the employees in these jobs because

this information is not systematically collected and reported in most places;

no minority employees.”); Thomas D. Boston, The Role of Black-Owned Businesses in Black

Community Development, in JOBS AND ECONOMIC DEVELOPMENT IN MINORITY COMMUNITIES

161, 163 (Paul Ong & Anastasia Loukaitou-Sideris eds., 2006) (“Over three-quarters (76

percent) of all employees in Black-owned firms were Black, while 16 percent were White. By

contrast, Blacks comprise 29 percent of the employees in firms owned by Whites.”); Michael

A. Stoll, Steven Raphael & Harry J. Holzer, Why Are Black Employers More Likely than

White Employers to Hire Blacks? 1-2 (Inst. for Rsch. on Poverty, Discussion Paper No. 1236-

01, 2001), https://www.irp.wisc.edu/publications/dps/pdfs/dp123601.pdf [https://perma.cc

/C6EK-DWB4] (“We find that establishments where blacks are in charge of hiring are

considerably more likely to employ blacks even after controlling for the proportion of

applications that are submitted by blacks, establishment spatial location within the

metropolitan area, and a large set of observable establishment characteristics.”).

Carol M. Swain, Affirmative Action: Legislative History, Judicial Interpretations,

Public Consensus, in 1 AMERICA BECOMING: RACIAL TRENDS AND THEIR CONSEQUENCES 318,

319 (Neil J. Smelser, William Julius Wilson & Faith Mitchell eds., 2001).

Jenel Stelton-Holtmeier, US Cannabis Employment Could Climb Nearly 50% in 2020,

Surpassing Computer Programmers, MARIJUANA BUS. DAILY (July 28, 2020),

https://mjbizdaily.com/chart-us-cannabis-employment-could-climb-nearly-50-in-2020-

surpassing-computer-programmers/ [https://perma.cc/4MW9-MGWP].

LEAFLY, LEAFLY JOBS REPORT 2020, at 5 (2020), https://leafly-images.imgix.net/Leafly-

2020-Jobs-Report.pdf [https://perma.cc/SN6B-9Q7L].

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1017

many insights rely on anecdotes and convenience samples.

A notable

exception is Massachusetts which reports gender and race/ethnicity information

for approved and pending cannabis agents, defined as “board members,

directors, executives, managers, employees, and volunteers” of cannabis

establishments.

As of November 19, 2020, nearly 36% of the

approved/pending agents were female.

Among those agents who answered the

race/ethnicity question,

6.6% identified as Black/African American, 7.5%

identified as Hispanic/Latino/Spanish, 80.5% identified as White, and 5.4%

identified as another or multiple race/ethnicities.

Those figures suggest that disparities persist when compared to the general

population in Massachusetts where, as of July 2019, 51.5% are female, 9.0% are

Black/African American, and 12.4% are Hispanic/Latinx.

However, a better

comparison might be to the demographics of Massachusetts employees, not all

residents, or specifically to employees in comparable industries. Additionally,

because variation in race/ethnicity is not uniform within states, it might be more

useful for monitoring and evaluation purposes to make these comparisons at the

local level.

E. Government Revenues

Choices. Legalizing cannabis supply can generate government revenues via

taxes and license fees, although the actual revenues tend to be less than what is

anticipated (and could be much less under federal legalization).

How these

revenues are used can have important implications for social equity. For

example, will they be used to fund public education campaigns to minimize the

For example, a report based on a convenience sample of those working in the Denver

cannabis industry in 2020 estimated that 68% percent of employees identified as White, 12%

as Hispanic/Latino/Spanish, and 6% as Black; however, the authors urged caution when

interpreting these figures because over 26% of study respondents chose not to disclose their

race/ethnicity. ANALYTICINSIGHT, CANNABIS BUSINESS AND EMPLOYMENT OPPORTUNITY

STUDY 16-17 (2020), https://www.denvergov.org/content/dam/denvergov/Portals/782

/documents/Denver_Cannabis_Business_and_Employment_Opportunity_Study.pdf

[https://perma.cc/XP7K-T5NR].

MASS. CANNABIS CONTROL COMM’N, GUIDANCE ON MARIJUANA ESTABLISHMENT AGENT

REGISTRATION, https://mass-cannabis-control.com/wp-content/uploads/200825_Guidance

_on_Marijuana_Establishment_Agent_Registration.pdf [https://perma.cc/6DC3-D2B8] (last

visited Apr. 13, 2021).

MASS. CANNABIS CONTROL COMM’N, MONTHLY PUBLIC COMMISSION MEETING:

NOVEMBER 2020, at 340 (2020), http://mass-cannabis-control.com/wp-content/uploads

/public-meeting-november-2020.pdf [https://perma.cc/4BR2-CX8K].

Id. at 341. 8.9% of the population declined to answer. Id.

See id.

U.S. CENSUS BUREAU, QUICKFACTS: MASSACHUSETTS, https://www.census.gov

/quickfacts/MA [https://perma.cc/K488-D3B7] (last updated July 1, 2019).

See infra Section III.G.

1018 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

risks and harms of cannabis use? Will the funds be allocated to a general fund

to help mitigate the impact of COVID-19, which disproportionately affects

BIPOC?

Will they be used to fund other health services and schools,

potentially targeting disproportionately affected communities? Will they be used

to fund training and grant programs (including fee reductions or waivers) for

those with limited business experience who want to get involved in the cannabis

industry? Will they be used for reparations or restorative justice programs, and,

if so, will they be targeted at alleviating the injustices created by cannabis

prohibition or racial injustices more generally?

Emerging insights. States are generating revenue from cannabis taxes and

licensing fees, but those revenues are not enormous. Five years after the licensed

stores opened in Colorado and Washington, the annual cannabis tax revenues

were roughly $300 million and $400 million, respectively.

In both states, that

works out to about $50 per resident and accounts for less than 1% of total state

expenditures.

We caution other jurisdictions to not simply multiply their state

populations by $50 and assume that will be the government revenue five years

after the stores open; much depends on tax rates, price trends, and what happens

with neighboring states and the federal government.

From 2014 to 2019, Colorado generated $1 billion in cannabis tax and fee

revenues, with more than half of those funds being spent on human services,

public health, and the environment, and another 17% on education.

For the

$396 million Washington generated in cannabis revenues for the fiscal year

2019, providing health care services accounted for the majority of expenditures.

Risk for COVID-19 Infection, Hospitalization, and Death by Race/Ethnicity, CTRS. FOR

DISEASE CONTROL & PREVENTION, https://www.cdc.gov/coronavirus/2019-ncov/covid-

data/investigations-discovery/hospitalization-death-by-race-ethnicity.html

[https://perma.cc/3EG2-8Q9G] (last updated Mar. 12, 2021) (reporting that Black and Latino

persons are more likely to die from COVID-19 than White, non-Hispanic persons).

Marijuana Tax Reports, COLO. DEP’T OF REVENUE, https://cdor.colorado.gov/data-and-

reports/marijuana-data/marijuana-tax-reports [https://perma.cc/AH77-B57T] (last visited

Apr. 13, 2021); Washington Marijuana Revenues, and Health, WASH. STATE TREASURER:

MIKE PELLICCIOTTI, https://tre.wa.gov/portfolio-item/washington-state-marijuana-revenues-

and-health/ [https://perma.cc/32LW-PCHH] (last visited Apr. 13, 2021).

Total State Expenditures (in Millions), KAISER FAM. FOUND., https://www.kff.org

/other/state-indicator/total-state-spending/?currentTimeframe=0&sortModel=%7B%22colId

%22:%22Location%22,%22sort%22:%22asc%22%7D [https://perma.cc/P6G9-ZRYY] (last

visited Apr. 13, 2021).

Beau Kilmer, Opinion, Gov. Wolf’s Push to Legalize Marijuana Is Oversold as

Coronavirus Relief, PHILA. INQUIRER (Aug. 28, 2020), https://www.inquirer.com

/opinion/commentary/marijuana-legalization-tom-wolf-pennsylvania-revenue-coronavirus-

20200828.html [https://perma.cc/SVF2-BWXQ].

Jesse Paul, Where Does Colorado’s Marijuana Tax Money Go? The State Made a Flow

Chart to Answer the $1 Billion Question, COLO. SUN (June 12, 2019, 2:42 PM),

https://coloradosun.com/2019/06/12/where-does-colorados-marijuana-tax-money-go/

[https://perma.cc/WKX7-FEAN].

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1019

• General Fund – $116.5 million

• Basic Health – $188.3 million

• Cities, Counties – $15.0 million

• Education, Prevention – $9.5 million

• Research – $0.4 million

• Other – $49.2 million

Some of the more recent states to legalize have specifically directed their

cannabis revenues toward equity efforts. Both Illinois and Massachusetts

established their own equity funds that, after the initial state investment, will be

financed by cannabis tax revenue. The R3 (Restore. Reinvest. Renew.) program

in Illinois receives 25% of net tax revenue from adult-use cannabis sales and

was allocated $10 million in fiscal year 2020 to disperse as grants investing in

the revitalization of DACs.

California is distributing equity funds as grants to

local jurisdictions to “develop and operate local cannabis equity programs that

focus on the inclusion and support of individuals in California’s legal cannabis

marketplace who are from communities negatively or disproportionately

impacted by cannabis criminalization.”

