New cannabis consumption lounges are coming to Nevada.

When and what efforts exist to make the industry more socially equitable?

That's this week on Nevada Week.

♪♪♪ Support for Nevada Week is provided by Senator William H. Hernstadt and additional supporting sponsors.

-Welcome to Nevada Week.

I'm Amber Renee Dixon.

Recreational marijuana has been legal in Nevada since 2017; yet right now there is only one place where you can legally use it in public in Las Vegas, and that's NuWu Cannabis Marketplace because it's on tribal land and owned and operated by the Las Vegas Paiute Tribe.

However, the Nevada Cannabis Compliance Board has created a path for more cannabis consumption lounges to open.

Similar to bars that serve alcohol, cannabis consumption lounges will serve marijuana, and the Compliance Board says some lounges may be able to open before the end of this year.

That Board says it estimates issuing around 40 to 45 licenses for lounges that are associated with dispensaries and 20 licenses for lounges independent from dispensaries.

Of those 20 licenses, 10 must be given to social equity applicants which the Board defines as someone who lives in a disadvantaged area based off socioeconomic levels and incarceration rates and someone who has been convicted of a nonviolent cannabis offense or who has an immediate family member who has been convicted of a nonviolent cannabis offense.

We will dive deeper into the social equity aspect ahead; but first, a look at how equitable Nevada's cannabis industry currently is.

According to a 2022 Nevada Cannabis Compliance Board demographic study, the majority, 69% of cannabis industry executives in Nevada are male.

Also 57% identified as White, 9% as Hispanic, and 6% as Black.

The Compliance Board defines industry executives as board members, officers, or owners like Kema Ogden.

She co-owns Top Notch The Health Center in Las Vegas and is the only African American woman to own a dispensary in the state.

How were you able to defy that trend in ownership?

-(Kema Ogden) You have to be aggressive.

You have to push the door open.

You have to demand to have a seat at the table.

You have to know what you're getting into, do a lot of research, and be well prepared for this.

-What has your experience been like in an industry where executives like yourself are mostly White and male?

-You know, people who own companies like this, a lot of times they want to do business together.

So it's very difficult because, one, they automatically don't look at you and think you know as much as they do.

-Why, in your opinion, are there so few minorities in executive roles in the cannabis industry?

-I think it's just a reflection of corporate America in the United States.

Unfortunately, we don't have the money; we don't have the resources, and lenders don't loan minorities or women money like they do White males.

Access to capital, access to resource, people believing in you, stereotypes, all these things play a role and the challenges that we have to overcome.

-Ogden is also part of the Cannabis Advisory Commission that recommended the State set aside a certain number of cannabis consumption lounge licenses for social equity applicants.

And here now to discuss that further are Tyler Klimas, Executive Director of the Nevada Cannabis Compliance Board; A'Esha Goins, Chair of the Advisory Commission's Social Equity, Diversity, and Inclusion Subcommittee; Tina Ulman, President of the Las Vegas-based Chamber of Cannabis; and Judah Zakalik, co-owner of Zion Gardens, a local growth facility.

Thank you all for being here.

Would anybody like to add to Kema Ogden's answer as to why there are so few minorities in leadership and ownership positions in Nevada's cannabis industry?

-(A'Esha Goins)I think that Kema talked a lot about why there aren't enough diversity and ownership, but I think it's important to talk about why there isn't enough diversity in leadership.

And I think that really just comes from the industry is still new and it's still green, and business owners haven't hard identified the skill set that they're looking for to fill in those leadership positions.

So what they've been doing is elevating from having entry level and then elevating them up.

But that does a disservice to the industry as a whole, not identifying hard what the skill set is because it makes recruiting difficult.

And so I think the sooner we lean into doing business as corporate business and really identifying those skill sets, we'll have a better area of diversity and leadership.

-Is there perhaps something you'd like to add?

-(Judah Zakalik) I would agree with those points.

But also, generally, what we've seen in the United States and, I think, just socially is that people will hire people that remind them of themselves or they have some kind of commonality with.

So if we have affluent White males in the mainstay of ownership, then they're going to look for people that they can identify with or have some kind of commonality with.

