Saturday, September 30, 2023

What Is a Cannabis Microbusiness?

New Model Tries to Address Equity


There’s not always a lot to crow about living in New Mexico, but our cannabis laws are some of the best in the country. The Cannabis Regulation Act (CRA) is one of the few cannabis laws in the country that appeared to pass with a less-than-epic amount of pushback from either cannabis advocates or prohibitionists.

One aspect of the CRA that advocates can absolutely crow about is the inclusion of language aimed at leveling the playing field for small businesses. Legislators say these equity laws are designed to give those in communities that have been disproportionately impacted by drug prohibition and rural communities the power to enter a highly competitive field burdened by steep entry fees. This model of equity has been brewing for a few years and seems to be a fair way to address inequality while avoiding discrimination.

What Is Equity?

Equity is an often misunderstood Progressive value that is distinct from equality. “Equality” refers to the availability of equal opportunities for all people, whereas “equity” recognizes a current lack of equality between some groups and attempts to correct for that inequality through social justice.

The concept has led to some controversial policy choices by Progressive leaders with varying degrees of success and failure. Deciding whether areas of life require intervention through equity and recognizing where the approach is heavy-handed has proven difficult for many.

But in the case of cannabis legalization the need for equity is clear. It’s unarguable that marijuana prohibition has had a disproportionately negative affect on communities of color and those of lower socio-economic status.

The Microbusiness Model

According to the CRA, a cannabis microbusiness is one that produces or sells 200 plants or less, but the term microbusiness can refer to other things in other industries. It might refer to a business that has fewer than 10 employees or one that produces small-run products. The one constant in all types of microbusinesses is that they are small, owned by local individuals as opposed to major companies and are historically disadvantaged against bigger players in a given field.

While the practice is still relatively new, bolstering local microbusinesses with government funding and helpful programs seems to be having some success. With added support, small businesses are able to compete in markets that are dominated by industry giants.

The microbusiness model has the potential to address social equity without stepping into the troubled waters of discrimination. Opening doors for small businesses in general with a particular eye on low-income or rural ventures will benefit those who have been disadvantaged without having to take individuals’ statuses into consideration. This might be especially helpful amid culture wars that push conservative lawmakers to distance themselves from other equity initiatives.

The microbusiness model also has the added benefit of encouraging craft industries where unique and localized products can have room to spread their wings. New Mexico is well-known around the country for its craft breweries. By creating special cannabis microbusiness licenses, the state has potentially opened the door to a similar situation in which specialty marijuana products can be made that will only be available in New Mexico. That’s an exciting opportunity for consumers!

The only real issue with this model is that scaling up becomes troublesome for small businesses when states have codified growth limits for production or staffing. New Mexican cannabis microbusinesses currently face the 200-plant limit, but a bill was recently introduced that would allow them to grow up to 1,000 plants. Lawmakers have yet to vote on the bill but it reportedly has support in the legislature.

NM: Friendly to Small Businesses

State leaders didn’t stop at placing equity provisions in the CRA to help microbusinesses. The state recently even introduced a microbusiness loan program that will help fund small cannabis startups. The $5 million loan program is meant to deliver loans to microbusinesses that have a valid business plan, managerial staff and capacity to operate but can’t afford to purchase the equipment or facilities necessary for a new venture.

“This program will give New Mexico small businesses, particularly in rural and economically-disadvantaged communities, a tool to make this industry more accessible and help get their businesses off the ground,” said CEO Marquita Russel of the New Mexico Finance Authority.

The program will be issuing loans up to $250,000 to cannabis microbusinesses. Authorities say they expect the average awarded loan will likely be around $100,000. Loan terms will go up to five years, and interest rates will vary between two and three percent.

“The Cannabis Control Division, throughout our ongoing open and transparent rulemaking process, has listened to and really heard concerns that it’s hard for microbusinesses to access the capital needed to start a successful business,” said Regulation and Licensing Department (RLD) Superintendent Linda Trujillo. “This Administration is committed to creating a thriving cannabis industry that incorporates New Mexico’s values of social equity and fairness. We are grateful to be able to work with the New Mexico Finance Authority to put forward this loan program to make good on our commitment to social equity in this exciting new industry.”

The microbusiness model is still going through some growing pains, and it’s likely that unforeseen problems will reveal themselves as states continue to iron out the kinks. But at the moment, it seems to be the most promising path to address the detrimental effects that the War on Some Drugs has had on certain groups of people. The simple step of giving small business owners the tools and support needed to enter this budding industry might go a long way in repairing damage that decades of prohibition have wrought on entire swaths of the population.


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