It is too early to rigorously evaluate these efforts, and even after more time

has passed, these analyses will still confront some thorny questions. Besides

obvious issues such as how to create credible control groups for comparisons,

there is also the issue of defining success. For example, would an equity program

be successful if $500,000 of taxpayer dollars were used to increase DAC

licensees by 10%? What if it were $1 million and 5%? There will also be

potential spillover effects that will need to be incorporated, such as—on the

positive side—the likelihood that concentrating business opportunities in DACs

will increase employment of members of DACs in the industry and—on the

negative side—that such concentration will increase problematic cannabis use

in DACs.

Besides the traditional community reinvestment routes (e.g., green spaces,

infrastructure, public education, general job trainings/workforce development),

there are also calls to use cannabis tax revenue to make cash payments to

members of the relevant DAC. Evanston, Illinois voted to use funds collected

from cannabis taxation to fund racial reparations for the enduring effects of

Washington Marijuana Revenues, and Health, supra note 58.

Press Release, Ill. Crim. Just. Info. Auth., Delivering on Key Equity Goal, Pritzker

Admin. Awards $31.5 Million in First Ever Restore, Reinvest & Renew Program Grants to

Orgs Across the State (Jan. 21, 2021), https://r3.illinois.gov/downloads/01.21.21

_ICJIA_R3_Grants_Release_Final.pdf [https://perma.cc/TZ34-9P3W] (listing previous grant

recipients and noting that $31.5 million is available for grants for fiscal year 2021).

Local Jurisdiction Equity Grant Funding, CAL. BUREAU OF CANNABIS CONTROL,

https://bcc.ca.gov/about_us/equity_grant.html [https://perma.cc/2TL3-TX4T] (last visited

Apr. 13, 2021).

1020 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

slavery and drug prohibition.

Utilizing the first $10 million collected, this

reparations program may be the first of its type in the country in hopes of making

amends to descendants of enslaved people for the broken promise of their

ancestors receiving “40 acres and a mule.”

F. Health

Choices. The health consequences of legalization will depend on which

cannabis products are allowed; how they are advertised; their price, potency, and

availability; and how legalization influences the use of other substances such as

alcohol, tobacco, and opioids.

Legalizing jurisdictions have some ability to

influence all these levers, although commercial legalization vests direct control

over many of these decisions to profit-maximizing companies that are mostly

not concerned with public health or social equity outcomes.

Properly designed education campaigns might influence some of these health

outcomes, and they could be targeted at certain groups to help reduce

inequities.

That said, we still have a lot to learn about the campaigns

implemented in jurisdictions that have legalized.

Further, efforts to increase

Jonah Meadows, Future Weed Revenue Will Fund Evanston’s New Reparations

Program, PATCH (Dec. 3, 2019, 2:43 PM), https://patch.com/illinois/evanston/evanston-

recreational-cannabis-tax-fund-referendum-program [https://perma.cc/56SN-EWFW] (“City

staff estimated Evanston will collect at least $500,000 a year from the tax, which can start

being applied in July 2020 . . . .”).

Id.

JONATHAN P. CAULKINS, ANGELA HAWKEN, BEAU KILMER & MARK A.R. KLEIMAN,

MARIJUANA LEGALIZATION: WHAT EVERYONE NEEDS TO KNOW 109 (1st ed. 2012) [hereinafter

CAULKINS ET AL., WHAT EVERYONE NEEDS TO KNOW]; Beau Kilmer, How Will Cannabis

Legalization Affect Health, Safety, and Social Equity Outcomes? It Largely Depends on the

14 Ps, 45 AM. J. DRUG & ALCOHOL ABUSE 664, 664-72 (2019); Rosalie Liccardo Pacula, Beau

Kilmer, Alexander C. Wagenaar, Frank J. Chaloupka & Jonathan P. Caulkins, Developing

Public Health Regulations for Marijuana: Lessons from Alcohol and Tobacco, 104 AM. J.

PUB. HEALTH 1021, 1026 (2014).

While the state could control supply or limit participation to nonprofit organizations,

there are other options within the for-profit category. For example, the government could

require cannabis-related companies to be benefit corporations or be designated as B-Corps.

CAULKINS ET AL., CONSIDERING MARIJUANA LEGALIZATION, supra note 34, at 66.

Adinoff & Reiman, supra note 23, at 681 (describing varied approaches to improving

equity, many of which are funded by cannabis-related revenues). For information about

Canada’s lower-risk use guidelines, see Benedikt Fischer, Cayley Russell, Pamela Sabioni,

Wim van den Brink, Bernard Le Foll, Wayne Hall, Jürgen Rehm & Robin Room, Lower-Risk

Cannabis Use Guidelines: A Comprehensive Update of Evidence and Recommendations, 107

AM. J. PUB. HEALTH POL’Y e1 (2017), https://www.ncbi.nlm.nih.gov/pmc/articles

/PMC5508136/pdf/AJPH.2017.303818.pdf [https://perma.cc/Q2T6-ZBMZ].

Kilmer, supra note 67, at 666. “After initially stumbling with the ‘Don’t be a Lab Rat’

campaign, the state of Colorado created a folksy ‘Good to Know’ education campaign; early

evaluations of the latter suggest it achieved its goals of improving knowledge of the new laws

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1021

prices, reduce availability, and decrease public consumption have been more

successful than countermarketing campaigns for addressing harms from

alcohol.

Another issue deserving serious consideration is the spatial concentration and

location of retail establishments in DACs (discussed in more detail in the next

section). If preferences for retail licenses are given to those living in DACs and

those individuals set up their stores in these communities, this could lead to a

concentration of outlets that could plausibly increase health inequities.

Emerging insights. For many reasons, there is no scientific consensus on the

extent of the health consequences of cannabis legalization.

For one, the

“natural experiments” created by states recently changing their laws are not very

clean or powerful for inferring causal effects. The variation in how legalization

is implemented across and within states creates additional empirical challenges.

Further, the long-term consequences could be very different from what has been

observed to date; indeed, in a very real sense, legalization has not even started

in the United States—as of this writing, more or less all cannabis production and

distribution is illegal under federal law—so of course evaluations cannot yet

measure legalization’s full effects. And even if there was consensus, that does

not mean the effects would be similar across all groups (e.g., age, income,

race/ethnicity).

and the health effects of cannabis.” Id. (footnote omitted). However, it is unclear whether it

has affected behaviors surrounding cannabis use.

Toben F. Nelson, Ziming Xuan, Thomas F. Babor, Robert D. Brewer, Frank J.

Chaloupka, Paul J. Gruenewald, Harold Holder, Michael Klitzner, James F. Mosher, Rebecca

L. Ramirez, Robert Reynolds, Traci L. Toomey, Victoria Churchill & Timothy S. Naimi,

Efficacy and the Strength of Evidence of U.S. Alcohol Control Policies, 45 AM. J. PREVENTIVE

MED. 19, 24 (2013).

For overall insight on the emerging evidence on the public health impacts of legalization

in the United States, see COMMONWEALTH OF VA. JOINT LEGIS. AUDIT & REV. COMM’N, KEY

CONSIDERATIONS FOR MARIJUANA LEGALIZATION (2020) [hereinafter JLARC REPORT],

http://jlarc.virginia.gov/pdfs/reports/Rpt542-6.pdf [https://perma.cc/TN2Y-ESMH]; BRYCE

PARDO, BEAU KILMER & ROSALIE LICCARDO PACULA, EUR. MONITORING CTR. FOR DRUGS &

DRUG ADDICTION, MONITORING AND EVALUATING CHANGES IN CANNABIS POLICIES: INSIGHTS

FROM THE AMERICAS (2020), https://www.emcdda.europa.eu/system/files/publications

/12543/TD0220009ENN.pdf [https://perma.cc/JMC2-N9A4]; Magdalena Cerdá, Christine

Mauro, Ava Hamilton, Natalie S. Levy, Julián Santaella-Tenorio, Deborah Hasin, Melanie M.

Wall, Katherine M. Keyes & Silvia S. Martins, Association Between Recreational Marijuana

Legalization in the United States and Changes in Marijuana Use and Cannabis Use Disorder

from 2008 to 2016, 77 JAMA PSYCHIATRY 165 (2020); Wayne Hall & Michael Lynskey,

Assessing the Public Health Impacts of Legalizing Recreational Cannabis Use: The US

Experience, 19 WORLD PSYCHIATRY 179 (2020); Julian Santaella-Tenorio, Katherine

Wheeler-Martin, Charles J. DiMaggio, Alvaro Castillo-Carniglia, Katherine M. Keyes,

Deborah Hasin & Magdalena Cerdá, Association of Recreational Cannabis Laws in Colorado

and Washington State with Changes in Traffic Fatalities, 2005-2017, 180 JAMA INTERNAL

MED. 1061, 1061-68 (2020).

1022 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

Here, we highlight two particular health concerns with cannabis

legalization.

The first is cannabis potency. There is a myth, enshrined in the

phrase “iron law of drug prohibition,”

that prohibition increases drug potency

and so legalization will reduce it. That may have characterized alcohol

prohibition, but cannabis legalization has shown just the opposite.

The

liberalization of cannabis policy has increased cannabis potency. The average

potency of seized cannabis did not exceed 5% THC until the twenty-first

century.

Today, the average flower potency in state-licensed stores is around

20% THC, and—of perhaps even greater concern—the potency of extract-based

products such as dabs can sometimes exceed 80% THC.

