Economy

OSLO (Reuters) – Norway’s central bank kept its benchmark interest rate unchanged at 4.50% on Thursday, as unanimously expected by analysts, and said the cost of borrowing would likely stay at that level “for some time ahead”.The prospects for the Norwegian economy did not appear to have changed materially since December, Norges Bank’s monetary policy committee said in a statement, while adding it would take time before the full effects of previous rate hikes are seen.”The committee assesses that the policy rate is now sufficiently high to return inflation to target within a reasonable time horizon,” Norges Bank Governor Ida Wolden Bache said.The Norwegian crown strengthened to 11.34 against the euro at 1013 GMT, from 11.38 just before the announcement.The central bank in December raised the benchmark rate in a surprise decision even as inflation had come off earlier highs, aiming to stamp out price pressures and shore up the currency.”Monetary policy is having a tightening effect, and the economy is cooling down,” Norges Bank said on Thursday.”At the same time, business costs have increased considerably in recent years, and continued high wage growth and the crown depreciation through 2023 will likely restrain disinflation,” it added.Norway’s core inflation stood at 5.5% year-on-year in December, a 15-month low, down from a record 7.0% last June but still exceeding the central bank’s goal of 2.0%.The central bank did not provide fresh economic forecasts or a new forward rate curve. Those are due to be updated when the next policy decision is announced on March 21.While Norges Bank has kept the door ajar to a potential future rate hike, its main scenario as communicated last month is for rates to start falling towards the end of 2024 as inflation subsides.The central bank’s December forecast had indicated that an initial rate cut would come in the autumn of 2024, but also left open the possibility of different outcomes, Bache said on Thursday.”If cost inflation remains elevated, or the crown depreciates again, inflation may remain high for longer than previously projected. In that case, the committee is prepared to raise the policy rate again,” Bache told a press conference.”If there is a more pronounced slowdown in the Norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier than envisaged in December,” she added.A majority of economists participating in the Reuters poll predicted there would be one rate cut in the July-September quarter of 2024 and another one in the final three months, each by 25 basis points, bring the benchmark rate to 4.0% at the end of the year.Money market rates, meanwhile, indicated that Norges Bank will deliver four rate cuts this year, but this is likely to prove incorrect, Nordea Markets wrote in a note to clients, adding that a first reduction would come only in September. More

BUDAPEST (Reuters) – Hungary’s central bank on Thursday criticised a government proposal to replace interbank rates with Treasury bill yields as the main, much lower reference rate for loans as “misguided”, saying it would reduce the scope for policy manoeuvre.On Monday government officials proposed applying Treasury bill yields as the benchmark lending rate for corporate loans to cut borrowing costs as part of Prime Minister Viktor Orban’s efforts to revive Hungary’s economy.A surge in inflation last year to 25%, the highest in the European Union, pushed Hungary’s economy into recession and while growth is expected to resume in 2024, a Reuters poll last month suggested it would miss the government’s 3.6% forecast.”Such misguided measures and ad hoc ideas — such as the current plan to replace BUBOR — only harmfully narrow the room for manoeuvre in economic policy and complicate the achievement of longer-term objectives,” the bank said.The bank’s press office did not immediately respond to emailed questions about whether this remark and the market’s reaction to the government’s plan meant a lower likelihood of the bank lowering its base rate by 100 bps next Tuesday.The forint gained 0.5%, rebounding from three-month lows hit earlier this week on the proposal and also on the prospects for the central bank accelerating the pace of rate cuts next week.Orban’s government, which faces European and local elections this year, has been calling on the central bank, which has cut interest rates by a combined 725 basis points (bps) since May, to do more to help the economy.The government, which has a long track record of tax changes and other measures hitting the bank sector, believes the proposed reforms to the benchmark lending rate will boost investment and economic growth.The central bank, however, said the proposal could backfire in various ways, such as by making banks interested in pushing up Treasury bill yields. It said comments by S&P Global, first reported by Reuters, signalled possible risks to Hungary’s credit rating.S&P Global Financial Institutions analyst Lukas Freund told Reuters the proposal represented another example of Budapest’s unconventional policy, which aimed to boost the economy, but posed a risk to the financial sector. More