And that's one of the issues too.

So it stems from the ownership and then goes down to the executives in the C-suite, and that's why we have to increase diversity in ownership.

-(Tina Ulman) And when you look at the diverse owners, like GFIVE, like Top Notch, you see a much more diverse executive and leadership team.

So it just goes hand in hand with who's at the top.

-Talking about this in corporate America, 8.8% of Fortune 500 CEOs this year are female.

Only 1% are African American.

So this is an issue throughout corporate America.

But why, Tyler, has the State chosen to focus on the cannabis industry?

-(Tyler Klimas) Well, the cannabis industry being new.

And then we'll talk a little bit about consumption lounge licenses, which will be the first new license within the cannabis industry and certainly the first licensing round since 2018.

So this provides us an opportunity to reach in there and force some of these pathways to bring in greater diversity.

You know, when medical cannabis was legalized in Nevada, there were barriers of entry.

To start with, there was a high capital cost to get in.

There was a lot of unknowns; we didn't know what the pathway was for legal cannabis.

And so a lot of money upfront to run the business, a lot of unknowns; but since then, there's never been an opportunity to bring in new diverse ownerships through licensing rounds.

And so of course, we can't work on diversity if we don't have the mechanism to bring in new diverse ownership.

So consumption lounges really provides a pathway here that we can get in there and ensure that we start to bring in more diverse individuals and try to get a more inclusive industry.

-This is the first time that the State has actually been able to take steps like that.

Judah, you have experience outside of Nevada within the cannabis industry.

Is equity an issue in other states, or is it just a Nevada cannabis industry issue?

-No.

It's an issue in every state, I would say.

I think Nevada is maybe catching up a little bit because we were a trailblazer in the industry, and now we have a look at what we can do better to increase diversity.

But I'm also an applicant in Florida with a Pigford applicant, which is a farmer that was not allowed financing back in the 70s and 80s.

And so they have, actually, a class for that from a litigant's standpoint.

And then I'm also a licensee in Illinois.

And Illinois had a whole social equity applicant set aside essentially for not only craft grows, but dispensaries.

-"Trailblazer," you would say Nevada was.

How?

-Yeah.

Well, we're one of the first states to get into the industry.

And with that is a lot of growing pains.

We put forth a lot of great regulations, and I think a lot of states have copied that.

But now we see them innovating a little bit quicker than we have because they got to learn from our mistakes.

And so now we can learn from them to see what we can do here and perhaps even better, and I know we will do better.

-A'Esha, why is equity especially important within the cannabis industry in your opinion?

-In my opinion, I think what we neglect to look at is the trauma that has been induced on a generation of people, right?

So to this day, right now, the ACLU has a study that right now, Black and Mexicans- Because it says Mexicans and indigenous people are still three times more likely to be stopped for possession of cannabis.

I have a member of CEIC that has just recently been picked up for possession for under an ounce.

And so I think when we're talking about cannabis specifically, we don't take into account that just eight years ago, it was illegal and they were locking and still are locking up people of color; and now there is a whole person that has whitewashed the word, because we've even went from "marijuana" to "cannabis," and now it's okay to make money off of.

-Can you explain that further?

Why were certain demographics impacted more than-- more than others for the war on drugs?

-Yeah.

Because of the war-- The war on drugs was really a war on people, right?

And what it was, was an initiator to lock up people of color.

You know, it gives me great disdain to even talk about it because I'll always feel like I'm trying to justify the importance of a body of people, their importance of having to be in this industry or being given the option to be in this industry.

But the reality of it is, is we should not be making millions of dollars and just completely wipe away what happened to a generation of people-- generations of people, because it's been thirty-something years, so-- -And you get worked up about it.

-I do get a little worked up (laughing).

-But is it necessary that you continue to repeat this message?

How well understood do you think that aspect of this social equity applicant process is?

Who would like to add-- -The aspect of the gentrification of the industry?

-Yes.

-I don't think it's well understood that it's-- -And so the need for-- -Yeah.

- --A'Esha to talk about it is a big.

