The social equity cannabis scam that's hosing dark market dealers

The social equity cannabis scam that's hosing dark market dealers

VicesAugust 31, 2018 By Reilly Capps

Cannabis rule-breakers are being broken.

During prohibition, dark market cannabis dealers and growers were the mules of the world. Now, in Los Angeles, these folks are being taken advantage of by a new breed of drug dealers — ganjapreneurs.

Two lawyers familiar with the "scam" told Rooster that it works like this:

California just legalized adult-use cannabis. And several cities, from Long Beach to Sacramento, decided to honor the dark market drug dealers by putting them first in line for permits.

In Los Angeles, for example, anyone with a drug conviction who is also low income gets dibs on the right to grow or wholesale cannabis. This is called "social equity."  

Of course, this isn't easy: skint convicts can't fund big grows. 

So these dudes are often "partnering" with more savvy investors and business people. The low-income dudes bring the "social equity" and the high-earners bring the actual equity.

But "partnering" should be in quotes.

Because what's often happening in Los Angeles is that, even though the strugglers own 51 percent of the business on paper, the baller "partners" are the ones actually in charge, Hilary Bricken, a Los Angeles-based weed lawyer says.

Sometimes, there are handshake side-deals in which the strugglers promise to sell their share later, after the permits come through, for way less than it's really worth. Bricken calls these deals "Show Me the Money."

These busted slingers are often fine with this deal, Bricken adds. She's heard people who qualify for "social equity" openly tell her, "I'm willing to sell myself, if they'll pay me." She's heard of deals — in a similar program called "tier 3" — where the low-off homie will get just $50 bucks a month for his participation.

"They've got the social equity applicant by the neck," Bricken says.

[Los Angeles cannabis lawyer Hilary Bricken. Courtesy photo.]

There are even "brokers" in L.A. who link up eager, rich businessmen with the busted plugs, Bricken reports, often real estate agents or lawyers who throw soirees for the two social classes to meet up and do deals. The "brokers" take a cut of the deal.

"The city just doesn't have the time or the money" to police the deals, says Bricken, who first wrote about these scams on Canna Law Blog. 

This is just the way of the world; cash rules everything. But if you loved cannabis back in the day, you owe a lot to the outlaws of OG, the rebels or reefer, the sherpas of swag, who made mini cheddar to sling a schedule one.

So now that the opportunity for big, legit bucks in legal weed is dawning in Cali, these rule-breakers were supposed to get a break.

And while some of these deals are legit, and the dark-market dudes might see some real ownership in the legal cannabis market, of the dozen or so "deals" Bricken has seen, she doesn't expect any of them to truly work out.

[cover photo taylor_steez via Instagram]