NEW DELHI (Reuters) – India’s federal government may keep its gross market borrowing for 2024/25 close to this fiscal year’s level, according to two government sources, as it looks to rein in its borrowings that have more than doubled, mainly due to pandemic spending.India may peg its gross market borrowing for next fiscal year at between 15 trillion rupees ($180.47 billion) and 15.5 trillion rupees, when Finance Minister Nirmala Sitharaman presents the federal budget on Feb. 1, the two officials aware of the development told Reuters.That is close to its 15.43 trillion rupees target for the current fiscal year that ends on March 31. Of that, the government has raised about 14.08 trillion rupees, or about 91%, as of Jan. 22.But that is already roughly double its gross market borrowings of 7.1 trillion rupees in 2019/20, just before the COVID-19 pandemic. “The government is serious about reducing its market borrowings this fiscal year,” one of the officials said.Both the officials did not want to be named as they are not allowed to speak to the media about budget plans, which are in the final leg of discussions before they are unveiled next week.The likely gross borrowing figures are also close to economists’ estimate of 15.6 trillion rupees, according to a Reuters poll.Despite being an election year where Prime Minister Narendra Modi is bidding for a rare third straight term in power, the government is likely to rein in its fiscal deficit by at least 50 basis points by capping its spending on welfare schemes and subsidies.The Reuters poll also showed economists expect the government to reduce its fiscal deficit to 5.3% of gross domestic output in 2024/25, from 5.9% this year.India’s finance ministry did not immediately reply to an email and a message seeking comments. ($1 = 83.1180 Indian rupees) More

1. Futures subdued with data, earnings in focusU.S. stock futures hovered broadly around the flatline on Thursday, as investors awaited the release of key economic data and gauged a bevy of quarterly corporate results (see below).By 05:00 ET (10:00 GMT), the S&P 500 futures contract had added 5 points or 0.1%, Nasdaq 100 futures were mostly unchanged, and Dow futures had inched up by 104 points or 0.3%.The benchmark S&P 500 extended a recent rally on Wednesday, increasing by 0.1% to its fourth straight record close. Boosting the index were shares in Netflix (NASDAQ:NFLX), which surged after the streaming giant reported subscriber growth that smashed Wall Street expectations.Solid results from Dutch chipmaking equipment manufacturer ASML (AS:ASML) also fueled an uptick in semiconductor stocks, providing some lift to the tech-heavy Nasdaq Composite. The 30-stock Dow Jones Industrial Average, meanwhile, dipped by about 0.3%.2. U.S. GDP aheadTraders will likely be paying close attention to the release of the key first reading of U.S. growth data for the fourth quarter, which could be an indicator of the health of the world’s largest economy.Economists are predicting that real gross domestic product (GDP) in the U.S. grew at a 2.0% annual rate in the final three months of last year, slowing from 4.9% in the third quarter.Markets are hunting for any signs of the impact of a period of elevated interest rates on wider activity. A recent uptick in stocks has been partly fueled by hopes that the U.S. may be on course for a so-called “soft landing”, in which the Federal Reserve’s monetary policy tightening campaign successfully cools inflation without sparking a steep economic downturn.Fed officials have moved to temper this optimism, suggesting that while such a scenario is becoming increasingly more conceivable, it is not yet an inevitability. The GDP figure may factor into how this outlook, although analysts at ING argued that the publication of the Fed’s preferred measure of price growth on Friday will be “far more important” for rate-setters.While the Fed is widely tipped to keep borrowing costs on hold at more than two-decade highs of 5.25% to 5.50% at its next meeting later this month, the outcome of this week’s data could determine how policymakers approach potential rate cuts this year.3. Tesla flags sales slowdownElon Musk’s Tesla has warned that it expects to see “notably lower” sales growth in 2024 versus the prior year, as the electric vehicle giant faces intensifying competition and stalling demand from cost-conscious carbuyers.In a presentation to shareholders, the company said it is currently “between” an initial growth wave sparked by the popularity of its Models 3 and Y, and a second that it believes will be initiated by a lower-cost, next-generation offering. Musk told analysts in a post-earnings call that the car is slated to begin production in the second half of 2025, adding that it will feature “revolutionary manufacturing technology.”Musk also flagged that margins “will be good” if interest rates come down quickly and “won’t be that good” if they do not. “[W]e don’t have a crystal ball, so it’s difficult for us to predict this with precision,” he noted.Tesla’s stock price slipped in premarket U.S. trading on Thursday. Shares in major Chinese EV