While some people

may adjust their consumption to account for the increased potency, there is little

research on titration in response to higher-potency flowers or how greater

With respect to health, this Essay does not provide a detailed discussion about the

potential medical or other benefits associated with cannabis use. For more on this, see

CAULKINS ET AL., WHAT EVERYONE NEEDS TO KNOW, supra note 67; COMM. ON HEALTH

EFFECTS OF MARIJUANA, BD. ON POPULATION HEALTH, NAT’L ACADS. SCIS., ENG’G & MED. &

PUB. HEALTH PRAC., THE HEALTH EFFECTS OF CANNABIS AND CANNABINOIDS (2017),

https://www.ncbi.nlm.nih.gov/books/NBK423845/pdf/Bookshelf_NBK423845.pdf [https://

perma.cc/J74N-VWW7]; Donald I. Abrams, The Therapeutic Effects of Cannabis and

Cannabinoids: An Update from the National Academies of Sciences, Engineering and

Medicine Report, 49 EUR. J. INTERNAL MED. 7 (2018).

Richard C. Cowan, How the Narcs Created Crack, NAT’L REV., Dec. 5, 1986, at 26, 27

(“The iron law of drug prohibition is that the more intense the law enforcement, the more

potent the drugs will become.” (emphasis omitted)).

Adinoff & Reiman, supra note 23, at 683 (“While cannabis legalization has resulted in

the availability of less potent products like cannabidiol (CBD) and non-intoxicating methods

of ingestion such as topicals, legalization has also increased availability of more potent

cannabis flower as well as highly potent edibles and extracts . . . .”).

Mahmoud A. ElSohly, Zlatko Mehmedic, Susan Foster, Chandrani Gon, Suman

Chandra & James C. Church, Changes in Cannabis Potency over the Last 2 Decades (1995–

2014): Analysis of Current Data in the United States, 79 SOC’Y BIOLOGICAL PSYCHIATRY 613,

616-17 (2016).

MPG CONSULTING & UNIV. OF COLO. BOULDER LEEDS SCH. OF BUS., 2019 REGULATED

MARIJUANA MARKET UPDATE 6-9 (2019) [hereinafter 2019 MARKET UPDATE],

https://www.colorado.gov/pacific/sites/default/files/2019%20Regulated%20Marijuana%20

Market%20Update%20Report%20Final.pdf [https://perma.cc/8UKR-SYC3] (providing

quantitative analysis of the marijuana market trends and structure in Colorado); Rosanna

Smart, Jonathan P. Caulkins, Beau Kilmer, Steven Davenport & Greg Midgette, Variation in

Cannabis Potency and Prices in a Newly Legal Market: Evidence from 30 Million Cannabis

Sales in Washington State, 112 ADDICTION 2167, 2172 (2017) (“Washington’s legal cannabis

market has trended towards higher-THC products, as flower products with THC concentration

more than 20% and extract products with more than 60% THC are now commonplace.”);

Steven Davenport, Price and Product Variation in Washington’s Recreational Cannabis

Market, INT’L J. DRUG POL’Y (forthcoming), https://doi.org/10.1016/j.drugpo.2019.08.004

(describing increases in cannabis potency broken down by type of product).

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1023

availability of vapes, dabs, and other extract-based products affects average

amounts of THC consumed per day of use—especially in the United States.

While the evidence on the health consequences of the higher potency products

is nascent, in part because various restrictions have, until recently, made it very

difficult to obtain and study high potency products’ effects, a November 2020

review by a working group concluded that

research available to date documents that THC content of cannabis

products contributes to adverse health effects in a dose-response manner.

This increased risk imposed from using higher potency cannabis products

is particularly concerning for young users and those with certain pre-

existing mental health conditions. These harms are likely to

disproportionately affect marginalized populations (low income,

minorities) who choose high potency products because of their lower costs,

ease and discrete nature of use, glamorization of its use through social

media and advertising, and perception of safety.

Another key concern from a health equity perspective is the possibility of

retail stores being concentrated in DACs. High densities of alcohol outlets in

DACs are a serious and perennial problem. Higher densities of retail cannabis

outlets have also been associated with greater rates of use,

so it is important to

prevent overpopulation of cannabis stores in sensitive areas.

Although an

argument can be made that one does want to ensure some sufficient

concentration of licensed stores in DACs, the problem typically observed to date

in other states is not a paucity but a surfeit of retail cannabis stores in

neighborhoods with vulnerable populations.

That means both that

Beau Kilmer, Recreational Cannabis — Minimizing the Health Risks from Legalization,

376 NEW ENG. J. MED. 705, 706 (2017).

JOINT UNIV. OF WASH. & WASH. ST. UNIV. WORKGROUP, CANNABIS CONCENTRATION

AND HEALTH RISKS: A REPORT FOR THE WASHINGTON STATE PREVENTION RESEARCH

SUBCOMMITTEE 4 (2020), https://pttcnetwork.org/sites/default/files/2020-11/Cannabis%20

Concentration%20and%20Health%20Risks%202020-11%20Final%20%281%29.pdf

[https://perma.cc/44LA-D4YE].

Erik M. Everson, Julia A. Dilley, Julie E. Maher & Curtis E. Mack, Post-Legalization

Opening of Retail Cannabis Stores and Adult Cannabis Use in Washington State, 2009–2016,

109 AM. J. PUB. HEALTH 1294, 1297 (2019); Eric R. Pedersen, Caislin L. Firth, Anthony

Rodriguez, Regina A. Shih, Rachana Seelam, Lisa Kraus, Michael S. Dunbar, Joan S. Tucker,

Beau Kilmer & Elizabeth J. D’Amico, Examining Associations Between Licensed and

Unlicensed Outlet Density and Cannabis Outcomes from Preopening to Postopening of

Recreational Cannabis Outlets, 30 AM. J. ON ADDICTIONS 122 (2021).

Crystal Thomas & Bridget Freisthler, Examining the Locations of Medical Marijuana

Dispensaries in Los Angeles, 35 DRUG & ALCOHOL REV. 334, 336 (2016).

Solmaz Amiri, Pablo Monsivais, Michael G. McDonell & Ofer Amram, Availability of

Licensed Cannabis Businesses in Relation to Area Deprivation in Washington State: A

Spatiotemporal Analysis of Cannabis Business Presence Between 2014 and 2017, 38 DRUG

& ALCOHOL REV. 790, 796-97 (2019); Yuyan Shi, Kristin Meseck & Marta M. Jankowska,

1024 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

communities with fewer resources (e.g., low-income, unincorporated areas) are

burdened by hosting large numbers of stores and that cannabis stores are often

concentrated in the same places as are liquor stores and tobacco outlets.

This is not an idle concern. An analysis of the location of medical and

recreational cannabis stores in Colorado circa 2015 found that “marijuana stores

were more likely to locate in neighborhoods that had a lower proportion of

young people, had a higher proportion of racial and ethnic minority population,

had a lower household income, had a higher crime rate, or had a greater density

of on-premise alcohol outlets.”

A similar study of more than 1,100 cannabis

retailers—licensed and unlicensed—in California in October 2018 found that

“[r]elative to neighborhoods without retailers, neighborhoods with retailers had

higher proportions of Hispanics, African Americans, and residents living below

the poverty level.”

Another analysis of licensed recreational cannabis stores in Washington

examined whether they were more likely to be located in census tracts with

higher levels of deprivation—operationalized using the Area Deprivation Index

and categorized by least, middle, or most deprived.

Examining the period from

2014-2017, Solmaz Amiri and colleagues found that “[t]he density of all

licensed cannabis outlets increased over time. Most‐deprived areas have an

increased likelihood of licensed cannabis outlet density when compared to least‐

deprived areas. No differences were observed in the likelihood of licensed

cannabis outlet density in middle‐deprived areas when compared to least‐

deprived areas.”

A similar study focused on 117 neighborhoods in Portland, Oregon, found

evidence that “cannabis retailers are more likely to be located in relatively

deprived neighborhoods, suggesting the need to consider spatial equity in

cannabis policies to mitigate disproportionate exposure to retailers, particularly

if retailer exposure is associated with negative consequences.”

As noted, there is a large literature base examining the effect of alcohol outlet

density and location on community-level outcomes,

and an emerging one for

Availability of Medical and Recreational Marijuana Stores and Neighborhood

Characteristics in Colorado, J. ADDICTION, Apr. 24, 2016, at 1; Jennifer B. Unger, Robert O.

Vos, Jasmine Siyu Wu, Kimberly Hardaway, Ada Y. Li Sarain, Daniel W. Soto, Christopher

Rogers & Jane Steinberg, Locations of Licensed and Unlicensed Cannabis Retailers in

California: A Threat to Health Equity?, PREVENTIVE MED. REPS., July 13, 2020, at 1, 4-6.

Shi, Meseck & Jankowska, supra note 82, at 1.

Unger et al., supra note 82, at 1.

Amiri et al., supra note 82, at 792.

Id. at 790.

Caislin L. Firth, Beatriz H. Carlini, Julia A. Dilley, Jon Wakefield & Anjum Hajat, What

About Equity? Neighborhood Deprivation and Cannabis Retailers in Portland, Oregon, 3

CANNABIS 157, 158 (2020).

