Is the Golden State keeping its equity promises? It’s not easy to say. Since California’s social equity programs are doled out at the local level, the provisions vary across different municipalities. Each jurisdiction defines its applicants differently as there is no statewide definition of “social equity.” And just as the requirements are mixed across the state, so are the experiences of those involved.
Thanks to the 2018 California Cannabis Equity Act, local jurisdictions can request the government for technical assistance and funding for social equity applicants. Oakland, San Francisco, and Los Angeles all received over $2 million in grant funding from the program between 2020-2021, and Sacramento received about $1.8 million. Despite this aid, many business owners have found themselves struggling to succeed.
Bridget Hennessey, Vice President and Director of Government Relations at Irvine, California-based Weedmaps, told me that “there is a patchwork of differing local regulations across California when it comes to social equity programs. So what is the case in San Francisco may not be the case in San Diego. There are no common goals or objectives. There are no core requirements. And that is resulting in unequal access and opportunities for applicants.”
Oakland social equity
The New York Times recently reported that Oakland’s industry is being threatened by theft, racism, and a market stacked against small operators. Other reports have echoed this, pointing to crime, high taxes, and lack of access to capital as barriers that could wash away small cannabis businesses.
I spoke with Tucky Blunt, the aptly-named owner of Blunts and Moore, which was the first equity-owned dispensary in the industry when it opened in 2018. The opening of Blunts and Moore also made Tucky the first person with a prior weed conviction to open a legal cannabis business in California. Oakland is now reported to have 186 equity cannabis businesses.
The high taxation in California’s cannabis industry makes it difficult to turn a profit, Blunt told me. “That’s not the equity program, but it affects us the most because we’re the poorest. We’re not a part of big MSOs, we don’t have money to just keep overpaying stuff. My store has brought in income, but there is no profit to be made because we’re over-taxed. That’s separate from the equity program, but overall the equity people are getting hit hard the most because we don’t have the money to begin with. It’s been a real shit show.”
Oakland’s social equity program is the reason Blunt is now a dispensary owner, and he was sure to express gratitude for the opportunity. With that said, he points out that there is always more work to do. “The equity program is a beautiful thing, they just need to tighten it up. Just tighten it up, that’s it,” he told me.
What does tightening it up look like? He wants more oversight for equity programs, as well as more training for business practices and ethics. “Yes, they have a technical assistance program, I’m not gonna discredit that,” he said. “But the people running these programs aren’t in cannabis and they’re learning from us. How are you learning from us but you’re the ones supposed to teach us? It’s weird,” he added with a chuckle.
He pointed out that the lack of oversight is a problem in Oakland, other California cities, and around the nation. “I want to be regulated in the sense of ‘come and let me know that I’m doing the right things.’ There’s none of that. Who is holding these counties and cities responsible for these equity programs when bad things are happening? No one.”
Tucky knows that his experience and expertise in the cannabis and social equity world can benefit other states that are still working on drafting a program, even if California hasn’t reached its optimal programming. He has been present in Zoom meetings and calls with government officials to give his two cents and craft even better provisions around the nation.
“Once you make a law, it’s over. I don’t know many laws that have got changed. We have to craft laws to help benefit the space, which means having people that are part of the space that know their shit.”
While many people dislike it, Tucky Blunt was pleased with the lottery system for California social equity licenses because it gave all qualified applicants an equal chance at getting a license.
Both Blunt and Hennessey mentioned that access to capital is at the top of the list of concerns for Oakland and California as a whole. “It isn’t surprising that access to capital is at the top of the list–it is cited as a problem for almost anyone who wants to start or expand a small business. But access to capital is even more elusive if you are a person of color, or have a criminal record, or a less-than-perfect credit history–and you want to open a cannabis business,” said Hennessy.
LA social equity
In LA, social equity provisions are also met with mixed reviews. We’ve spoken with LA success stories, including Kika Keith who became the first Black woman to own a dispensary in LA, and business owners who received assistance from social equity-focused retail brands doing more than the city’s program.
Kika Keith, LA’s first Black woman dispensary owner
The city announced in 2018 that it would reserve two-thirds of retail licenses for Black and brown people most impacted by the War on Drugs, but it didn’t take long for lack of start-up capital to become a roadblock. Applicants had to have already purchased or leased property for their potential business before they could qualify for a license and then they’d have to wait for the red tape to lift. Paying for empty space in LA caused some licensees’ to lose their savings and created yet another barrier for qualified applicants to enter the industry.
“People had dreams and hopes of building generational wealth,” said Bonita Money, founder of the L.A.-based National Diversity and Inclusion Cannabis Alliance, in an interview with LA Times. “And it’s done just the opposite. It’s ruining lives at this point.”
As of this January, the city had granted 358 temporary temporary equity licenses to retailers, cultivators, manufacturers and distributors. Now, the city is working to transition temporary licenses into annual ones–a process described in the LA Times as costly and complex.
Sacramento social equity
Sacramento’s Cannabis Opportunity Reinvestment and Equity (CORE) program faces similar problems to other California cities. Lack of access to capital, a complicated regulatory system, lack of business education, and difficulty in identifying viable locations for business are among the obstacles mentioned by Davina Smith, manager of the city’s Office of Cannabis Management, in an interview with Cannabis Business Times. Smith pointed to some successes, though, such as how nine of the 22 CORE businesses are owned by women of color.
As of this January, the city had doled out 19 social equity licenses. Dispensary caps have prevented Sacramento from issuing new equity licenses since the first round of openings in 2020.
Access to capital and meaningful education seem to be among the biggest concerns when it comes to social equity in California, as well as trouble navigating the bureaucratic red tape.
As Blunt puts it, “They give us equity people a billion-dollar license with maybe $2 worth of education.”
Hennessey shares these concerns. “California’s legal market is the biggest in the world, but that doesn’t mean it is open to everyone. Larger operators have the advantage.”