makers also fell after Musk warned that these groups would “demolish” their foreign rivals without trade barriers, feeding concerns over eventual export restrictions on the sector.Tesla’s announcement comes as several other big-name U.S. businesses are due to unveil their latest quarterly earnings. On Thursday, carriers American Airlines (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) are set to report before the bell, while payments firm Visa (NYSE:V) and chipmaker Intel (NASDAQ:INTC) will post results after markets close in New York.4. FAA halts Boeing 737 MAX expansionThe U.S. aviation regulator has said that it will not let Boeing expand production of its 737 MAX jet, in the latest blow to the planemaker following a dangerous mid-air breach on its MAX 9 model earlier this month.Shares in Boeing inched down premarket on Thursday.The Federal Aviation Administration said in a statement that the move, which will halt the expanding of output of one of Boeing’s most popular line of planes, is needed to “ensure accountability and full compliance” by the company with quality control procedures. Fresh concerns have arisen around the safety of Boeing’s planes after a non-fatal fuselage blowout on a MAX 9 operated by Alaska Airlines on Jan. 9.It was still unclear how the FAA’s decision would hit Boeing’s production plans or its finances. The MAX fleet includes the MAX 8, a key source of revenue for Boeing.However, the FAA gave the green light for MAX 9 jets to return to skies once they have passed safety inspections.”The exhaustive, enhanced review our team completed after several weeks of information gathering gives me and the FAA confidence to proceed to the inspection and maintenance phase,” said FAA Administrator Mike Whitaker in a statement.5. Crude rises after U.S. inventories drawOil prices climbed higher Thursday, boosted by U.S. crude inventories falling more than expected last week as well as stimulus measures from top importer China.By 05:00 ET, the U.S. crude futures traded 1.57% higher at $76.22 a barrel, while the Brent contract climbed 1.3% to $81.11 per barrel, trading once more above the widely-watched $80 a barrel level.U.S. crude stockpiles tumbled by a hefty 9.2 million barrels last week, according to the Energy Information Administration, but this figure was impacted by the harsh winter weather which shut in refineries and kept motorists off the road.Output of U.S. crude fell from a record 13.3 million barrels per day two weeks ago to a five-month low of 12.3 barrels per day last week.Elsewhere, the People’s Bank of China on Wednesday unexpectedly cut reserve requirements for local banks, freeing up more liquidity in another attempt to foster economic growth in the world’s largest oil importer.Upgrade your investing with our groundbreaking, AI-powered InvestingPro+ stock picks. 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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.It’s 2021 again. We have rising Covid cases, poor prospects for British athletes at the Olympics, and a public fight about transitory inflation. Back then, the argument made by “team transitory” economists (and Jay Powell, for a while) was that price pressures were mostly attributable to lockdowns, jams in supply chains and Russia’s war in Ukraine. But inflation picked up pace and prices rose in an increasing number of sectors, even as economies reopened. The Fed abandoned “transitory” and started raising interest rates. By the time CPI passed 9 per cent in 2022, the argument seemed dead. But the dramatic drop in inflation in the last year, without a commensurate increase in unemployment, has revived the fight. Joseph Stiglitz, the Nobel-prize-winning economist, in November published “A Victory Lap for the Transitory Inflation Team”, which does what the headline promises. He says the “self-correcting” trajectory of car and house prices shows that inflation was transitory all along. The problem was one of supply — not enough cars, for example — rather than too much demand from consumers with more to spend thanks to post-Covid economic recovery programmes. The implication is that the Fed’s enormous interest rate increases are not primarily responsible for the slowdown in inflation in 2023. “What role did the US Federal Reserve play in all this? Given that its interest-rate hikes did not help resolve the chip shortages, it cannot take any credit for the disinflation in car prices. Worse, the rate hikes probably slowed the disinflation in housing prices. Not only do significantly higher rates inhibit construction; but they also make mortgages more expensive, thus forcing more people to rent instead of buy. And if there are more people in the market for rentals, rental prices — a core component in the consumer price index — will increase,” says Stiglitz.The stakes of this argument are higher than in an ordinary spat among macroeconomists. If the Fed’s hikes were not responsible for bringing down inflation, the bank can cut interest rates whenever it likes without threatening an acceleration. That’s the view of Ajay Rajadhyaksha, FT Alphaville contributor and global