-It is a great need, and people of color are still being targeted.

And that hasn't changed.

And so I think we need to change a lot of the stigma.

Like I deal with a lot of owners in the industry, and even them, even a lot of them or some of them, I should say, still look down on people that consume cannabis, right?

So they're in the industry, but there's a certain stigma already tied to them, and it could be tied to racial undertones which, you know, is understood in this country.

-And I also think there's this mindset of the difference of social equity.

And then relates to cannabis, specifically, we're talking about those persons impacted by the war on drugs, right, versus diversity in corporate business as a whole.

They're not the same.

And so when we're dialoguing conversation that, yes, the industry should be more diverse, I don't disagree; I believe it should be more diverse.

I'm a woman and I'm Black, right?

But I also think that we are taking that conversation and making it be all-encompassing because that's what America would like for us to do.

But this specific thing is not the same.

This specific thing caused trauma, and now people are making million dollars off of it, millions of dollars.

Now, this isn't saying that everyone is making millions of dollars, because I agree with Judah.

I know people who have lost their shirts.

What I am saying is this has been okayed, taxes are being made, the state is profiting from it, and yet we are still right now locking up not just adults, but youth based on marijuana.

-Tina, was there something you wanted to add?

-Yes.

When you have predominantly affluent White owners and this doesn't affect them or their families, it's kind of just, Look the other way, right?

Well, that doesn't affect me, so I don't necessarily need to focus on it; I got my license, I've got my capital, I've got my building, I've got my goals, I've got my business plan.

And maybe, maybe sometimes people throw a little bit of money at an organization that's helping, to think that they've done their due diligence and my work is done here, and that's not good enough.

And if it wasn't for activists and organizations like A'Esha and CEIC, M4MM shining a light on this issue, it would just be swept under the rug, and everyone would think everything's hunky dory because we can legally purchase weed and we're all having a good time, but that's not the case.

And we're here to talk about today that it shouldn't be swept under the rug, people should have an opportunity, and we should continue to grow a pipeline of leaders and do right by people that were affected by the war on drugs.

-Tyler, the Nevada Cannabis Compliance Board, what has the Board done to ensure that social equity applicants can actually have ownership in these cannabis consumption lounges.

-So social equity was always something that was envisioned at the start of the CCB.

It wasn't something that was always talked about at the start of the industry, and we talked a little bit about that.

Very similar to the other states that started first, like Colorado or Washington or Oregon, it just wasn't something that was discussed and should have been.

So we have the challenge of trying to reach back into an already established market and force that change, as opposed to some other states that are coming online now which get to kind of build that into their programs.

So it's an extra challenge for us.

But with the creation of the Cannabis Compliance Board, the public policy that the legislature laid out was to place an emphasis on making a more inclusive industry.

Then with consumption lounges, Assemblyman Steve Yeager's bill which Tina and the Chamber played a big role in, that forced and particularly or specifically carved out social equity licenses to be issued for the first time.

And so there's no-- There's no choice.

This is the legislature and the governor and the State recognizing that we must give licenses and do our best to take those first steps to create a more inclusive industry.

-So according to the 2021 Small Business Credit Survey, Black-owned firms that applied for traditional forms of financing were least likely to receive all of the financing that they sought, followed by Hispanic-owned firms, Asian-owned firms, and then White-owned firms.

So what has the State done to address the financial aspect of getting into this business?

-I think, and I hope that we talk a little bit about that today, because it should be well known that just issuing a paper license is not going to solve the issues of social equity and diversity in this industry.

I mean, what it's going to take are wraparound services, grant programs, local jurisdictions helping out some of those applicants.

I mean, this is a long-term project.

Issuing these licenses is a great first step, and it's a very important significant one; but just because you get a license doesn't mean you have the money to open the business, the acumen that you need to obtain very quickly to make it a successful business.

And so it's really going to take a community and a state.

There's a collective responsibility, which will be needed if these individuals and these applicants are truly going to succeed.

-Excuse me.

I think the obstacle that we need to highlight is, all of this is a policy issue, right?

