New Report Aims To Protect Small Cannabis From Corporate Takeover

When cannabis is legalized, a lot is at stake for the existing, state-level industry. The entrepreneurs who make up weed’s $33.8 billion market are predominantly small business owners. A new report says they’re worth protecting.

The report, “How to Federally Legalize Cannabis Without Violating the Constitution or Undermining Equity and Justice,” was ideated by the Parabola Center for Law and Policy. Its author Tamar Todd is an attorney with a breadth of experience in drug policy. She also serves as a lecturer at the U.C. Berkeley School of Law teaching cannabis law and policy.

It offers a clear blueprint for Congress to protect the cannabis industry, ensure justice, and not obliterate the hard work that the states have done in the last decade. America’s weed industry is made up of over 10,000 small businesses providing an estimated 400,000 jobs across the country. According to Parabola Center founder and director Shaleen Title, the report was written to address “concerns that federal marijuana legalization would wipe out current state markets and replace them with a national monopoly.”

The report urges a gradual legalization approach. "Excitement for federal legalization is mounting because state programs have led to good jobs and a lot of progress toward our goals of equity and justice," says Title. "But flipping a switch to federally legalize marijuana would end all of that progress. A gradual implementation that protects small businesses and workers is the fairest option for everyone."

Small business owners and retailers who make up the local-level market are in need of safeguarding. “These states and many small businesses operating within these states have invested significant time, labor, and other resources to develop the cannabis industry intentionally, value-driven, and focused on creating equitable opportunity, allowing small businesses to thrive, and protecting cannabis workers,” says Todd. “These programs are innovative, their goals are laudable, and they are worth saving.”

“Cannabis is not like any other commodity,” says Todd. “Its prohibition carries a history of devastating harm and damage to individuals and communities. Congress needs to be intentional in legalizing cannabis to account for this history and to design a policy that focuses on both repairing past harms and preventing future harms.”

Among its goals, the paper seeks a reparative solution for those most impacted by the War on Drugs. “While intrastate cannabis markets developed in response to federal prohibition,” says Todd, “many states and local governments used the opportunity to design and implement cannabis regulatory programs intentionally designed to advance policy goals focused on repairing the harms of decades of criminalizing people for cannabis.”

The report also looks at the potential corporatization of cannabis if legalized, and hopes to put in place safeguards for the smaller businesses that preexist that federal legalization tipping point. “Amazon — a company currently being sued by the Federal Trade Commission for illegally maintaining monopoly power — is openly endorsing the MORE Act, the CAOA, and the SRA,” says Title. She’s an attorney and activist who has helped present two key reports in the last month, including “The Role of Small Business in the Evolving Cannabis Industry,” published in SSRN. Title served as a top regulator for the state of Massachusetts as part of its Cannabis Control Commission from 2017 to 2020.

The founder says that Amazon isn’t the only monopoly from which the industry needs to protect itself. “Tobacco giants Altria and Reynolds America, who have squandered their trust with the American public by intentionally pushing deadly products onto teenagers, are hiding behind a front group called CPEAR to lobby for laws that would let them do the same thing with cannabis,” says Title. “We're not speculating about what these companies are doing; they're doing it in plain sight.”

Three constitutional policy solutions are suggested in the report to ensure the existing cannabis industry at the state level is protected from corporate takeover. “Our concern is that if any large corporation can enter the market without guardrails,” says Todd, “we will see rapid market consolidation, the disappearance of the equity-focused businesses fostered by state cannabis programs, and a complete disregard for small businesses, workers, and public health.”

The three solutions that the paper lays out: “Explicitly allowing existing state cannabis laws to operate as designed and without disruption; Allowing bonafide social equity businesses, small businesses, and worker-owned businesses to engage in interstate commerce first; and limiting the impact of large corporations by preventing excessive consolidation through mergers and acquisitions, and establishing anti-monopoly provisions.”

Once cannabis is legal federally, do the attorneys predict interstate commerce will be a way to contend with the unlicensed market? “This will depend mainly on the details of what federal legalization looks like,” says Todd. “There is great potential for it to help bring more cannabis activity into the regulated market, but only if done in a manner that does not create new barriers to entry for existing state-regulated businesses and markets.”