chair of research at Barclays:It is not clear to me that it was rate hikes that ultimately brought inflation down. Very thoughtful economists said that unemployment had to rise dramatically to bring inflation down — and it hasn’t. We are back down to near 2 per cent inflation, but the labour market hasn’t slowed. There’s an argument that “team transitory” was right all along — though it took longer than expected,The continued strength of the labour market is the key point here. Economists including Larry Summers, Jason Furman and Laurence Ball argued that unemployment was going to have to rise dramatically for the Fed to bring inflation down. These arguments are rooted in the concept of the Phillips curve, which maintains that unemployment and inflation have an inverse relationship. The Fed’s preferred gauge of inflation — the core personal consumption expenditures index — today stands at 3.2 per cent, having fallen from a peak of 5.6 per cent in early 2022. Over that same period, unemployment has been virtually flat, moving from 3.8 per cent in February 2022 to 3.7 per cent today. Without mass lay-offs, it’s harder to argue that inflation was a demand-side problem, one in which Americans had too much cash on hand. Inflation has come down despite the fact that unemployment remains low and wage growth has been strong. The changes in demand haven’t been big enough to explain the change in inflation. Claudia Sahm, former Fed economist and originator of the “Sahm rule” recession indicator, has been a member of “team transitory” from the start. The steady rate of US unemployment proves inflation was a supply, not demand, issue, she says. “If this was all about demand, we would be in trouble. We would be in a situation more like the 1970s. The fact we had inflation come down so much, and unemployment not rise too much, meant we didn’t need a recession to get inflation down. If inflation had been driven by demand, we would have needed a recession to get inflation down,” said Sahm.  The Fed does not yet seem convinced by these arguments. Governor Christopher Waller last week said “Well, if these are temporary supply shocks, when they unwind, the price level should go back to where it was. It’s not. Go to Fred. Pull up CPI. Take the log. Look at that thing. The [price level] is permanently higher. That doesn’t happen with supply shocks. That comes from demand. And this was a permanent increase in demand and permanent increase in debt.”That’s not exactly true. Inflation has been frustratingly persistent in some parts of the economy, like core services, a category that includes rent. But prices for core goods — a category that includes used cars — had been slowing for much of last year, with some prices even declining. There was a surprise uptick in core goods in December, however, which would be worrisome if it continues. Other counterarguments to team transitory are that the Fed’s interest rate cuts kept market expectations of inflation lower. That may be true, but it is hard to know how much market expectations of inflation actually feed through to the real economy. The fight is expected to rage on: it’s impossible to know what would have happened if the Fed had not raised interest rates. The only real way to get an answer would be to cut rates, a little (as a treat), and watch the reaction in inflation data. There’s the added benefit that cutting early would prevent the lay-offs and economic crunch that become more likely the longer that interest rates are high. But the Fed’s not known for taking preventive action. Nor is it known for making decisions to settle fights between economists.  More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Joe Biden will go into November’s US presidential election touting his lavish spending on the green transition — and his interventionist industrial policy more generally — as one of his great achievements. He also wants to export it to the rest of the world. Jake Sullivan, head of the White House National Security Council, said last year: “We will unapologetically pursue our industrial strategy at home, but we are unambiguously committed to not leaving our friends behind. We want them to join us. In fact, we need them to join us.”In reality, Sullivan might have to resign himself to the administration going it alone. When your economic interventionism involves fiscal largesse other big economies can only dream of affording and protects US industry with trade barriers other governments find unpalatable, it’s tricky to see how you can assemble a gang of like-minded countries.Biden has shielded US steel producers from import competition — though with nothing like the sweeping tariffs imposed by Donald Trump — and tried to build a US semiconductor industry through the Chips Act. But his centrepiece is the Inflation Reduction Act, which includes a massive programme of federal spending and open-ended tax credits aimed at creating domestic green production to service the American market.The cost of the IRA’s spending elements for climate and energy was originally estimated at $385bn over 10 years, but projections made last spring