So although the CCB, and I really respect Director Klimas specifically because he has really been moving the ship forward to, This is the agenda; equity is the agenda.

And so he's been really constant in that.

But a lot of this, his hands are tied because it is a policy issue.

And if we're not creating creative policy to ensure that we have those things and the legislators aren't intentional about ensuring that we have the finances and we have the wraparound services, then it still won't happen because there's only so much the CCB has been given the power to do.

-Because, Tyler, it almost sounds like you may anticipate getting--issuing licenses, and these businesses might not be successful.

-Yeah.

I mean, the industry itself, social equity and other, is a very difficult business.

I mean, running a business in general is very difficult, right?

And our job is, as a regulator, is not to make sure everybody turns a profit, right?

That's not the role of a regulatory agency; it's to create a framework that allows both of those things to happen, some to succeed, and some to fail.

However, when you're talking about a new applicant that's trying to compete now with people that have been in the industry and licenses that have been in the industry, I mean, they're already starting at a disadvantage, and that's social equity or otherwise.

So again, it's going to take additional resources outside of just issuing a license to really ensure there's a pathway for these individuals to succeed.

-The real work will begin once they get the license.

That's the tough part.

And I can say that as a licensee.

The uphill battle, the green tax that we all feel as operators, which is essentially I tell someone that I'm in the cannabis industry, the price goes double or triple for whatever I'm doing.

Dealing with a highly compliant industry-- I'm also a lawyer by law, and that pales in comparison to dealing in the cannabis industry.

I think that bringing in these new social equity applicants for lounges is very important, but that's also an untested license.

We don't know if the lounges are going to do well, right?

We haven't tested it.

We know what dispensaries did.

We know what cultivations did, but lounges is a whole new gambit.

And to then not only have to deal with the compliance in the cannabis industry, but also if you're serving food, dealing with food services, dealing with OSHA, these people coming into this license are going to get a crash test in what it is to be a successful entrepreneur in a highly compliant business.

-I talked about access to traditional financing.

Can industries within the cannabis industry-- Can businesses in cannabis get traditional financing since it is still illegal Federally?

Where are they?

You say no.

Tina, you're shaking your head no.

-No.

-So where do people get financing?

-Through rich friends.

And if you don't have rich friends, you're gonna have to do a capital raise.

And that really prevents, you know, people that are working class people that want to open a business.

But we can look to other states, like New York, like Oakland Social Equity Program, and they have taken some of their tax money and put it into a fund so that social equity applicants can actually get capital.

We have not done that.

We have chosen to take all of our tax dollars and put them into the schools.

And I definitely hope that's something that changes this legislative session because even though the schools are important, there's a grip of other issues--social equity, addiction--that we could be spending our tax dollars on.

So unfortunately that, and like I said, raising your own capital but not being able to write off items because of 280E, no cannabis got small business loans or PPE loans while everyone else was just cashing in.

And the crazy thing about it is so many more people in the state of Nevada used cannabis during the pandemic when we were on lockdown.

Governor Sisolak did say that cannabis is essential.

And we have seen people benefit from it, but unfortunately, there is no banking and no funding at this time.

-What are other policy changes needed at the Federal and State level for the industry to succeed?

-I hate to keep leaning in.

But because this is my heart, cannabis the business, the industry-- I was a pioneer in the industry; we opened up one of the first dispensaries here in the industry.

I worked for the first Black-owned, the only right now Black-owned, Black-funded dispensary.

So I've been in this industry since the onset, and what I will say is, because we have to keep being creative with licensing, that's the only way.

And also the tax dollars, which I don't know if, I gotta be honest, I don't know if anyone is interested if there ever is an appetite to, as Tina has said, carve out dollars from the tax revenue for it to go to any of these services.

New York has a fund.

It's called the Community Reinvestment Fund.

Ironically, I have a Community Reinvestment Fund.

But unless we are strategically thinking about where we don't have licensing now, looking consistently overall arching what is available, where the misses are, there just won't be any true pathways to the industry for the social equity applicants.

I really, you know-- The consumption lounge, to Judah's point, the consumption lounge, I don't believe that is the place for social equity.

