House Agriculture Chairman David Scott on Thursday said the 2023 farm bill should address the barriers small businesses and Black entrepreneurs face when trying to start legal cannabis companies under state law.
Those barriers include high startup costs, underfunded state social equity programs and the lack of access to banking, Amber Littlejohn, executive director of the Minority Cannabis Business Association, told Scott and other members of the House Financial Services Subcommittee on Consumer Protections and Financial Institutions.
“Here we are, the fastest growing agricultural product, between hemp and cannabis,” said Scott, D-Ga. “We're also going into our farm bill. We've got to address this issue. We can no longer hide it.”
Congress has previously used the legislation that reauthorizes agriculture and nutrition programs to address the legal status of cannabis. The 2018 farm law made it legal to grow hemp, derived from the cannabis plant, as an agricultural crop.
However, jurisdiction over policies addressing cannabis cut across committees, potentially complicating Scott’s efforts. In his role as Senate majority leader in 2018, Mitch McConnell, R-Ky., had to fend off opposition from Sen. Charles E. Grassley, R-Iowa, then chairman of the Senate Judiciary Committee, to include the hemp provisions.
Scott pressed Littlejohn on the barriers to entry that small and minority farmers face trying to get into the cannabis industry.
Littlejohn said state-sponsored social equity programs designed to help minority communities harmed by drug policies in the past get a foothold in the cannabis industry have fallen short. Only 15 of the 37 states with legal recreational- or medical-use marijuana programs have equity programs, and none of those are well-funded enough to defray the high startup costs, Littlejohn said.
“What we've seen is they’re rolling out these equity programs, but the funding is not there,” Littlejohn said. “There is a clock ticking on the amount of time that people have to get their businesses up and running.”
In Scott’s state of Georgia, would-be cannabis business owners must pay $200,000 just to apply for a license to grow or process the substance, Littlejohn said. Only four African Americans applied for licenses, and the state approved none of them, she said.
Meanwhile, Subcommittee Chairman Ed Perlmutter, D-Colo., and Rep. Ayanna S. Pressley, D-Mass., criticized the exclusion of cannabis businesses from federal pandemic relief provided to other small businesses.
“This exclusion has added insult to injury. Ensuring Black and brown folks can start and sustain cannabis businesses is a matter of economic and racial justice,” Pressley said. The criticism comes as another small business relief package to attach to the delayed fiscal 2022 appropriations package is taking shape in the Senate.
Littlejohn said the pandemic hit minority-owned cannabis businesses hard.
“The pandemic has hit all minority businesses hard, but it has been especially hard on minority cannabis businesses that really don't have anywhere to turn for resources,” she said. “It is really a dire situation. If we don't get the resources now, many minority businesses are just not going to make it to legalization. They won't make it to the end of the year.”
Perlmutter said federal restrictions cutting the cannabis industry off from banking and financial services exacerbated pandemic hardships.
“Not only must these businesses contend with the ongoing pandemic and other economic uncertainties without being eligible for any federal small business aid, but they must do so while being shut out of the banking system,” he said. “Forcing this industry to do business in all-cash is turning into a public safety nightmare.”
The House has passed Perlmutter’s legislation to remove those restrictions six times, both as a standalone bill and provision attached to other packages. Each time, it has faltered in the Senate.