suggested it had risen to about $1tn. Some estimates show that by the time the programmes have achieved their environmental targets, their cost could be nearly $3tn. Famously, the administration placated Congress by restricting the electric vehicle tax credits to car companies from US allies and in general excluding products made with certain amounts of Chinese components.This is a trail that other big economies — except, ironically, China — can’t really afford to follow. European Commission president Ursula von der Leyen, a noted Americanophile, has talked about co-ordinating green policy with the US, and the EU has in theory assembled a one-off €800bn “NextGenerationEU” fund to finance the green and digital transitions.But in practice it is proving painfully slow to get the money out of the door, because it requires the member states to meet performance targets set by the commission. Unlike the US, the EU doesn’t have a large permanent centralised taxing or borrowing function and has to create new spending mechanisms for projects rather than quickly disbursing money via tax credits. In November, Germany’s constitutional court upended the government’s budget plans by blocking it from employing unused borrowing capacity to fund a climate and transformation fund for German industry.The EU has also resisted being quite as aggressive as the US on restricting trade and investment with China. Brussels has announced an investigation into subsidised Chinese EVs, but it’s unlikely to result in very high tariffs, and its domestic subsidies are not in general at present designed to exclude foreign (including Chinese) producers. The leading Chinese carmaker BYD recently announced it would produce EVs in Hungary, subsidised by the Hungarian government. Outside the EU, the US has some hopes that the UK will join its industrial policy camp. It’s true the Conservative government has often at least rhetorically tilted towards the US. And the Labour opposition likely to take power after a general election later this year has adopted Biden’s slogan of a “worker-centric trade policy”.But Britain can’t conceivably afford to copy the IRA. The public finances are already stretched and Liz Truss’s fleeting prime ministership in 2022, cut savagely short by financial markets taking fright at £45bn of unfunded tax cuts, is a cautionary tale for any government considering an open-ended fiscal commitment.In any case, unlike the US, the UK economy is nothing like big enough to sustain a self-contained industry for EVs or other green goods. Indeed, the government has focused on integrating with the EU market by extending rules of origin that facilitate car companies building cross-Channel supply chains.Brazil, where President Luiz Inácio Lula da Silva has committed himself to an active industrial policy, is also sometimes seen as a like-minded country by US officials. But Lula’s spending is often directed at heavy industries such as oil refineries and shipyards favoured by his electoral base. His idea of building a Brazil-based EV sector is enthusiastically to invite in Chinese investment, contrary to the US approach.There is no doubt that there is a lot of IRA envy in the world, particularly in the EU. Officials long for the ability simply to flick open a spigot of tax credits rather than laboriously construct an elaborate fiscal apparatus, not to mention dealing with the interference of the German constitutional court. There will also be interest outside the US in transferring any technological breakthroughs made by American producers. But as regards big economies actually joining its gang, the US’s industrial policy is blazing a trail that others are largely unable or unwilling to [email protected] More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Several Chinese shipping lines have been redeploying their vessels to serve the Red Sea and the Suez Canal, in what analysts have said is an effort to exploit China’s perceived immunity from the Houthi attacks that have driven most other operators out of the area.These smaller Chinese lines have been serving ports such as Doraleh in Djibouti, Hodeidah in Yemen and Jeddah in Saudi Arabia, all of which have faced big falls in traffic as international container shipping lines have rerouted to avoid potential attacks by Yemen’s Houthi rebels.Among the shipping lines redeploying its fleet is Qingdao-based Transfar Shipping, which on its website describes itself as “an emerging player in the transpacific market”, offering services between China and the US.Two of Transfar Shipping’s three vessels, the Zhong Gu Ji Lin and Zhong Gu Shan Dong, are currently operating in the Middle East. Ship-tracking websites show the Zhong Gu Shan Dong came from the Mediterranean through the Suez Canal in late December, after many other lines had abandoned the area.The Houthis, who have the backing of Iran, in late November started attacking commercial ships that they had said had links with Israel, declaring they were acting in support of Gaza’s Palestinians during the Israel-Hamas war. The group has also attacked other ships, particularly those linked to the US.Leaders of the group have said that they will not attack vessels associated with China or Russia, both allies of Iran, as long as they have no Israeli links. The US has asked China to urge Iran to rein in the Houthis, without apparent success.Cichen Shen, China expert at Lloyd’s List Intelligence, the maritime data business, said the “easiest explanation” for the rush of Chinese operators into the region was that they were seeking to exploit their relative invulnerability to attack to win business.