Now, I respect that the designation for social equity had to start.

And I really appreciate the Chamber bringing that bill in, and I was only concerned about the social equity component.

CEIC, that was the only place we leaned into because we knew once that designation happened, that it would be the bridge for all the rest of the policy coming in.

But that's all there is right now.

-Why don't you think-- It sounds like you're saying you don't believe in it being quite effective.

-I believe that-- -The pathway to ownership.

-The pathway to ownership.

I don't-- I am always an apologizer for Nevada legislation.

I appreciate their hard work, but because it is tied to the consumption lounge, it's not a true pathway.

As Judah has pointed out, there's just too many obstacles in place for someone to actually have that license be beneficial or create generational wealth, because that's what we really should be thinking about.

And they'll be in debt.

We're giving them a license that will already put them in debt to a point that they can't stand right now.

Right?

So we're asking them to go further in debt into a space where there's nothing to undergird them.

-Judah, any ideas for practical pathways to ownership?

-Great ideas.

I hope for great ideas; I'm not gonna overspeak, but on the state level, and I'm not sure this can be done or how the pathway would work, but if the State could have some kind of incentives for or provide some kind of incentives for companies that are already existing--whether they're dispensaries, cultivation--to bring in diverse ownership -- like perhaps there's a tax break for that or there's some kind of credit or whatever it may be -- to incentivize on a money level, actually bringing in diversity and ownership, I think that's very important.

I think that would resolve a lot of these issues.

On the state level, that's what I see.

I think there also needs to be mentorship programs, where people who've already been in the industry can come in and deal with some of these new lounge owners and talk to them about, This is how we can kind of navigate this, get some ideas, practical experience.

On a Federal level, I think we have the issue of taxation without representation.

I have to pay my IRS income taxes.

I don't get any deductions except cost of goods sold.

I get no banking.

I get no support from the Federal government.

And that's essentially why we had the Tea Party to begin with.

So we're seeing that same kind of thing now in the cannabis industry.

Can we all agree that consumption lounges for cannabis are needed in Nevada?

-Absolutely yes.

-Tina, you had spoken with me earlier about it.

What is the need?

-Yes.

Well, first and foremost, to make sure that people aren't being criminalized for consuming cannabis.

We just celebrated five years.

-In public?

-In public, yeah.

We just celebrated five years of legal cannabis sales.

And unfortunately when Questioned 2 passed, there was a little bit of irresponsible capitalism behind that, because there was nowhere people can consume and not be criminalized.

And we have millions of tourists coming here every year, but we also have millions of Nevadans who are in favor of cannabis and consume cannabis.

So we need to give somewhere people that they can consume.

This also opens up a whole new place for entrepreneurs.

So it was very important in the bill that we had different ways that people could bring in revenue besides just cannabis, like food and beverage, non alcoholic beverage, different events.

So really, if you think of any successful business right now, think of your favorite restaurant--I'm a big fan of Tacotarian downtown in the Arts District--and add cannabis to that, right?

And that's really how people, if they come into the consumption lounge opportunity as an entrepreneur, then we're going to see some very creative and innovative businesses that Las Vegas does so well.

-And last question, Tyler.

How soon could we see some opening?

And how many do you anticipate early on?

-So it's been a long process, a very comprehensive process.

It's been 11 months since that bill passed.

We've had over 15 public meetings with subcommittees.

A'Esha runs a subcommittee that Tina is also on.

And so a ton of input-- A ton of public input have gone into this process.

Leading up to this point, the regulations are now passed.

So now we'll look to do some public information campaigns to make sure everybody's clear on how to apply; everybody has the same information and the same chance to apply.

And once that happens, we'll notice the licensing round likely in mid- to late fall.

And depending how close some facilities are to building out their spaces, they could open by the end of the year, but we'll likely see him start coming up throughout next year.

-Thank you all so much for being here.

And thank you from wherever you are watching.

For any of the resources discussed on Nevada Week, including a link to cannabis consumption lounge rules, go to our website, vegaspbs.org.

You can also follow us on Facebook and Twitter @VegasPBS.

♪♪♪