The problem still exists as of 12.1.1:
➜ ~ wolfram
Mathematica 12.1.1 Kernel for Linux ARM (32-bit)
Copyright 1988-2020 Wolfram Research, Inc.
Mathematica 12.1.1 Kernel cannot find a valid password.
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Machine name: raspi2
MathID: 4703-79205-43531
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Adding the user to the video
group fixed it for me. I figure adding full command output as above may help others (like a future me, once I've forgotten this) find this thread.
Edited to add: To fix the problem for the current user (regardless of that user's name), you can use:
sudo usermod -a -G video $(whoami)