See, e.g., NORMAN GIESBRECHT, ASHLEY WETTLAUFER, NICOLE APRIL, MARK

ASBRIDGE, SAMANTHA CUKIER, ROBERT MANN, JANET MCALLISTER, ANDREW MURIE, CHRIS

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1025

cannabis. Linking self-reported cannabis use information with store locations in

Washington, Erik Everson and colleagues found that past-month use of cannabis

“increased among adults living in areas within 18 miles of a retailer and,

especially, within 0.8 miles (odds ratio [OR] = 1.45; 95% confidence interval

[CI] = 1.24, 1.69). Frequent use [use on at least 20 of the past 30 days] increased

among adults living within 0.8 miles of a retailer (OR = 1.43; 95% CI = 1.15,

1.77).”

A newly published study combined longitudinal data on young adults in Los

Angeles County with detailed location information about licensed and

unlicensed cannabis retail outlets. Pedersen and colleagues found:

After controlling for demographic factors and cannabis outcomes at a time

point prior to their opening . . . , licensed cannabis outlets were [positively]

associated with young adults’ cannabis use, heavy use, and intentions [to

use], and unlicensed outlets were associated with young adults’ heavy

cannabis use and [cannabis use disorder] symptoms.

However, the effect sizes were fairly small.

With these last two studies, questions remain about how much of the

association is causal. Did frequency of use increase because stores opened close

to where people live, or did the stores strategically locate in places with more

frequent users living nearby? Both could be true, or both could be false if there

is a common factor driving the association. It is best to consider these studies

consistent with the hypothesis that living closer to a cannabis retailer increases

the frequency of use, but not as strong evidence.

II. THINKING ABOUT THE SCALE OF THOSE WHO COULD BENEFIT FROM

VARIOUS CANNABIS EQUITY PROGRAMS

A common misunderstanding is that cannabis legalization is a single, well-

defined policy. Instead, cannabis legalization should be thought of as a broad

category of quite different policies with sometimes starkly different advantages

and disadvantages. For example, a government monopoly can choose to protect

public health interests in ways that a regulated, for-profit industry generally

would not.

PAULEY, LAURIE PLAMONDON, TIM STOCKWELL, GERALD THOMAS, KARA THOMPSON & KATE

VALLANCE, STRATEGIES TO REDUCE ALCOHOL-RELATED HARMS AND COSTS IN CANADA: A

COMPARISON OF PROVINCIAL POLICIES 20 (2013), http://madd.ca/media/docs/Strategies-to-

reduce-alcohol-related-harms-and-costs_ENG_FINALrevised.pdf [https://perma.cc/KX3K-

ANC5]; PANTEHA KHALILI, ALTA. HEALTH SERVS., NEIGHBOURHOOD DEPRIVATION,

ALCOHOL CONSUMPTION AND HEALTH AND SOCIAL OUTCOMES 14 (2017),

https://www.albertahealthservices.ca/assets/info/amh/if-amh-amapp-literature-review.pdf

[https://perma.cc/737G-WH42].

Everson et al., supra note 80, at 1294.

Pedersen et al., supra note 80, at 1.

1026 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

Cannabis legalization creates economic opportunities for both legal

entrepreneurs and employees. Expunging criminal records can improve job

prospects for individuals with prior cannabis convictions and does so whether

they work in the cannabis industry or elsewhere.

All these approaches have

value. They can be pursued simultaneously, and they are not in competition.

However, it is important to understand the very different numbers of equity

beneficiaries involved in each.

The cannabis social equity literature extensively discusses provisions for

entrepreneurs, but these policies affect far fewer people than do provisions

affecting cannabis industry workers. Those in turn affect far fewer people than

does expunging past cannabis criminal records. In other words, one can argue

that much of the literature has its priorities backward. In terms of directly helping

the most people who have been harmed by cannabis prohibition, expunging

records is the most impactful, far-reaching measure. Measures to increase the

employment of members of DACs in the new cannabis industry are a distant

second, and measures specifically benefitting entrepreneurs are yet further

behind.

This is arguably the single most important insight concerning cannabis

legalization and social equity. It is a simple function of numbers and scale, so

we work through the numbers here; however, the argument concerns orders of

magnitude. Getting the figures right to the third significant digit is not what is

important; it is the number of zeros in the figure.

This Part provides a case study of Virginia, drawing on criminal justice data

provided by its Joint Legislative Audit and Review Commission (“JLARC”),

but the insights are broadly applicable to other jurisdictions. It assumes that

cannabis is still federally prohibited and cannot legally be transported across

state lines (we revisit this and what it could mean for addressing equity in

Section III.F).

Numbers of people who can benefit from expunging criminal records. Based

on our analysis of data provided to us by JLARC, from 2010 to 2019, there were

about 150,000 arrests and 120,000 convictions for (misdemeanor) cannabis

possession in Virginia, with about three-fourths of those being of individuals

twenty-one years or older and, hence, pertaining to behavior that would not be

prohibited after legalization. Of those 90,000 adult convictions for simple

possession, just over 50,000 were BIPOC.

Some nuances complicate the interpretation of these figures. They are events,

not individuals; one individual can get arrested and convicted multiple times. On

For simplicity in this Part we refer to “expunging,” but the conclusions apply equally to

sealing.

One could argue that the benefits of owning a business can exceed the benefits of merely

obtaining a job, so provisions for DAC entrepreneurs could produce big wins for a small

number of people versus more modest benefits for many more. It is important to remember,

though, that many new businesses fail. Thus, giving people the chance to be an entrepreneur

is also giving them the chance to lose a large amount of money.

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1027

the other hand, many simple possession arrests are not custodial arrests, and

those released with a summons may not be fingerprinted and recorded in these

data. More fundamentally, these statistics cover only the most recent decade; the

total number of people affected over the last forty years is much greater than just

the numbers over the last decade.

Considering those factors, in our judgment, it is safe to say that automatically

expunging all past criminal records for adult cannabis possession offenses in

Virginia would benefit more than 100,000 BIPOC and more than 100,000 others

as well.

Number of jobs in the cannabis industry. Leafly produces the most-cited

estimates of job creation in the cannabis industry.

Passing a straight line through

a scatterplot of their state-specific job estimates versus annual sales shows that,

in round numbers, there are twenty jobs per $1 million in sales, which is one job

for every $50,000 in sales.

Figure 2. Cannabis Jobs and Estimated Annual Sales ($ millions).

Leafly is not an unbiased source, but three alternate sources suggest that one

job per $50,000 in sales is a reasonable guideline. First, Colorado had $1.75

billion in sales in 2019 (combined medical and retail)

and reports total

This conclusion was reached via the our analyses of Leafly employment and revenue

data. See LEAFLY, supra note 49, at 8-10.

See id.

2019 MARKET UPDATE, supra note 77, at 8.

California

Colorado

Washington

Oregon

Florida

Massachusetts

Oklahoma

Michigan

Maryland

Ohio

New York

Montana

Hawaii

y = 19.732x + 109.796

R² = 0.997

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

$0 $500 $1,000 $1,500 $2,000

1028 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

employment as 34,705, or one job for every $50,400 in sales.

Likewise,

Statistics Canada reports that federally licensed medical cannabis producers had

$647 million in sales and 9,200 employees,

or one employee for every $70,000

Canadian in sales, which is close to one job per $50,000 U.S. at 2020 exchange

rates.

Last, labor’s share of total industry output in the United States averages

around 60%,

and fully burdened annual labor cost per full-time employee

could average roughly $30,000 for an industry with many lower-skill, lower-

wage retail and production jobs.

100

With the Virginia legislature recently passing a bill to legalize the production

and commercial sales of cannabis, its cannabis market might reach roughly $500

million per year a few years after legalization is implemented.

101

Using that

$50,000 in sales per job estimate, that suggests that the cannabis industry might

employ roughly 10,000 people in the short to medium term.

102

It is hard to know what proportion of these jobs could be steered toward

members of DACs, but the number of jobs for DAC members in Virginia’s legal

cannabis industry could be in the low single thousands.

Numbers of cannabis entrepreneurs. The number of independent businesses

that the cannabis industry will sustain is in flux and contested. Among midsize

states legalizing to date, legalization has typically led to many hundreds or a few

thousand new businesses. As with other sectors of the economy, many do not

last long and go bankrupt or are bought out by larger firms. The dominant trend

in the cannabis industry has been mergers, acquisitions, and consolidations to

LEAFLY, supra note 49, at 8.

A Snapshot of Federal Licensed Cannabis Producers, 2018, STAT. CAN. (Aug.

22, 2019), https://www150.statcan.gc.ca/n1/daily-quotidien/190822/dq190822c-eng.htm

[https://perma.cc/H47V-JJEL].

See Monthly Exchange Rates, BANK OF CAN., https://www.bankofcanada.ca/rates

/exchange/monthly-exchange-rates/ [https://perma.cc/X66G-C8ZY] (last visited Apr. 13,

2021) (noting currency exchange rates relative to Canadian dollars broken down by month).

Michael D. Giandrea & Shawn Sprague, Estimating the U.S. Labor Share, MONTHLY

LAB. REV. (Feb. 2017), https://www.bls.gov/opub/mlr/2017/article/estimating-the-us-labor-

share.htm [https://perma.cc/VZ4S-JEEE].

100

Our calculation is based on the methods in Daron Acemoglu, When Does Labor

Scarcity Encourage Innovation?, 118 J. POL. ECON. 1037 (2010).

101

Mona Zhang, Virginia Joins 15 Other States in Legalizing Marijuana, POLITICO (Feb.