“You have commercial interest and you see this capacity gap and you see the demand,” Shen said of the lines’ motivation for moving ships to the region. “I think the commercial interest is probably the biggest reason.”He pointed as an example of Chinese lines’ approach to China United Lines (CULines), based in Yangpu, on the island of Hainan. The company expanded significantly during the trade disruption from the Covid-19 pandemic and focused on the China-Europe and China-US routes.CULines last week announced that it was starting a Red Sea Express service linking Jeddah in Saudi Arabia with a series of Chinese ports. Shen said it was “natural” for CULines to apply the same opportunistic approach to the Red Sea disruption as it did to the Covid-era hold-ups.“It’s a similar kind of disruption, which creates this capacity shortage,” Shen said.Simon Heaney, senior manager in container research at London-based Drewry Shipping Consultants, said shippers moving goods through the area would have to weigh up whether to accept the risk of using the new services.“It’s opportunistic, it’s risky and it may appeal to some less risk-averse cargo owners,” Heaney said.China’s Cosco, operator of the industry’s fourth-biggest fleet, abandoned the southern Red Sea because of the security risks More

“Transforming Spaces” is a series about women driving change in sometimes unexpected places.Jam the towel under the door. Open the window. And hide the bong.For decades, college students have found ways to mask the pungent aroma of marijuana smoke on campuses. Wanda James, however, did not always feel a need to hide. A 1986 graduate of the University of Colorado Boulder, Ms. James would sit on the steps outside her dorm and roll joints with her friends.It would be decades before Colorado became one of the first two states in the country to legalize recreational cannabis, but on campus, James never worried.“The worst that would happen is they would tell us to put it away, or they might take it from us, and that was the end of it,” Ms. James recalled of the campus police.Fast forward 40 years: Ms. James, a former Navy lieutenant, is a member of her alma mater’s Board of Regents — and a prominent advocate of racial justice in the changing cannabis landscape.It wasn’t until after college that Ms. James realized she had been living in something of an alternate reality with her cannabis use. She learned how the United States’ marijuana laws have led to Black Americans’ being sentenced to prison at a higher rate than white Americans despite near equal usage rates, setting her on the mission to which she has dedicated her life.Ms. James, the chief executive of the Simply Pure dispensary in Denver, is licensing her company’s name to entrepreneurs in the cannabis industry who are from communities that had once been hotbeds of marijuana arrests.Rachel Woolf for The New York TimesMs. James, 60, has owned multiple cannabis businesses over the years, including a pair of dispensaries and an edible company, which has given her a platform to speak about what she believes to be racial injustices in the industry. She has been at the forefront of calling for cannabis legalization at the state and federal level. Federal scientists, in recent reports, have recommended easing restrictions on marijuana, a so-called Schedule I drug like heroin, and having it reclassified to a Schedule III drug, along with the likes of ketamine and testosterone.“Wanda is a force of nature!” said Senator John Hickenlooper, the former Colorado governor who named Ms. James to a task force that came up with recommendations on how to regulate marijuana in Colorado. Those recommendations became a model for the two dozen states that have since legalized the sale of cannabis in recreational dispensaries.But as more states have legalized the sale of recreational cannabis, prompting bigger companies to get involved in an industry that is increasingly mainstream, Ms. James is one of the few Black women in a leadership role. Several smaller cannabis businesses, mostly run by people of color and women — many of whom were caregivers who saw the benefits of medical marijuana for those they cared for — have been pushed out of the space, Ms. James said.In fact, ownership by women of cannabis companies fell to 16.4 percent in 2023 from 22.2 percent in 2022 with racial minorities accounting for just 18.7 percent of owners, according to a report from MJBiz Daily, a publication that covers cannabis-related legal and financial news.These days, Ms. James is not only pushing for wider cannabis legalization — recreational use of the plant is legal in 24 states and the District of Columbia but illegal on the federal level — but also for reform in the industry to ensure more people who look like her fill leadership roles.She believes that by becoming a dispensary owner, and now a leader in an industry with policies that have historically harmed Black and Latino Americans, she could reclaim some power for minorities targeted in communities that were hotbeds of marijuana arrests. In New York, for instance, state cannabis regulators documented a staggering 1.2 million marijuana arrests that disproportionately targeted Black and Latino Americans over 42 years.