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Marijuana Industry To Add New, Diverse Ownership Thanks To Recent State, Local Laws

Social Equity_Michael Diaz-Rivera
Stephanie Daniel
Michael Diaz-Rivera has a social equity license and a transporter license from the state and city of Aurora. He will start a marijuana delivery business as soon as he receives the permit.

Marijuana is one of the fastest growing industries in Colorado. Since the state’s legal market started in January of 2014, medical and retail sales have topped $10 billion. Despite this huge revenue, many people of color have been unable to stake their claim within the industry and start a business. But recent state and local legislation aim to change that.

Michael Diaz-Rivera’s marijuana story begins about 16 years ago during an encounter with the police. It was nighttime and he was driving around Colorado Springs with some friends.

“The cops come zooming up. They put their lights on, hop out their car, put their guns on us, and they just come like, ‘get out the car, get out the car,’” he said.

After searching the car, officers found about a half ounce of weed in several bags.

“I remember sitting in my jail cell that night just being a 19-year-old boy, seeing all of my opportunities just close in my eyes,” he said. “I wasn’t hurting anybody. I wasn’t doing anything bad and now my future was being ruined for marijuana.”

Diaz-Rivera pled down from a felony distribution charge to one of marijuana possession.

He was ultimately put on a work release program, got three years of probation, and paid a couple thousand dollars in restitution. With that felony on his record, Diaz-Rivera has been unable to work in Colorado’s cannabis industry.

“I always like to say when it wasn’t regulated; the person who was selling was a drug dealer,” said Sarah Woodson, executive director of the Color of Cannabis. “Now that it’s regulated, the person that’s selling is a businessman.”

Marijuana is one of the fastest growing industries in Colorado. In the month of February, sales totaled over $167 million. Since the state’s legal market started in January of 2014, that number has topped $10 billion.

But despite this huge revenue, many people of color have been unable to stake their claim within the industry and start a business. According to state data, most medical and recreational cannabis business owners are white men.

“There is a huge lack of diversity,” Woodson said.

Last summer, Gov. Jared Polis signed a bill allowing him to pardon anyone charged with possession of up to two ounces of the drug before it became legal. The legislation also created a social equity license program for people that fall into one of three categories: those with a household income below a certain level, those who have lived in a community harmed by the "war on drugs," or if they or a relative were arrested and convicted of a marijuana offense or had an asset forfeiture due to an investigation.

A person who meets the eligibility criteria for a social equity licensee can apply to independently own and operate a regulated marijuana business. Or they can participate in an accelerator program with an established business. Applicants are also eligible for fee waivers and other incentives and support.

“Cannabis is extremely competitive and extremely regulated, probably the most regulated industry,” Woodson said. “Therefore, we want to make sure that people have the tools that they need.”

The Color of Cannabis assists black and brown people who want to enter the industry through a mentorship program, business training and criminal justice reform and lobbying. It offers a 10-week business incubator course to help people get started. The course covers everything from the history of marijuana to licensing, zoning and running a retail store.

The program also brings in guest speakers and owners so participants can learn from them and build relationships.

“It's extremely imperative for a person that wants to really be in the industry to have some kind of relationship, some type of education,” Woodson said. “You just don't jump into it.”

The first cohort of 12 people graduated a couple months ago. Diaz-Rivera was among them. The fifth-grade teacher has been interested in the business for a while and worked as a budtender last summer.

The 35-year-old recently bought his first house in Aurora and got his social equity license through the state.

“I know so many people in similar situations like mine, and I want people to know that you can't give up. We can't let the system break us down,” he said.

In January, Aurora became the first city in the state to allow retail marijuana deliveries. For the next three years, only social equity applicants will be able to get a transporter license. Aurora is only issuing delivery permits to marijuana stores and those with a transporter license.

On Monday, the Denver City Council will vote to approve marijuana deliveries and remove the cap on new recreational dispensaries. To get a transporter license or open a dispensary, applicants must meet the state’s social equity requirements. If the vote passes, deliveries could start by late summer.

“When you look at cannabis delivery, there's a variety of things that make it attractive from a social equity perspective,” said Jordan Wellington, a partner at VS Strategies and a national cannabis policy consultant. “The first is that it's, in a sense, a new market.”

A transporter business has significantly lower startup costs, Wellington said, compared to the seven-figure investment it could take for brick-and-mortar retail, cultivation or manufacturing ventures.

“If your goal is to create entrepreneurial opportunities in marginalized communities, identifying business opportunities that have lower barriers to entry, are going to lead to greater likelihood of success in that policy,” he said.

The state is also reducing financial barriers. In March, Polis signed the Program to Support Marijuana Entrepreneurs bill. It provides grants, loans and technical assistance to aid social equity licensees, nonprofits and other businesses working in this space.

The program is designed for industry newcomers like Diaz-Rivera.

He is starting off small. He got a transporter license and is waiting for his delivery permit to be approved. Diaz-Rivera leased two cars and is outfitting them with the state-required video cameras and safes needed to do deliveries. He hopes to partner with an Aurora dispensary soon and get to work.

“My dream is to own my own dispensary, own my whole cultivation, et cetera, and then deliver from that.”

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