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Medical marijuana business

Maranda Richardson, from St. Louis County, takes notes during a workshop at the University of Missouri St. Louis on Tuesday, Feb. 19, 2019 hosted by a Colorado-based cannabis firm, Canna Advisors. Richardson is also attending a weekly training program starting April 13 at UMSL hosted by the nonprofit Minorities for Medical Marijuana that is aimed at helping black and Latino entrepreneurs as well as veterans and small business owners get involved in Missouri's medical marijuana industry. Richardson is interested in getting license for cultivating and dispensing of medical marijuana. Richardson also wants a percentage of medical marijuana licenses allocated to minority entrepreneurs, particularly in neighborhoods that were negatively affected by the war on drugs. Photo by David Carson, dcarson@post-dispatch.com

ST. LOUIS — As she applies for a state license to make marijuana-infused products for medicinal use, Keyonna Gray is thinking of people in her north St. Louis County neighborhood who were incarcerated for nonviolent marijuana offenses or battled addiction to opioids or other drugs. 

“I look at it as a way of creating jobs,” said Gray, a first-time entrepreneur. “And creating safer access to steer people away from other, more dangerous drugs.”

Gray is one of hundreds of marijuana business hopefuls applying Aug. 3 with the state to enter the medical marijuana industry, which is expected to top $100 million in sales by 2025. Missouri officials will license the minimum number of dispensaries this year, meaning many applicants will lose out. Applicants are required to have hundreds of thousands in cash and plans that address details from controlling odor from marijuana facilities to keeping the drug from entering the illegal market. 

In making its selections, the state plans to use a blind scoring process that strips applicants’ identifying information, including race.

But black business owners, like Gray, and policy advocates say Missouri should give extra points to minority-owned businesses seeking to enter the medical marijuana industry as a way to bring wealth and jobs to communities where people were disproportionately arrested for marijuana-related offenses.

“These are the communities that have been impacted the most negatively by the war on drugs,” said Maranda Richardson, a local marijuana hopeful and member of the national groups, the Minority Cannabis Business Association and Minorities for Medical Marijuana.

“That should count when you are setting up an industry where it’s difficult for people of color to gain ownership and access because of the capitalization piece, and taking into account that people are still sitting behind bars for what is now being legalized.” 

The considerable financial capital and know-how needed to break into the marijuana industry makes it easier for big businesses to be successful, and harder for people like Gray and her mother, a home care provider. 

The two spent time in Oregon and Colorado apprenticing with legal marijuana businesses there and are courting investors in Missouri where they can. They’re also in talks with a company that offered to buy them property in exchange for sharing a percentage of their revenue.

“We’re exploring our options right now to see if we can find investors and people willing to give us a chance to join this industry, or people who don’t know how to do it themselves and will invest in our company.”

Deep pockets

African Americans are about four times as likely to be arrested for nonviolent marijuana offenses as whites, despite both groups using marijuana at similar rates, said Karen O’Keefe with The Marijuana Policy Project

Meanwhile, ownership in the legal marijuana industry nationally has skewed heavily white and male, O’Keefe said. 

That is in part because of the considerable financial capital marijuana business hopefuls need to get started and laws barring people with marijuana convictions from taking part. Missouri, for example, requires a group applying to open a marijuana-growing facility to have $300,000 in cash; it can cost about $1 million to build the type of secure, high-tech facility needed to meet regulations. 

And the federal ban on marijuana makes banks wary of loaning to marijuana businesses and property owners reluctant to rent to them, O’Keefe said.

“You have to have deep pockets, and people who have suffered through centuries of discrimination, redlining (and) incarceration aren’t sitting on that much wealth,” she said. 

Other states with legal weed have increasingly adopted minority-inclusion policies including giving extra points to black-owned businesses or providing them with grants, though some states, like Ohio, have faced lawsuits alleging such programs are unfair, O’Keefe said.  

A handful of Democrat state legislators introduced bills with similar aims, including bills giving a point increase or a tax credit to minority-owned businesses, but they failed to win passage in the Republican-dominated Legislature.

The Department of Health and Senior Services is regulating Missouri’s medical marijuana industry. Dr. Randall Williams, DHSS director, said the constitutional amendment voters approved that legalized medicinal marijuana did not allow for applicants to get extra points because they were minority-owned. 

“The constitution was very prescriptive about what we could consider in deciding the categories of scoring,” he said. 

Williams pointed out that the points will be given to applicants that locate their businesses in low-employment areas or whose business plans describe how to “address diversity” in their top management and how to make medical marijuana available to low-income patients.  

But there is no guarantee the plans will be followed through, said Derek Mays, an intellectual property lawyer and compliance attorney who founded a largely black-owned company applying to open marijuana businesses in the St. Louis area. 

“We all know that you can buy a diversity plan from an articulate consultant from somewhere outside of Missouri and never have any real intentions to implement it,” said Mays, a board member of the Missouri Medical Cannabis Trade Association. “And they can win licenses off of that.”

“To me, it’s a farce. We’ll see how things shake out.”

May’s group, Real Cannabis, has been working toward breaking into the industry for years and is well positioned to succeed in the industry, he said. They hope to bring jobs and safe access to marijuana to black communities, he said.

But another obstacle to using the now legal drug to build black wealth is that Missouri also bars anyone with a felony conviction within the last five years from employment in the legal industry.

“It’s a retroactive law that prevents people who are actually pretty skilled and knowledgeable in operating in this space from participating, and in my view it’s an additional punishment after they’ve already paid their debt to society,” Mays said. 

In the meantime, Richardson said, businesses can use the marijuana industry as a tool for racial equity by making diverse hires, offering job training, and establishing benefit agreements with communities where marijuana businesses are located. 

“It’s about putting people into position to gain knowledge and hands-on experience so they can be their own champion and ambassador,” she said.

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Reporter covering breaking news and crime by night. Born in Algeria but grew up in St. Louis. Previously reported for The Associated Press in Jackson, Mississippi and at the Wichita Eagle in Wichita, Kansas.