“There is so much happening in the industry to where it has not been a promising place that looks to diversity as a positivity right now,” she said. “We are trying to find out ways to help.”Ms. James grew up in rural Colorado on a ranch filled with dogs, rabbits, chickens and guinea pigs. Her father, a single parent and Air Force veteran, was a cowboy and they often rode horses together.As a businesswoman and a shaper of marijuana policy, Ms. James has been honored by the Colorado Women’s Chamber of Commerce and High Times Magazine, among other organizations.Rachel Woolf for The New York TimesThe penchant for caring for animals has continued. Ms. James has housed more than 30 dogs over the years, including some she found on the street. Like her father, she joined the military, becoming the first Black woman to complete the University of Colorado’s ROTC program. She served four years in the Navy before moving to Los Angeles, where she worked for two Fortune 100 companies. She also met her husband, Scott Durrah, then a property manager in West Hollywood and a fellow pot smoker, with whom she opened several restaurants in Colorado and California. Ms. James’s Rottweiler, Onyx, was the maid of honor at their wedding.While the couple were building their businesses, the country was feeling the long-term impact of President Ronald Reagan’s hard-line policies on cannabis. Mr. Reagan’s Comprehensive Crime Control Act of 1984 and Anti-Drug Abuse Act of 1986 — the year Ms. James graduated from college — “flooded the federal system with people convicted of low-level and nonviolent drug offenses,” according to the Brennan Center for Justice. In 2007, nearly 800,000 people were arrested for simple marijuana possession, the F.B.I. reported. About 80 percent of those arrested were Black. .“It was the demographic least likely to have a family friend that was an attorney and the least likely to have parents or family money to be able to get them out of the situation that night,” Ms. James said.Those statistics remained front of mind for Ms. James as she pursued cannabis business ownership and worked behind the scenes in politics.Ms. James at an election-night watch party in 2022. She has been at the forefront of campaigning for cannabis legalization at both state and federal levels.David Zalubowski/Associated PressIn 2008, Ms. James managed the successful congressional campaign of Jared Polis, a Democrat who was elected Colorado’s governor in 2018. The following year she and Mr. Durrah opened the Apothecary of Colorado, a medical cannabis dispensary, becoming the first African Americans to own a legal dispensary in the United States. They later closed the medical dispensary to open an edibles company, Simply Pure, which in 2015 became Simply Pure Denver, a recreational dispensary.“She’s a trailblazer,” said Tahir Johnson, a mentee of Ms. James. “When you think about a strong Black woman, that’s what she embodies.”As she became a businesswoman and a shaper of marijuana policy, she had a personal point of reference that she has returned to often in her work: her half brother, who served time in prison for offenses including marijuana possession.The cannabis industry “has not been a promising place that looks to diversity as a positivity right now,” Ms. James said.Rachel Woolf for The New York TimesMs. James has shared her journey in short documentaries produced by The Atlantic and Yahoo, and in 2018, she was named one of the 100 Most Influential People in the cannabis industry by High Times Magazine. She has used her platform to call for federal cannabis legalization, which would help dispensary owners inject some of the money they’ve been paying in taxes back into their businesses, increasing the likelihood of creating “generational wealth,” she said; because recreational cannabis is still illegal on the federal level, dispensary owners are unable to write off basic expenses, like staff salaries, unlike noncannabis businesses.And she’s tapping into her network to create change. Beginning with Mr. Johnson, her mentee, Ms. James is licensing the Simply Pure name to young entrepreneurs in the industry who are from communities harmed by racial disparities in marijuana arrests.Mr. Johnson said he had been arrested three times for marijuana possession, and he was “honored” Ms. James chose him to continue her legacy. He plans to open Simply Pure Trenton soon.“The fact that she’s trusted me to take on this mantle to this next phase of the organization means a lot to me,” he said. More