28, 2021, 10:19 AM), https://www.politico.com/news/2021/02/27/virginia-legalizes-

marijuana-471840 [https://perma.cc/2E8M-PQJ5]. Scaling Leafly’s estimates for

Massachusetts and Washington based on population and past-month marijuana prevalence as

measured by the National Survey on Drug Use and Health would suggest figures of $460

million and $600 million, respectively. $500 million is consistent with those figures. See

LEAFLY, supra note 49, at 8-10.

102

Longer-term projections are difficult to make, especially given the uncertainty

surrounding federal prohibition. Product sales would almost certainly increase. Sales revenue

probably would, depending on what happens with prices, but job growth or stagnation would

also depend on patterns of labor productivity growth.

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1029

take advantage of economies of scale in production, distribution, compliance,

and marketing.

The growth in firm size is striking. Before the 2009 Ogden memo,

103

many

grow operations kept to ninety-nine plants to stay under the 100-plant threshold

that triggered longer sentences. The average size of the 186 firms in Angela

Hawken and James Prieger’s study sample was just under 1,000 square feet

(about double the size of a typical two-car garage).

104

A sample of ten gray-

market firms analyzed in 2013 had an average facility size of 3,000 square feet

of grow area.

105

Now, a number of Canadian producers have 1 million square

foot grow ops (about five times the size of a typical Walmart Superstore).

106

This transformation from small-scale “artisanal” activity to modern industrial

agriculture has dramatically reduced production costs. The wholesale price of

high-potency cannabis “in California in 2010 was $2,000 - $6,000 per

pound . . . , and generally higher in other parts of the U.S.”

107

Given inflation,

that is equivalent to $2,325-$6,975 per pound in 2019 dollars.

108

By November

2019, a number of Canadian producers boasted of production costs below $1

Canadian per gram, which is equivalent to about $300 U.S. per pound.

109

These

price declines have been driving smaller producers out of business.

110

The situation with retailers is also in flux. Many start as independent

operations, but then are acquired, merge, or consolidate into multistate operators

(“MSOs”). This consolidation may be a function of fundamental economic

103

Memorandum from David W. Ogden, Deputy Att’y Gen., DOJ, to Selected U.S. Att’ys

(Oct. 19, 2009), https://www.justice.gov/archives/opa/blog/memorandum-selected-united-

state-attorneys-investigations-and-prosecutions-states [https://perma.cc/XX8Y-59UT]

(clarifying DOJ guidance for federal prosecutors in states where medical marijuana was legal

at the time).

104

ANGELA HAWKEN & JAMES PRIEGER, BOTEC ANALYSIS CORP., ECONOMIES OF SCALE

IN THE PRODUCTION OF CANNABIS 11 (2013), https://lcb.wa.gov/publications/Marijuana

/BOTEC%20reports/5c_Economies_Scale_Production_Cannabis_Oct-22-2013.pdf

[https://perma.cc/5KDW-YAF6].

105

Our calculation is based on data in JONATHAN CAULKINS, MATTHEW COHEN & LUIGI

ZAMARRA, BOTEC ANALYSIS CORP., ESTIMATING ADEQUATE LICENSED SQUARE FOOTAGE

FOR PRODUCTION [hereinafter CAULKINS, COHEN & ZAMARRA, ESTIMATING ADEQUATE

LICENSED SQUARE FOOTAGE], https://lcb.wa.gov/publications/Marijuana/BOTEC%20reports

/5a_Cannabis_Yields-Final.pdf [https://perma.cc/6VHL-F8EA] (last visited Apr. 13, 2021).

106

Jonathan P. Caulkins, Radical Technological Breakthroughs in Drugs and Drug

Markets: The Cases of Cannabis and Fentanyl, INT’L J. DRUG POL’Y (forthcoming)

[hereinafter Caulkins, Radical Technological Breakthroughs] (manuscript at 2).

107

Id.

108

See id.

109

See id.

110

MARK A.R. KLEIMAN, SAMUEL C. HAMPSHER, STEVEN DAVENPORT, CLARISSA

MANNING & LOWRY HEUSSLER, BOTEC ANALYSIS CORP., INTERVIEWS WITH CANNABIS

LICENSEES IN WASHINGTON STATE 6-11 (2018), https://papers.ssrn.com/sol3/papers.cfm

?abstract_id=3437462 [https://perma.cc/3RMA-9E5V].

1030 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

drivers, not just the particular regulatory environment, as it is also happening in

Canada,

111

where chains outcompeting “Mom and Pop” operations is the norm

in retail.

112

Borchardt describes cannabis MSOs’ scale economies as stemming

from the ability to pool or share intellectual property, technology and business

practices, equipment, employees, and branding.

113

Consolidation could

accelerate with national legalization, which would allow multistate supply

chains and promotion of national brands.

There is no consensus about how far the consolidation will go. Ryan Stoa

offers an enthusiastic argument as to why appellations and other forces may limit

consolidation.

114

We tend to be skeptical because in the long run more

competitive industry structures tend to prevail in competitive markets.

Considering all of this, one might estimate that the number of licensed

cannabis locations in a state the size of Virginia will be on the order of 1,000 (all

licensed premises, including producers and distributors, not just retail).

115

first, the number of businesses may be perhaps half that amount, as some

businesses will hold multiple licenses (e.g., Massachusetts’s 835 applications

111

About 40% of stores in Alberta, Canada are owned by just eight companies—even

though regulations prevent any one person or entity from holding more than 15% of retail

cannabis licenses in the province. Cannabis Commonly Asked Questions, ALTA. GAMING,

LIQUOR & CANNABIS COMM’N, https://aglc.ca/cannabis/cannabis-commonly-asked-questions

[https://perma.cc/458Y-W5J6] (last visited Apr. 13, 2021); Cannabis Licensee Search, ALTA.

GAMING, LIQUOR & CANNABIS COMM’N, https://aglc.ca/cannabis/retail-cannabis/cannabis-

licensee-search [https://perma.cc/Y8GC-L86M] (last visited Apr. 13, 2021).

112

The ascendency of chain restaurants such as McDonald’s and Starbucks is familiar, and

there are other examples, including gas station chains (7-Eleven, Wawa, etc.) replacing

independent, owner-operated gas stations.

113

Debra Borchardt, The Cannabis Industry’s Top 12 U.S. Multi-State Operators, GREEN

MKT. REP. (Mar. 20, 2019), https://www.greenmarketreport.com/the-cannabis-industrys-top-

12-u-s-multi-state-operators/ [https://perma.cc/VUE2-48KK].

114

See RYAN STOA, CRAFT WEED: FAMILY FARMING AND THE FUTURE OF THE MARIJUANA

INDUSTRY 117-34 (2018).

115

Massachusetts may be a relevant comparator; its population is about 20% lower than

that of Virginia, but its past-month marijuana use rates are almost twice as high (14.9% versus

7.9% among adults). SUBSTANCE ABUSE & MENTAL HEALTH SERVS. ADMIN., 2018-2019

NATIONAL SURVEY ON DRUG USE AND HEALTH: MODEL-BASED PREVALENCE ESTIMATES (50

STATES AND THE DISTRICT OF COLUMBIA) 6-7 (2020), https://www.samhsa.gov/data

/sites/default/files/reports/rpt32805/2019NSDUHsaeExcelPercents/2019NSDUHsaeExcelPe

rcents/2019NSDUHsaePercents.pdf [https://perma.cc/SDA3-SFCF]. Massachusetts’s

Cannabis Control Commission reports that as of July 2020, it had 835 pending or approved

license applications, including 326 for retail. MASS. CANNABIS CONTROL COMM’N, JULY 2020

PUBLIC MEETING PACKET 380 (2020) [hereinafter JULY 2020 CANNABIS CONTROL COMM’N

PACKET], https://mass-cannabis-control.com/wp-content/uploads/july-2020-public-meeting-

packet.pdf [https://perma.cc/AK2H-8V3F]. Of those, 20% qualified as a disadvantaged

business enterprise for being women owned, veteran owned, minority owned, disability

owned, and/or LGBT owned, although many of those have not yet opened. Id. at 375.

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1031

came from 450 separate business entities.).

116

Over time, the number of

independent businesses can be expected to drop through the merger and

consolidation process.

Much is uncertain, but it is perhaps reasonable to expect that there may be

several hundred cannabis companies based in a state the size of Virginia, thus

several hundred local entrepreneurs.

It is not clear what proportion of licenses could be directed toward

entrepreneurs from DACs; perhaps set-aside goals could be in the range of 10-

30%, although some suggest reserving at least half of licenses to those from

DACs.

117

If 10-30% out of several hundred entrepreneurs were from DACs, then

several dozen individuals might be helped.

*****

By expunging past records of cannabis law violations, a state the size of

Virginia could improve the employment prospects of hundreds of thousands of

people.

Increasing employment of DAC members in the cannabis industry could

benefit thousands. Equity programs directed at the owners of cannabis

businesses could directly help several dozen. All are helpful, and all can be done

simultaneously. But the scale in terms of numbers of direct beneficiaries is

sharply different.

III. PUZZLES AND TRADE-OFFS

We have tremendous respect for those who are currently implementing

cannabis policies to address inequities. It is an uphill challenge, particularly as

the COVID-19 pandemic is creating huge demands on shrinking government

budgets.

118

But there are puzzles and trade-offs concerning these policies that

deserve greater attention than they have received to date. This Part surfaces

seven issues confronting those designing or contemplating cannabis equity

programs.

