Editor’s note: This op-ed was written by Christine De La Rosa, co-founder and CEO of The People’s Ecosystem, a California-based, equity-focused, multi-state cannabis operator.
Pharmaceuticals, agriculture, wind power, solar energy, electric cars, steel, banks, airlines and railways – what do all these industries have in common? They were all subsidized by the federal government at the start, during the growth phase or during downturns in their industry. Billions of dollars have been poured into these industries to sustain them or prevent them from failing. Yet the US government has done very little to help establish one of the biggest and most lucrative industries of this century that we will see in our lifetime or in the 21st century: the cannabis industry.
What are federal grants?
So what is a subsidy? Grants are direct contributions, tax breaks, and other special assistance that governments provide to businesses to offset operating costs over time. If ever there was an industry that needed help offsetting operating costs, it would be the cannabis industry. It is not an industry that will be able to sustain itself, grow or prosper unless funding is available from both the public and private sectors. Our legislators must be disabused of the idea that cannabis is a cash cow for their empty coffers. Governments, municipal, state and federal, are running the cannabis industry like it doesn’t need help when it absolutely needs it right now, now.
Did you know that the three largest subsidized industries are energy, agriculture and transportation? Cannabis falls squarely into the agriculture category, and literally no other part of the supply chain is more important than cannabis growers. Manufacturing, distribution, and retail only exist if we have a strong community of cultures of all sizes, from large-scale growers to artisanal growers. Cannabis growers, our growers, should receive some of the subsidies offered to their counterparts in other agricultural categories. At the same time, some subsidies are available for hemp growers, but very few growers know how to access them – but at least they have them. Back to cannabis growers, the backbone of the cannabis industry, their inability to access agricultural subsidies from their federal government is a crime and makes no sense.
Hit the tipping point
Right now there is a cacophony for SAFE Banking, as there should be, but we cannot forget what is owed to us as an industry. It feels like all of our resources are going to support SAFE Banking, so what? We must actively work on parallel tracks for what we expect from our governments to help us defend this industry, as it has done for almost all other industries of this magnitude. We must ensure that our governments, at all levels, are prepared to engage with the cannabis industry in ways that are helpful and not harmful. What I take away most from talking to legislators is how poorly they understand what it takes to run businesses in this industry. It’s clear to me that they don’t understand the depth and breadth of what is possible if they are good stewards of this industry, and that goes far beyond SAFE Banking.
We are at a tipping point in the industry where there are so many small and medium-sized businesses failing because they don’t have access to institutional capital or regular banking services. Yet, more importantly, the entire industry does not have access to federal funding, which we should have. Cannabis is a life-changing medicine, and I know that firsthand. It is also an industry that has the capacity and the mandate to increase the income of an entire generation. The federal government has spent billions of dollars to wage the war on drugs. Where did that money go now that the cannabis industry is regulated? Why was it so easy to find the money to throw our people in jail, but now the money is nowhere to be found to ensure a prosperous, robust and fair industry?
If you read my article “Social Equity is ‘The Hunger Games’ for BIPOCs and Formerly Incarcerated Cannabis Founders” earlier this year, you know I’m not a fan of social equity. I find it abhorrent that we are asked to pay to right our own wrong. As a disabled person, I am even more angry that my medicine, our ancestral medicine, is used as a tax windfall for governments. They have to find all that money they had before to incarcerate our people and all the fresh money from the regulated market and use it to subsidize the industry that will change the world. There are many ways to do this using agricultural subsidies as a benchmark, but let’s be creative; help our governments become more creative.
- Let’s make sure our small business administration understands the needs of the cannabis industry, especially our small businesses, because those needs are sometimes unique.
- Let’s prepare them now to work with our industry at the time of federal legalization, because it will be an extinction event for small and medium-sized businesses if we cannot access capital.
- Let’s create tax incentives for companies engaged in DEI and ESG initiatives now, not later.
- Let’s build the necessary workforce development for our essential workers and new founders. And let’s make sure that’s what we need.
- Let’s prepare grants for companies that work hard to limit their carbon footprint and build green.
- Let’s introduce direct cash payments to growers in the event of a market squeeze or natural disaster.
- Let’s provide loans, without penalty in case of default, to the backbone of our industry, the growers.
- Let’s make sure we have affordable insurance subsidized by our government at all levels of the supply chain.
The list can go on and on. These are just a few ideas but I’m sure collectively we can add to the list. I challenge us as an industry to start thinking about federal subsidies with the same fervor that we stand for SAFE Banking.
No other industry on this scale in recent history has had to recover with so little government assistance. In recent years, many people have proposed massive cuts in subsidies due to rising public debt and falling tax revenues. Except we are the tax revenue, and we must demand that we receive the help we need to create the industry we deserve.
I had written this article and submitted it days before President Biden’s recent cannabis orders were announced – this topic is now more relevant than ever. Cannabis may be postponed within 12-18 months or sooner. How are we, as an industry, going to prepare our government to help us build a federally legal industry? Now is the time to talk about it because it is more imminent than ever.
I was in the middle of a large showroom promoting our product line along with hundreds of other cannabis brands in Santa Rosa, CA when I read the news via email. I immediately started running to all the different booths around us to share the news. About 20 minutes later it was announced over the loudspeaker and the whole showroom erupted in cheers. I ran to our booth where a group of my fellow OGs had gathered. We hugged and cried together at this momentous event that we were blessed to share as a community. Everyone was so happy and optimistic about our future. After about 10 minutes, we all got back to work. That’s what we do as an industry — we work hard to get our drugs to people.
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