Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Friday, January 4, 2019

Spotlighting enduring challenges making marijuana social equity programs work

Oakland-cannabis-licensing-social-equity-program-attorney-advertisingStateline has this new piece, headlined "‘Cannabis Equity’ Runs Into Roadblocks," which highlights that good implementation, and not just good intentions, must be part of modern marijuana social equity programs.  Here are excerpts:

Now, as more states legalize recreational marijuana and the federal government moves away from incarcerating nonviolent drug offenders, several cities in California are trying to atone for decades of drug enforcement that fell disproportionately upon minorities.

They’ve created what are known as cannabis equity programs, meant to welcome more minority and low-income entrepreneurs into the now-legal industry. The programs provide business development, loan assistance and mentorships to eligible owners. Hundreds have applied in the past year. But “pot equity” has struggled with growing waitlists, and some participants allege that the programs aren’t fair to the people they’re meant to be helping....

The goal of “cannabis equity” is to lower the barriers to entry into the legal cannabis industry for people who were disproportionately impacted by the criminalization of marijuana. The programs base eligibility on a variety of factors, including marijuana convictions, residency in a heavily policed district and income.

Today, several city partnership programs require that established, non-equity businesses provide an equity business with space for several years rent-free. In exchange, the non-equity company receives faster processing for city approvals. Cities such as Sacramento plan to waive up to tens of thousands of dollars in application and permit fees for eligible cannabis businesses.

But pot equity has struggled to get going. Understaffing in San Francisco’s cannabis office has left a growing waitlist of applicants, and the city doesn’t expect to begin approving businesses until sometime in 2019, said Nicole Elliott, director of San Francisco’s Office of Cannabis. She could not be more specific on timing.

Some applicants argue that the waiting period has allowed other businesses to get an unfair head start. In Oakland, some pot equity businesses claim their incubator partners never followed through on the requirement to provide them with business development assistance or a space to operate....

Creating a program to atone for decades of unjust policing — on top of building the framework for a newly legal cannabis industry — is no easy task. Oakland is setting up a $3 million fund to provide additional capital assistance to pot equity businesses, Brooks said, but it remains unclear when the fund will become available.

San Francisco applicants have raised the same issue, said Elliott, the director of San Francisco’s Office of Cannabis. The office set up an investment fund to provide financial assistance to cannabis businesses, such as low-interest loans. But the city has yet to allocate money to the fund, Elliott said.

She said San Francisco will likely receive part of the $10 million that the state set aside for local cannabis equity programs in September, which could go toward the city’s cannabis investment fund. “There are equity applicants that need money now,” Elliott said. “We will advocate aggressively for that state funding.”

As of mid-December, San Francisco had 227 applicants that qualify for the equity program. Of those, about 110 want to join the city’s incubator partnership program and receive waived permit fees. Elliott said the city will begin approving applicants next year, but she could not say when. Applicants have criticized the lengthy timeline.

San Francisco’s Office of Cannabis, which just added two new staff members to bring the total to five, is tasked with reviewing permit applications and facilitating the equity program. Elliott said adding even more staff would speed things up. In the meantime, the city has established a partnership with the Bar Association of San Francisco to provide pro bono legal assistance to equity program participants.

Malcolm Mirage, an equity applicant in San Francisco, said the long wait has caused him to burn through capital at an alarming rate.  He partnered with MedMen, a household name in the cannabis industry that is publicly traded on the Canadian Securities Exchange.

MedMen agreed to provide business development aid and an incubation space for one of Mirage’s businesses. The company also helped him negotiate leases on two other spaces, and he struck a deal that gave him six months of free rent to obtain his permits and become operational.

Mirage figured that was plenty of time. But those six months came and went, and he’s now paying expensive leases on spaces that sit empty.  “I got out of jail for selling weed and now I’m trying to do this legally,” Mirage told Stateline.  “But I’m drowning right now. My businesses are going to be in a tremendous amount of debt if the city can’t get these licenses out in the next six months.”

https://lawprofessors.typepad.com/marijuana_law/2019/01/spotlighting-enduring-challenges-making-marijuana-social-equity-programs-work.html

Business laws and regulatory issues, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Who decides | Permalink

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