A. If the Target Group or Area Is Too Large, Finite Resources Get Spread

Thin, and There Is a Higher Risk of Helping Those Who Do Not Need It

Jurisdictions will need to decide which groups qualify as beneficiaries of their

social equity programs. It should be relatively easy to identify individuals who

were arrested or convicted for particular cannabis offenses; however, states may

116

JULY 2020 CANNABIS CONTROL COMM’N PACKET, supra note 115, at 373.

117

See, e.g., Become an Equity Applicant or Incubator, CITY OF OAKLAND,

https://www.oaklandca.gov/topics/become-an-equity-applicant-or-incuabtor

[https://perma.cc/7WLW-62YQ] (last visited Apr. 13, 2021).

118

How the COVID-19 Pandemic Is Transforming State Budgets, URB. INST.,

https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-

initiative/projects/state-fiscal-pages-covid-edition [https://perma.cc/3JNW-QCJS] (last

updated Apr. 9, 2021).

1032 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

wish to include all who live in designated geographic areas that experienced high

arrest rates.

That opens the social equity benefits to more individuals but spreads

finite resources more thinly.

Furthermore, geographic definitions will be affected by changing

demographics and economic trends. For example, in Seattle, Washington,

geographic areas where residents were historically harmed by cannabis

prohibition have changed so dramatically due to gentrification that equity

beneficiaries are particularly difficult to identify and engage.

119

Massachusetts, a reassessment of communities disproportionately affected by

cannabis prohibition is underway. The flexibility to reassess and adjust

accordingly has helped policy makers in Massachusetts maintain trust with those

their programs intend to benefit despite occasional setbacks and delays.

120

B. Defining Beneficiaries by Race or Ethnicity Could Lead to Legal

Challenges

Some government programs, services, or policies that give preferential

treatment to individuals from certain racial or ethnic groups can be subject to

legal challenges. For example, in 1989, the Supreme Court found that the City

of Richmond’s minority set-aside programs for municipal contracts were

unconstitutional because they failed to demonstrate both a need for remedial

action and that other race-neutral remedies were insufficient.

121

Docia Rudley

and Donna Hubbard have argued that “[w]hile Croson made it clear that race-

conscious affirmative action programs, where properly drawn, were permissible,

the decision gave little guidance on the characteristics of a properly constructed

program.”

122

After the Supreme Court’s Adarand Constructors, Inc. v. Pena

123

decision,

federal programs favoring disadvantaged groups are judged under a strict

scrutiny standard.

124

Under that standard, proponents of the program may justify

its existence with evidence of past discrimination within that specific industry.

125

While it is widely understood that drug policy has been discriminatory in the

past, previous abuses by drug law enforcement would not, on its face, have any

119

E-mail from Cherie MacLeod, Cannabis Program Coordinator, Consumer Prot. Div. of

the City of Seattle, to Michelle Priest, Assistant Pol’y Researcher, RAND Corp. (Jan. 8, 2021,

12:00 PM) (on file with author).

120

E-mail from Shaleen Title, Former Comm’r, Massachusetts Cannabis Control

Comm’n, to Michelle Priest, Assistant Pol’y Researcher, RAND Corp. (Jan. 8, 2021, 12:03

PM) (on file with author).

121

City of Richmond v. J.A. Croson Co., 488 U.S. 469, 510-11 (1989).

122

Docia Rudley & Donna Hubbard, What a Difference a Decade Makes: Judicial

Response to State and Local Minority Business Set-Asides Ten Years After City of Richmond

v. J.A. Croson, 25 S. ILL. U. L.J. 39, 42 (2000) (footnote omitted).

123

515 U.S. 200 (1995).

124

Id. at 227.

125

Id.

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1033

bearing on whether there was discrimination within the nascent legal cannabis

industry. Indeed, the legal cannabis industry could claim that it does not have a

history of past discriminatory behavior because the entire industry is new

inasmuch as the participants in the legal industry are, by and large, different

individuals and organizations than those who participated in the illegal cannabis

industry.

The legality of designating a particular number or percentage of cannabis

business licenses to certain racial or ethnic groups has been successfully

challenged in two Ohio courts.

126

Ohio’s medical cannabis law, passed in

2016,

127

required at least 15% of cultivator, processor, laboratory, and retailer

licenses be issued to “entities that are owned and controlled by United States

citizens who are residents of [Ohio] and are members of one of the following

economically disadvantaged groups: Blacks or African Americans, American

Indians, Hispanics or Latinos, and Asians.”

128

A non-minority-owned company

seeking a cannabis production license sued the Ohio Department of Commerce

(which issues the cannabis licenses) in state court, bringing an equal protection

claim under 42 U.S.C. § 1983 and Article I, Section 2 of the Ohio

Constitution.

129

The judge ruled in favor of the company, ordering that the

provision be severed and stricken from the law.

130

Subsequently, a non-

minority-owned company sued the state because they were denied a retail

license, which was instead given to a lower-scoring minority-owned business.

131

The judge ruled that the nonminority business should be issued a license.

132

Finally, as noted in Section I.D, if a state were to implement a government-

controlled wholesale or retail-store model, it could consider using affirmative

action policies to promote diversity in the cannabis workforce. One possible

justification for this would be the disproportionate effect that cannabis arrests

and convictions had on employment opportunities in the public sector for those

in DACs. Whether this argument would withstand legal challenges would likely

depend on several factors, ranging from the specifics of the program, to cannabis

arrest disparities in the jurisdiction, to the judge(s) who hears the case. However,

a more important barrier might be withstanding the political challenges of

cannabis businesses that would likely oppose establishing a state-store model in

the first place.

126

Patrick Cooley, Courts’ Rejection of Minority Set-Asides in Ohio’s Cannabis Industry

Might Reduce Its Diversity, COLUMBUS DISPATCH (Nov. 16, 2019, 12:01 AM),

https://www.dispatch.com/news/20191116/courtsrsquo-rejection-of-minority-set-asides-in-

ohiorsquos-cannabis-industry-might-reduce-its-diversity [https://perma.cc/BSK8-78HJ].

127

OHIO REV. CODE ANN. § 3796.09 (West 2021).

128

Id. § 3796.09(C).

129

Pharmacann Ohio, LLC v. Williams, No. 17-CV-010962, 2018 WL 7500067, at *2

(Ohio Ct. Com. Pl. Nov. 15, 2018).

130

Id. at *10.

131

Cooley, supra note 126.

132

Id.

1034 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

C. Increased Enforcement Against the Illegal Market Could Help Equity

Licensees

Although past drug law enforcement contributed to social inequity, the

opposite could be true after legalization. In particular, one way to help equity

licensees is to reduce competition from the illegal market by stepping up

enforcement against unlicensed actors, although few states have been aggressive

about this. However, depending on the makeup of those operating in the illegal

market—which varies by jurisdiction—efforts to crack down on illegal actors

could have a disproportionate impact.

Of course, arrests, convictions, and incarceration could be de-emphasized

relative to product confiscation, fines, asset seizures, or other civil remedies.

Jurisdictions could even announce in advance when a large-scale crackdown

would take place, giving participants enough time to close down illegal business

activity to avoid arrest.

133

Taking this a step further, San Francisco’s cannabis equity program created

an amnesty program that

offered supply-chain operators that may have been operating in the illicit

market a pathway to enter the legalized market if they came into regulatory

compliance. At the same time, the ordinances were designed to restrict the

market such that certain equity applicants would have the opportunity to

enter the nascent market early.

134

Giving amnesty and preference to suppliers actively operating in the illegal

market may not be politically viable outside of very liberal jurisdictions, but it

does offer an example of an alternative approach to reducing illegal activity.

133

See MARK A.R. KLEIMAN, WHEN BRUTE FORCE FAILS: HOW TO HAVE LESS CRIME AND

LESS PUNISHMENT 41-43 (2009).

134

CITY & CNTY. OF S.F., OFF. OF THE CONTROLLER, CANNABIS IN SAN FRANCISCO: A

REVIEW FOLLOWING ADULT-USE LEGALIZATION 17 (2019), https://sfcontroller.org/sites

/default/files/Documents/Auditing/Cannabis%20in%20San%20Francisco_A%20Review%2

0Following%20Adult-Use%20Legalization_FINAL%20REPORT.pdf

[https://perma.cc/5K9Z-GVR4]. San Francisco’s equity program had three priority groups for

receiving cannabis licenses:

Following equity applicants, there are additional groups of individuals that get priority

permitting status. The second tier of priority permit processing after equity applicants is

equity incubators, which are businesses that offer a certain level of assistance to equity

applicants. This can be in the form of rent-free space or technical assistance. Third in

priority are previously-existing non-conforming operators (PENCOs), which are

businesses that were already operating prior to legalization, but were not in zoning-

compliant locations. This third tier also includes a specific group of previously operating

businesses that were shut down due to federal enforcement or the threat of federal

enforcement. The intent of this third tier of priority is to allow operators that may have

been operating in the illicit market an opportunity to enter the regulated legal market, as

part of the city’s Amnesty Program.

Id. at 24 (footnote omitted) (citation omitted).

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1035

D. Legalization Could Reduce Employment in the Cannabis Industry

Legalization is often described as “creating” jobs, but it is more accurate to

say that those jobs are changed and transferred; it is an obvious but often

overlooked fact that even before legalization, many people earn livelihoods

producing, distributing, and selling cannabis. Indeed, one of the objectives of

legalization is to eliminate jobs in the preexisting illegal market.

