Mayor Muriel Bowser’s proposed budget for fiscal year 2025 would strip millions of medical cannabis programs funds for social equity entrepreneurs.
Bowser’s April proposal strips half a billion in cuts throughout the city’s budget in an attempt to recover a $700 million budget shortfall this year. Cuts included reductions in emergency rental assistance and child care programs, but she also proposed stripping the Alcohol Beverage and Cannabis Administration’s Medical Cannabis Social Equity Fund.
The Medical Cannabis Social Equity Fund was supposed to be a key asset in the District’s attempt to set up a medical market expansion that focused on empowering the people most impacted by the War on Drugs. The fund set aside millions in social equity financing for grants and loans and an enterprise program.
The Department of Small and Local Business operates the fund. Leftover money from yearly budgets, cannabis sales tax and cannabis fines over a certain amount funnel into the fund. The money in that fund was never supposed to go back to the general fund.
D.C.’s medical cannabis expansion set up a 50/50 program that allows non-social equity candidates to only control half of the licenses in any category.
Only six of 15 social equity programs around the country in 2022 provide funding beyond fee reductions, according to a report. Many other social equity programs across the country failed to successfully launch candidates due to other roadblocks like real estate and funding.
D.C.’s fund was set up to ensure social equity candidates’ success in entering the market. “It is very hard to get funding so funding is critical in terms of the challenges of getting it open,” Fred Moosally, the director of ABCA, said in an April Council budget hearing .
Moosally said that the loss of funding could impact businesses ability to operate. Moosally acknowledged that it is a tough budget year and said he’d implement whatever the mayor and council agree on.
Bowser highlighted this type of funding herself in the 2021 proposed legislation. Councilmember Kenyan Mcduffie voiced his disapproval of the defunding in the April hearing.
“It seems like a huge trade-off that the alternative for these social equity applicants becomes trying to seek private capital and reducing their equity as opposed to being able to look to that medical cannabis social equity fund as a potential vehicle to access capital,” Mcduffie said. “And that to me, is actually inequitable.”
Mcduffie’s Committee on Business and Economic Development voted last week to keep the fund safe from the Bowser. The committee, run by McDuffie, recommended that cannabis sales tax should continue to be used to achieve equity in the medical program.
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The recommendations highlighted the need for “a well-funded social equity program that would provide an opportunity for disenfranchised minority groups to fairly compete in the medical cannabis industry.” Bowser did not respond to requests for comment.
