Equity Aspects of the MORE Act of 2021
By Transactional Attorney Daniel Dellafosse
June 18, 2021
On May 28, 2021, the “Marijuana Opportunity Reinvestment and Expungement Act of 2021” (the “MORE Act of 2021”) was introduced in the United States Congress. Senior Associate Attorney Lauren Mendelsohn wrote a brief blog post describing a few key details of the MORE Act of 2021. This post will provide a brief overview of the equity aspects of the MORE Act of 2021.
The first equity provision in the MORE Act of 2021 authorizes a grant program called the Community Reinvestment Program. Section 3052 provides that the newly created Director of the Cannabis Justice Office shall establish and carry out a grant program that administers funds to eligible 501(c)(3) non-profits that shall provide services to “individuals adversely impacted by the War on Drugs.” The term “Individuals adversely impacted by the War on Drugs” is further defined as an individual who reports income below 250 percent of the Federal Poverty Level for at least five (5) of the past ten (10) years, and who has been arrested for or convicted of the sale, possession, use, manufacture, or cultivation of cannabis (except for a conviction involving distribution to a minor), or whose parent, sibling, spouse, or child has been arrested for or convicted of such an offense. The eligible non-profits will use the grant funds for job training, reentry services, legal aid for civil and criminal cases, literacy programs, youth mentoring programs, and health education programs to the individuals defined above. This will likely prove invaluable to communities and individuals devastated by the failed War on Drugs.
The second equity provision establishes the Cannabis Restorative Opportunity Program in section 3054(b)(1). The Small Business Administration will administer a program that provides loans and technical assistance to small businesses operating in an “eligible State or locality.” An eligible State or locality is defined as a State or locality that has taken steps to create an automatic process for the expungement, destruction, or sealing of criminal records for cannabis offenses at no cost to the individual and to eliminate violations or penalties for persons under parole, probation, pre-trial or other State or local criminal supervision for a cannabis offense. The small business must be owned and controlled by socially and economically disadvantaged individuals. This program will allow business that meet the criteria to access capital and assistance that they were previously prohibited from accessing due to the Schedule I classification of cannabis.
The next equity provision created in the MORE Act of 2021 establishes the Equitable Licensing Grant Program that will provide funds to eligible State and localities to develop and implement equity programs. An eligible State or locality must meet four out of five requirements detailed in section 3054(b)(2)(a)-(e) in order to receive grant funds from the program. The five elements are detailed as follows: (a) waive the license application fees for individuals with an income below 250 percent of the Federal Poverty Level for at least five (5) out of the past ten (10) years and who are first time license applicants; (b) prohibit the denial of a cannabis license based on a conviction for cannabis; (c) prohibit restrictions for licensing related to criminal convictions subject to a criminal conviction related to business ownership and operation; (d) prohibit cannabis licensee from engaging in suspicionless cannabis drug testing of prospective or current employees, except with respect to safety-sensitive positions; and (e) establish a cannabis licensing board that reflects the racial, economic, and gender composition of the eligible State or locality. Entering the cannabis industry requires extensive capital and startup costs so this program can substantially assist equity applicants by lowering or removing startup costs associated with the permitting and licensing processes.
The equity provisions in the MORE Act of 2021 are a good start and will provide opportunities to those disenfranchised by the failed war on drugs. However, the taxation provisions in the MORE Act of 2021 do not address lowering the tax burden for businesses and individuals eligible for the programs. Additionally, the eligibility requirements for individuals adversely impacted by the War on Drugs are likely too narrow. The impact of the War on Drugs goes beyond incarceration and should likely expand the requirements so the program can truly benefit the communities as a whole that were devastated by the failed War on Drugs. Opportunities to address these issues are still available since the MORE Act of 2021 has not been signed into law.
Please stay tuned for additional blog posts that will break down other provisions in the MORE Act of 2021.
This information is provided as a public educational service and is not intended as legal advice. For specific questions regarding cannabis and hemp laws in California and at the U.S. federal level, contact the Law Offices of Omar Figueroa at 707-829-0215 or info@omarfigueroa.com to schedule a confidential legal consultation.