135

Legalization may even eliminate more jobs than it creates. Prohibition forces

(illegal) businesses to operate in very inefficient ways that require much more

labor per customer served.

136

Even though commercial legalization will tend to

increase the total quantity of THC purchased,

137

it probably increases labor

factor productivity even more. When contrasting modern cannabis farming with

illegal cannabis cultivation, the former is far more mechanized.

138

Likewise,

grocery store clerks sell far more items per hour than do retail drug sellers.

139

And legalization probably reduces the number of entrepreneurs to an even

greater extent than it reduces employment in cannabis-related activities, as there

are far more employees per firm in the legal than in the illegal cannabis

industry.

140

E. Increasing the Number of Licensees in an Area Could Depress Prices and

Profits as Well as Increase Availability of Cannabis in That Community

Retail and wholesale prices have fallen considerably where legalization has

occurred under the for-profit market model.

141

Price per unit of THC has fallen

even faster because potencies are higher now than they were in 2010, and price

135

See CAULKINS ET AL., WHAT EVERYONE NEEDS TO KNOW, supra note 67, at 83.

136

THOMAS F. BABOR, JONATHAN CAULKINS, BENEDIKT FISCHER, DAVID FOXCROFT, KEITH

HUMPHREYS, MARÍA ELENA MEDINA-MORA, ISIDORE OBOT, JÜRGEN REHM, PETER REUTER,

ROBIN ROOM, INGEBORG ROSSOW & JOHN STRANG, DRUG POLICY AND THE PUBLIC GOOD 68

(2d ed. 2018).

137

BEAU KILMER, JONATHAN P. CAULKINS, ROSALIE LICCARDO PACULA, ROBERT J.

MACCOUN & PETER H. REUTER, RAND CORP., ALTERED STATE? ASSESSING HOW MARIJUANA

LEGALIZATION IN CALIFORNIA COULD INFLUENCE MARIJUANA CONSUMPTION AND PUBLIC

BUDGETS 21 (2010), https://www.rand.org/content/dam/rand/pubs/occasional_papers/2010

/RAND_OP315.pdf [https://perma.cc/5DGG-XLV3]; Harold Bae & David C.R. Kerr,

Marijuana Use Trends Among College Students in States with and Without Legalization of

Recreational Use: Initial and Longer-Term Changes from 2008 to 2018, 115 ADDICTION

1115, 1116 (2019); Cerdá et al., supra note 72, at 168-70.

138

Caulkins, Radical Technological Breakthroughs, supra note 106 (manuscript at 2).

139

BABOR ET AL., supra note 136, at 68.

140

See Caulkins, Radical Technological Breakthroughs, supra note 106 (manuscript at 2).

141

Jonathan P. Caulkins, Yilun Bao, Steve Davenport, Imane Fahli, Yutian Guo, Krista

Kinnard, Mary Najewicz, Lauren Renaud & Beau Kilmer, Big Data on a Big New Market:

Insights from Washington State’s Legal Cannabis Market, 57 INT’L J. DRUG POL’Y 86, 88

(2018); Smart et al., supra note 77, at 2172; Davenport, supra note 77, at 2.

1036 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

collapses have also occurred in the hemp/CBD product space.

142

The resulting

competitive pressures may be particularly acute in areas with a high

concentration of cannabis stores.

Legalization also expands opportunities for professional marketing. Before

policy liberalization there were no billboards, cannabis marketing executives,

industry associations with lobbyists, or much in the way of brands—these are all

fixtures of the contemporary market. The emerging evidence suggests that

legalization is associated with an increase in the number of adults who use

cannabis in the past month

143

as well as an increase in their frequency of use.

144

While the evidence with respect to youth has mostly found a null or negative

relationship for these outcomes so far,

145

one study found that after legalization

there was an increase in the number of people aged 12-17 and 26 and older

meeting clinical criteria for cannabis use disorder.

146

And as noted in Section

I.F, there are growing concerns about the health effects of higher-potency

products.

Also as noted in Section I.F, cannabis stores are already concentrating in

BIPOC neighborhoods and places with higher levels of deprivation, and high

outlet density is associated with adverse outcomes. One way to address this is to

grant licenses with the stipulation that only so many cannabis retailers can be

concentrated in a geographic area.

142

Suman Chandra, Mohamed M. Radwan, Chandrani G. Majumdar, James C. Church,

Tom P. Freeman & Mahmoud A. ElSohly, New Trends in Cannabis Potency in USA and

Europe During the Last Decade (2008–2017), 269 EUR. ARCHIVES PSYCHIATRY & CLINICAL

NEUROSCIENCE 5, 7 (2019); Mahmoud A. ElSohly, Zlatko Mehmedic, Susan Foster,

Chandrani Gon, Suman Chandra & James C. Church, Changes in Cannabis Potency over the

Last 2 Decades (1995–2014): Analysis of Current Data in the United States, 79 BIOLOGICAL

PSYCHIATRY 613, 617 (2016).

143

Bae & Kerr, supra note 137, at 1116; David C.R. Kerr, Harold Bae, Sandi Phibbs &

Adam C. Kern, Changes in Undergraduates’ Marijuana, Heavy Alcohol and Cigarette Use

Following Legalization of Recreational Marijuana Use in Oregon, 112 ADDICTION 1992,

2000 (2017); David C.R. Kerr, Harold Bae & Andrew L. Koval, Oregon Recreational

Marijuana Legalization: Changes in Undergraduates’ Marijuana Use Rates from 2008 to

2016, 32 PSYCH. ADDICTIVE BEHAVS. 670, 677 (2018).

144

Cerdá et al., supra note 72, at 168-69; Everson et al., supra note 80, at 1297.

145

See, e.g., D. Mark Anderson, Benjamin Hansen, Daniel I. Rees & Joseph J. Sabia,

Association of Marijuana Laws with Teen Marijuana Use: New Estimates from the Youth Risk

Behavior Surveys, 173 JAMA PEDIATRICS 879, 880 (2019); Cerdá et al., supra note 72, at 168-

70; Magdalena Cerdá, Melanie Wall, Tianshu Feng, Katherine M. Keyes, Aaron Sarvet, John

Schulenberg, Patrick M. O’Malley, Rosalie Liccardo Pacula, Sandro Galea & Deborah S.

Hasin, Association of State Recreational Marijuana Laws with Adolescent Marijuana Use,

171 JAMA PEDIATRICS 142, 146-48 (2017); Julia A. Dilley, Susan M. Richardson, Beau

Kilmer, Rosalie Liccardo Pacula, Mary B. Segawa & Magdalena Cerdá, Prevalence of

Cannabis Use in Youths After Legalization in Washington State, 173 JAMA PEDIATRICS 192,

193 (2019).

146

Cerdá et al., supra note 72, at 169.

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1037

F. Federal Legalization Would Reduce Adult Cannabis Arrests, but It Could

Put Some Equity Licensees Out of Business

As discussed, legalization has led to massive increases in the average size of

the firms producing and distributing cannabis.

147

That trend could be

exacerbated by federal legalization, which would allow companies to operate

across state lines. Indeed, all the cannabis consumed in the United States could

be produced on a few dozen typical farms.

148

There is no reason why cannabis

production should not be as concentrated geographically as is the cultivation of

some other crops. For that matter, down the road, there is no particular reason

why cannabis would need to be produced in the United States at all, when it

might be imported. It seems quite possible that labor-intensive aspects of

production could be offshored to countries with lower labor costs, leaving only

the more mechanized aspects of production to be done in the United States. Of

course, these more mechanized aspects could be offshored as well.

Greater efficiency is also easy to imagine in distribution. COVID-19 has

accelerated preexisting trends toward online ordering and delivery in the

economy generally,

149

and online cannabis shopping might in time provide stiff

147

See supra Part II.

148

The most recent national estimate of cannabis consumption is from 2016: roughly 7,700

metric ton equivalents of flower, or 7.7 billion grams. GREGORY MIDGETTE, STEVEN

DAVENPORT, JONATHAN P. CAULKINS & BEAU KILMER, RAND CORP., WHAT AMERICA’S

USERS SPEND ON ILLEGAL DRUGS, 2006–2016, at 61 tbl.6.1 (2019),

https://www.rand.org/content/dam/rand/pubs/research_reports/RR3100/RR3140/RAND_RR

3140.pdf [https://perma.cc/V668-C2RP]. Assuming an outdoor yield of forty grams per

square foot per harvest—and only one harvest per year—one would need 192,500,000 square

feet, or 4,419 acres (1 acre = 43,560 square feet). CAULKINS, COHEN & ZAMARRA, ESTIMATING

ADEQUATE LICENSED SQUARE FOOTAGE, supra note 105, at 1. With the U.S. Department of

Agriculture (“USDA”) reporting that the average farm size in the United States is 444 acres,

this suggests that one could produce all of the cannabis consumed in the United States on

roughly ten average-sized farms. NAT’L AGRIC. STAT. SERVS., USDA, FARMS AND LAND IN

FARMS: 2019 SUMMARY 4 (2020), https://www.nass.usda.gov/Publications/Todays

_Reports/reports/fnlo0220.pdf [https://perma.cc/B4NQ-YUGB]. Of course, cannabis

consumption has increased since 2016, and some crops will not average forty grams per

square foot because of weather and pests. SUBSTANCE ABUSE & MENTAL HEALTH SERVS.

