Social Impact Business Incentives Could Change Legal Cannabis
The opinions expressed are solely those of the author and do not reflect the views of Rolling Stone’s editors or publishers.
In business, incentives are often misaligned with social good. This is true in prisons and the pharmaceutical industries and, now, much of the legal cannabis industry.
I have spent the last seven years in the cannabis industry investing, advising and operating businesses. During this time, I also worked on drug policy and criminal justice reform and served on the board of the Marijuana Policy Project. I have met some incredible change makers over the years. Recently I interviewed social entrepreneurs and advocates for my podcast, People are the answer. Based on that experience, I’ve outlined some common themes here.
Let’s examine what happens when injustice is instigated and how “cannabis companies” can align with social change.
When injustice is encouraged
the $182 billion prison industry locks up 629 people per 100,000 people in the United States, according to 2017 figures. Americans are imprisoned at the highest per capita rate of 223 countries monitored.
Beginning in the 1980s, the War on Drugs and tougher sentencing laws led to a rapid expansion of the prison population. ACLU says local, state and federal governments could spend anywhere between $20,000 and $50,000 per year keep someone behind bars.
The public sector has not kept pace with prison demand. As a result, this has opened the door to a for-profit prison industry of incarcerating people in private state and federal prisons. According to the proposed sentencing, between 2000 and 2016, the number of people “housed in private prisons has grown five times faster than the total prison population”. Of the 1.5 million people incarcerated in state and federal prisons in 2016, she found that 8.5% were incarcerated in private prisons.
After interviewing a number of formerly incarcerated people on my podcast and researching the subject, it’s clear to me that American prisons should be more closely aligned with rehabilitation and learning centers. If prison incentives could be aligned with things like successful reintegration into society, lower recidivism rates, and other positive outcomes for inmates, our system would be in a much better position to meet the needs of our country.
The United States is a world leader in prescription drug spending per capita. US sales of the top 20 drugs on the market were more than double that of the rest of the world combined. Since the development of new drugs is funded by patent-protected profit margins, innovation and affordability are generally not at the center of solving the most important health problems. The pharmaceutical industry has an incentive to keep people consuming products on an ongoing basis, rather than curing people of diseases.
the global cannabis market was valued at US$25 billion in 2021 and is expected to reach US$178.7 billion by 2030. In contrast, the global pharmaceutical market was worth about $1.2 trillion in 2020. States are starting to allow physicians to recommend cannabis to patients “For any condition, they would prescribe an opioid,” according to NBC News. Despite its relatively small size, the cannabis industry has the potential to disrupt the traditional pharmaceutical industry by offering alternatives to pharmaceuticals.
Inequality in cannabis
ACLU report, Tale of Two Countries, paints a devastating portrait of today’s cannabis inequality. The report reveals that of all cannabis-related arrests, 89.6% are for possession only. In every state, black people were significantly more likely to be arrested for cannabis possession. In some states, black people were up to six, eight, or nearly 10 times more likely to be arrested for cannabis. Legalization hasn’t changed the trend: The report found that in 31 states, racial disparities in cannabis arrests were actually greater in 2018 than in 2010 despite legalization at the state level.
The US cannabis industry is expected to reach $30 billion a year by 2025, but those most affected by the war on drugs are still the most likely to miss out on opportunities in space. According to a 2019 report, only one in five cannabis businesses is owned by a racial minority. In most states, cannabis licenses are expensive and difficult to obtain. Because cannabis is still federally illegal, bank and business loans are cumbersome to obtain, putting those without access to investors and capital at a disadvantage.
Many in the cannabis space are trying to make the industry a leader in aligning business incentives with social justice, but as more money continues to get involved, models of old-fashioned incitement unfortunately rise to the top.
How can incentives align with social change in cannabis?
When looking at the prison, pharmaceutical, or cannabis industries from the perspective of incentivizing social good, the statistics can seem overwhelming. While it’s tempting to lose faith in the systemic enormity of the problems, there are ways cannabis companies and their leaders can take concrete steps to align incentives with social change.
Tips for Entrepreneurs to Align Cannabis Businesses with Social Justice
• Eliminate criminal conviction disclosure issues on employment applications.
• Practice non-discrimination in hiring practices for racial inclusion and hiring of people affected by the criminal justice system.
• Create training and workforce development for those who have been involved in the criminal justice system.
• Provide seed grants, interest-free loans and business support for cannabis entrepreneurs who have been most affected by injustice.
• Connect beyond your business by creating strategic partnerships, sharing knowledge and skills, and participating in legislative advocacy.
Macroscopic changes are needed at the political level to address the systemic causes of injustice. In the meantime, cannabis entrepreneurs can bring about meaningful change by aligning incentives with social justice and positive impact.