Why New York’s cannabis equity program is stranding women entrepreneurs

NEW YORK — Women weed entrepreneurs who applied for New York’s first retail licenses are being left behind in the state’s effort to establish an equitable cannabis market.

Since launching the program in August, New York regulators have awarded dozens of licenses to entrepreneurs who had an immediate family member convicted on marijuana charges or have a record themselves. While those priorities were written into the program to make up for decades of disproportionate criminal enforcement, particularly in communities of color, the rules are having the unintended consequence of leaving women entrepreneurs out.

Across two rounds of licensing, 7 percent in the first round were women, while women made up just 14 percent of winners in the second.

“If we’re going to say that New York State is at the head of social equity and inclusion, it must consist of [women] or that is not full inclusion,” said Britni Tantalo, an entrepreneur who applied for one of the state’s first retail licenses through the Conditional Adult-Use Retail Dispensary program.

New York isn’t the first state to leverage marijuana legalization as a way to bring people harmed by the war on drugs in on the financial benefits of a lucrative industry. But it has arguably taken the most aggressive approach to boost equity in the business and avoid the pitfalls of similar programs: It’s promising startup funding to entrepreneurs and even identifying and renovating real estate to help retailers.

Yet the small share of women awarded licenses so far shows how sophisticated attempts to manipulate the market to benefit a certain group of applicants can still leave others feeling snubbed.

The low share of women entrepreneurs in New York’s nascent cannabis program makes some sense since marijuana enforcement was disproportionately targeted at young men of color.

Between 1997 and 2007, 91 percent of people arrested for marijuana possession in New York City were male, according to a report from the ACLU of New York. Young Black and Latino men were overwhelmingly overrepresented in marijuana possession arrests during that time period.

New York officials say they allowed people who have immediate family members with cannabis convictions to qualify for the retail licensing program in order to open the door to more women.

“My team early on made an effort to make sure that women have a pathway to get a CAURD license,” said Damian Fagon, chief equity officer of the Office of Cannabis Management, in an interview.

But for scoring purposes, qualifying based on a conviction is weighted higher than one based on a family member, Fagon explained. That brings up some tricky issues for women seeking licenses.

“I understand that the person who actually went through [the arrest and conviction] should be awarded more points,” said Venus Rodriguez, an applicant who qualified based on her son’s arrest. “But what’s that scale? And how do we measure suffering? We’ve all suffered.”

Jillian Dragutsky can understand both sides. Her father was convicted for a cannabis offense, and Dragutsky herself was also later convicted for a similar crime.

The harms of both experiences were undeniable for Dragutsky, who was about 15 years old when her father, her primary caregiver, was arrested. She and her brother were sent to live with a friend of her father’s, she recounted.

Dragutsky’s own arrest was just as life-changing of an event. Despite being fortunate enough to be able to hire attorneys — “it was terrifying and challenging,” Dragutsky said.

She called for more transparency in the application process — particularly when it comes to awarding points for the justice-involved questions on the license application.

“Who makes that decision?” she wondered. “It’s a little frustrating not to have transparency.”

The OCM has not yet made a decision on how much information they will make public about license scoring, as the agency is still in the midst of scoring applications, Fagon explained. Regulators are giving applicants more time to cure any deficiencies on their applications, and to submit documentation to verify parts of their qualifications. Unlike other jurisdictions, “we gave everyone as much time as they needed,” Fagon said.

Slow rollout

Cannabis businesses already struggle to access capital, given the industry’s federal illegality. Many institutional investors stay away from the industry and entrepreneurs can’t access small business loans from banks.

Tantalo argued that women, particularly women of color, have even greater challenges accessing capital. That’s what makes the CAURD program attractive, as it gives licensees access to a fund for startup costs.

New York regulators have run into delays with the program. Gov. Kathy Hochul said last October that 20 dispensaries would be open by the end of 2022. But only four have opened their doors so far — one on a pop-up basis. The $200 million public-private effort to help applicants has yet to be fully funded.

“What is the plan? Do [regulators] even have conversations about it?,” said Rodriguez. “We don’t know, because we don’t hear.”

For now, women who qualified based on family members are going to continue to be at a disadvantage for licenses because of the way qualifications are weighted.

“CAURD highlighted this gender disparity that could exist in other areas of our social equity categories as well,” Fagon said. For example, he expects licensing for disabled veterans and distressed farmers to also favor men.

Fagon emphasized that his team is focused on providing opportunities to women. He expects to see a fair representation of women when the office starts licensing entrepreneurs who qualify for social equity based on living in a disproportionately impacted area.

Meanwhile, the OCM announced earlier this month that it would increase the number of initial retail licenses from 150 to 300. That decision is expected to increase the overall number of women licensees, though they will continue to be a small percentage overall.

“The structural disparities in ownership in farming, presence in the military and the disproportionate arrests of men — those are things we can’t change," Fagon said.

With the first round of licensing underway, the agency isn’t making any immediate changes to the process.

Once the OCM finishes licensing the first applicants, “We’re going to look at the data — where we are and where we need to be,” Fagon said of licensing women entrepreneurs.

“I think we’re going to have to redouble our efforts in future licensing rounds,” he said.