ADMIN., KEY SUBSTANCE USE AND MENTAL HEALTH INDICATORS IN THE UNITED STATES:

RESULTS FROM THE 2018 NATIONAL SURVEY ON DRUG USE AND HEALTH 16 (2019),

https://www.samhsa.gov/data/sites/default/files/cbhsq-reports/NSDUHNationalFindings

Report2018/NSDUHNationalFindingsReport2018.pdf [https://perma.cc/H2HY-QV7X]. But

even assuming 15,000 metric tons consumed and thirty grams per square foot, it would still

only require twenty-six average-sized farms (15 billion grams / 30 grams per square

foot / 43,560 square feet in an acre / 444 acres per farm = 25.9 farms). This assumes that only

the buds are used from the plant. Using the rest of the plant for extracts means the number of

farms needed would be less given the increasing demand for nonflower products.

149

Inti Pacheco, Retailers Learn to Cope with Fewer Stores, WALL ST. J., Oct. 7, 2020, at

B1.

1038 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

competition to retail stores.

150

Indeed, it is a rather peculiar thing to dedicate

stores to just one product; most people buy consumer goods in stores like

Walmart or grocery stores that have far lower costs per item sold than do

specialty stores.

151

All three trends (cross-border commerce, offshoring, and expansion of retail

options) could drive many existing cannabis companies out of business,

including equity license owners.

G. Compared to the Profit-Maximizing Approach, a State-Store Model Could

Generate More Government Revenue to Address Inequities and Fewer

Health Harms in DACs

A state monopoly over retail distribution would offer a jurisdiction the

greatest potential cannabis-based revenue that could be used to fund efforts to

reduce social inequities. In theory, it makes no difference whether stores are

private or owned by the state; the state could, in an ideal world, constantly adjust

tax rates to precisely control price. In practice, the world is not like that.

However, by being the sole retail seller, the government can control retail prices

and reap the full revenue-generating potential that a monopolist would enjoy. A

state monopoly on wholesale distribution may offer similar opportunities.

Indeed, because legalizing large-scale production via modern agricultural

methods drives down production costs dramatically, there is a large gap between

customers’ willingness to pay and production cost.

152

Absent a government

monopoly, large-scale production will generally produce sharp declines in retail

prices and/or extensive investment in brand marketing, but it could instead be

converted into government revenue via a government monopoly model.

153

The government monopoly approach is also expected to be less likely to

exacerbate health inequities compared to the profit-maximization model.

154

state monopoly over retail distribution with appropriate restrictions would offer

better opportunities to decrease inequities and ensure that harms from

regulations and legislative programs are not disproportionate to harms of the

substance itself (e.g., by controlling the location and density of retail outlets as

well as advertising). Lessons learned from tobacco and alcohol regimes that

150

It only costs Amazon between $2-$8 to deliver a package, but brick-and-mortar retail

cannabis stores now charge about triple the wholesale price—say $9 per gram for cannabis

that wholesales for $3 per gram. That means that Amazon’s cost per gram is lower than that

of retail stores for purchases as small as two grams.

151

See BABOR ET AL., supra note 136, at 68.

152

CAULKINS, COHEN & ZAMARRA, ESTIMATING ADEQUATE LICENSED SQUARE FOOTAGE,

supra note 105, at 2.

153

Id. See generally Jonathan P. Caulkins, Recognizing and Regulating Cannabis as a

Temptation Good, 42 INT’L J. DRUG POL’Y 50 (2017).

154

CAULKINS ET AL., CONSIDERING MARIJUANA LEGALIZATION, supra note 34, at 64.

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1039

focused on a commercial for-profit model suggest that harms can be at a

maximum when commercialization is at the extreme.

155

Governors in Rhode Island

156

and Pennsylvania

157

have proposed the state-

store model, and Virginia’s JLARC discussed it in a 2020 report.

158

While the

JLARC report argues that the government-control model would likely be better

for public health and reducing diversion, it notes that this approach requires

significant upfront expenditures from the state and may take longer to

implement.

159

The JLARC report also highlights potential legal challenges from

the federal government and neighboring states.

If a state government became involved in marijuana distribution or retail,

it would become an active participant in a federally illegal enterprise,

instead of just acting as a regulator. While the U.S. Department of Justice

has tolerated states that regulate commercial marijuana (and hence enforce

restrictions on the substance), it is unclear how the department would

respond to a state taking on an expanded role and actually distributing and

selling marijuana.

Virginia could also face legal challenges from residents and neighbor

states if it implements a government control model. Colorado was sued by

two of its neighbor states—Oklahoma and Nebraska—shortly after it

established its fully private commercial market. Oklahoma and Nebraska

argued that, by legalizing marijuana, Colorado had increased marijuana

trafficking in their states and strained state and local police departments.

The Supreme Court declined to hear the case, and no similar lawsuits have

since been filed. However, if Virginia state government becomes an active

155

Brian Emerson & Mark Haden, Public Health and the Harm Reduction Approach to

Illegal Psychoactive Substances, in 6 INTERNATIONAL ENCYCLOPEDIA OF PUBLIC HEALTH 169,

172 (Stella R. Quah & William C. Cockerham eds., 2d ed. 2017).

156

Katherine Gregg & Patrick Anderson, Raimondo Discusses Taxes, Nursing Homes,

Legalizing Pot and More, PROVIDENCE J. (Dec. 15, 2020, 7:58 PM),

https://www.providencejournal.com/story/news/politics/2020/12/15/where-raimondo-

stands-taxes-nursing-home-staffing-marijuana/6549015002/ [https://perma.cc/JQ45-DM9T].

157

Bill Lucia, Pennsylvania Governor Suggests Selling Marijuana Through State-Run

Stores, ROUTE FIFTY (Aug. 25, 2020), https://www.route-fifty.com/finance/2020/08

/pennsylvania-marijuana-state-run-stores/167972/ [https://perma.cc/D7QK-P4PH].

158

JLARC REPORT, supra note 72, at 220. Additionally, some of the provinces and

territories in Canada have implemented government stores for cannabis. Policy and

Regulations (Cannabis), CANADIAN CTR. ON SUBSTANCE USE & ADDICTION,

https://www.ccsa.ca/policy-and-regulations-cannabis (select “Retail Structure” under “Select

a Category”; then select “Sales Model” under “Select a Topic to Update Map”) (last modified

Mar. 29, 2021).

159

JLARC REPORT, supra note 72, at 220-21 (“The upfront costs of a government control

model are also significantly higher because of the additional functions the state would

perform. If the state takes on distribution, it would have to set-up its own warehouse or at

least contract with one or a few private distributors.”).

1040 BOSTON UNIVERSITY LAW REVIEW [Vol. 101:1003

participant in the marijuana industry, its neighbors may be able to make a

stronger case that they have been harmed by Virginia’s actions.

160

Although predicting the outcome of political processes is always difficult,

interfering with states seeking to implement a more restrictive government

control regime would seem inconsistent with the largely hands-off approach that

the federal government has taken with states that have implemented for-profit

legalization models. While the threat of federal intervention against state stores

may have been a legitimate concern in the early years of legalization and after

the transition to a more conservative administration, it seems much less likely

now that so many states have passed laws to legalize cannabis sales for

nonmedical purposes.

CONCLUSION

One of the myths about cannabis legalization is that it is a single, well-defined

option that either happens or does not. Instead, cannabis legalization is a

complex and multifaceted challenge with hundreds of policy decision points,

each presenting opportunities to either narrow or widen disparities. And social

equity goals must be balanced with many other policy objectives concerning

legalization, such as raising tax revenue, protecting youth, minimizing increases

in problematic use, and attending to indirect effects on consumption of tobacco,

alcohol, and other substances.

Indeed, it is important to keep in mind that cannabis is not a harmless

substance.

161

Regardless of how successful social equity programs are on the

economic and criminal justice fronts, cannabis use can have health harms that

may exacerbate health disparities. Furthermore, the type of legalization regime

implemented will affect health and social outcomes within communities.

Alcohol and tobacco regimes have taught us that for-profit commercialized

models with few restrictions result in greater health and social harms, with

DACs being more vulnerable to poor health and social outcomes.

Those seeking to use cannabis policy reform to address social inequities may

want to clearly define the populations they wish to help and specific outcomes

they seek to achieve. This will make it easier to choose among the various

options identified in Part I and address some of the puzzles and trade-offs

described in Part III. Complicating these choices is the likelihood that federal

legalization will dramatically change the landscape of cannabis in the United

States, which could have major implications for small-scale cannabis

entrepreneurs and the people they hire.

While not all states are poised to legalize cannabis, those keeping it illegal

can still take important steps to address inequities caused by cannabis

prohibition. As noted in Part I, just decriminalizing cannabis possession can

dramatically reduce arrests for cannabis. The legacy of past arrests and

160

Id. at 220.

161

Hall & Lynskey, supra note 72, at 182-83.

2021] CANNABIS LEGALIZATION AND SOCIAL EQUITY 1041

convictions can also be mitigated without legalization by expunging or sealing

criminal records for prior cannabis convictions. As our case study of Virginia

demonstrates, sealing or expunging cannabis possession convictions could affect

many more BIPOC—possibly close to two orders of magnitude more—than

would prioritizing these individuals for entrepreneurship and employment

opportunities in the precarious legal cannabis market.