Colorado: Debate Continues Ahead of Rulemaking on Cannabis and Equity – Cannabis Wire

Last week’s Colorado Department of Revenue Marijuana Enforcement Division rulemaking workgroup on how a social equity bill will be implemented zeroed in on local control, income thresholds for applicants, and the definition of disproportionately impacted areas. 

Public comments and feedback will inform the final recommended rules, which are scheduled to be presented during a September 22 public hearing, held virtually. The group will meet again on September 1 to discuss licensing fees for equity applicants. (Read Cannabis Wire’s coverage of Colorado’s equity efforts to-date.)

HB20-1424, a bill intended to expand social equity in Colorado’s cannabis industry, gives regulators the authority to define some areas of the state’s equity program, including disproportionate impacted areas. Jordan Wellington, counsel at Vicente Sederberg and a partner at the firm’s policy and public affairs consulting affiliate, VS Strategies, presented the result of subcommittee discussions on disproportionately impacted areas.

Wellington highlighted three aspects of how an applicant could potentially qualify as being from such an area: the person has resided there for 15 years; they lived there between the years 1980 and 2010; or they’re in a census tract where a specific percentage of people either dropped out of high school or receive public assistance. 

“One of the things that we talked about was, if we have the ability and the flexibility to go outside those criteria, what kind of things are we talking about?” Wellington said. “And one of the things that they felt was important was that really this was about where people grew up.” 

Meeting attendees questioned how the consideration might unfold: what if someone lived in an area for 10 years, but it was before they turned 18 years old? And what if they attended a school that had met a percentage threshold of students qualifying for free or reduced lunch? 

“It’s really just a question of figuring out what our vision is and trying to best marry that again with the statutory language that we have,” Wellington said. 

Shai Malik, a potential equity applicant, pointed out that the residency requirement, say, asking an applicant to prove that they lived in a certain area during a specific period of time, or for a specific period of time, might actually ice out applicants that the group is seeking to help. 

“I just want to make sure that there is a space for immigrants in this. As an immigrant, I think that it would be really difficult for immigrants to show that they’ve been in the country for 15 years. As well as foster youth and dislocated people. I just want to make sure that these people who are still impacted by the drug war have the ability to qualify for this,” Malik said. 

Further, Malik said later, people who live in economic opportunity zones tend to move around a lot, which could inadvertently serve as a disqualification if rules take shape in a certain way. 

“I just want to make sure that we’re not thinking of that as something that’s going to disqualify people who have moved from an economic opportunities zone to somewhere across the border, so to speak, and then moved back in,” Malik said. 

The group also suggested that neighborhood segregation and redlining be taken into consideration when defining these areas. Wellington noted that data from the American Community Survey, conducted by the US Census Bureau every year, instead of the Census, conducted every decade, “may be able to narrowly tailor a little bit more of the areas that we’re looking at, because we recognize that, you know, neighborhoods change and evolve over time.”

Some outstanding questions remain: how many data points are necessary for someone to meet the disproportionate impact area bar? Can time periods or geographic locations be tweaked, and, if so, what’s fair? Should these applicants receive a waiver? 

The organization The Color of Cannabis  presented feedback they had solicited. On the topic of disproportionately impacted areas, among the comments they received is that all public housing programs be included as criteria, and that regulators look at Colorado data, rather than federal data, because the “intent of the program is to assist Coloradoans that have been disproportionately impacted by the war on drugs.” 

A lack of data, especially past data, came up several times during the discussion. Sarah Woodson, of The Color of Cannabis, described how her thinking on data evolved. 

“Although we were trying to capture the people that were growing up during the height of the war on drugs, living in communities that have now been gentrified, it seems like the data’s not there. So if the data’s not there, then let’s really focus on the person and let’s talk about criteria that specifically is for the person,” Woodson said. 

Next, the group discussed the threshold of income for qualifying applicants, because the bill requires regulators to establish a household income level to determine eligibility to be considered a social equity licensee. 

One challenge in this area is what different income levels mean in different areas of Colorado, from Denver to Pueblo. So, the goal, Wellington said, is not to set a “hard and specific number,” because how “much money you make in those places means something different.” So far, the proposed suggestion is to look at an applicant’s income from the previous year, and whether that income was a specific percentage of the median income of similar-sized households. 

Another consideration is the size of family households. Some have two or three, some eight, but the same paycheck has to cover those extra costs. 

“We do recognize that if we do hit a wall and we’re like, ‘no, we really do need an income cap,’ then maybe that’s a good reason to run a bill next year and get that into the statute so that we can we can continue to turn this program into everything we want it to be, even though we recognize that it may not be perfect day one,” Wellington said. 

There are some legal considerations when it comes to local control. For example, does an accelerator applicant also need to have a green light from a local jurisdiction, whether operating as a sole business or on a shared premises? 

“How do we also avoid local governments from creating a barrier as well to the state program and making extra work for folks?” Wellington said. “What we’re asking here is, does an accelerator endorsed cultivator, manufacturer, or store need a similar local endorsement?” 

On local control, members of The Color of Cannabis want to have further discussion before making recommendations. 

John Bailey, of the Black Cannabis Equity Initiative, brought up the need, several times, for Colorado stakeholders and regulators to seek data points and experiences from lawmakers and regulators in other states that have embarked on social equity cannabis initiatives. 

“What has been the research done from a comparative analysis to see what other states are doing? Because at the same time, other states are learning from us. There are some other states from a social equity perspective that have done some things, not just sporadic gestures of goodwill, but have actually done some things,” Bailey said. 

Dakeana Jones-Bishop, of LivWell Enlightened Health, mentioned that she sat in on the work group for social equity in Michigan, where they use some of the same criteria under discussion in Colorado, including previous cannabis-related convictions. 

“There are some differences, of course, state by state, but there are things that we can utilize. But the thing that I also thought was interesting that they did: have you resided in a disproportionately impacted area for at least five cumulative years out of the ten years? So that might be something that we look at,” Jones-Bishop said. 

Larisa Bolivar, of the Cannabis Consumers Coalition, said she’s been advocating for a commission to review applications so people can talk about their backgrounds and to continue to discuss the baseline of qualifications. Bolivar emphasized that “because the drug war and drug war policies and drug war tactics are very nebulous,” it’s important to build in flexibility and openness. 

“I’ve been fighting against the drug war as an entire thing, because I’ve seen the damages firsthand to my family,” Bolivar said, sharing that her family is from Peru. “So as long as we can keep this broad and we can keep this inclusive and make sure that we can create a legacy, because history is being written as we speak.” 

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