Oakland’s attempt to fix racial inequality in the cannabis industry by giving permits to ex-convicts to sell, grow or transport the drug for which they were once criminalized is off to a surprisingly good start by most accounts.
The city has received 72 applications for pot business permits since May, and nearly half are seeking equity permits under a city program meant to provide reparations for the war on drugs, a U.S. government campaign that researchers say disproportionately affected African Americans. Other roadblocks are cropping up in the budding industry, too, including a lack of available space in Oakland for new businesses — a problem that at least one City Council member wants to address by selling city-owned properties to marijuana operators. The numbers are putting to rest fears that few would apply for the program.But proving who qualifies for the equity program is turning out to be harder than city lawmakers thought when they passed a complex set of ordinances in March.
There was so much fear it wouldn’t work, said Councilwoman Rebecca Kaplan, who has proposed selling vacant city buildings and a number of zoning changes to ease pathways for new cannabis business owners. — a problem that at least one City Council member wants to address by selling city-owned properties to marijuana operators.
“One could almost say it’s a miracle. There was so much fear it wouldn’t work,” said Councilwoman Rebecca Kaplan, who has proposed selling vacant city buildings and a number of zoning changes to ease pathways for new cannabis business owners. “This whole strategy was built from scratch in Oakland, and it appears to be going beautifully well.”
The ordinances require the city to give at least half of all available cannabis permits to individuals who were convicted of a marijuana-related offense in Oakland and earn an income less than 80 percent of the city average. “Equity applicants” can also qualify if they lived in an Oakland neighborhood for 10 of the last 20 years that saw a disproportionately high number of cannabis arrests.
Someone who doesn’t qualify under either definition — a “general applicant” — can move up in line by giving an equity applicant at least 1,000 square feet of free rent through an “incubator” relationship.
The paperwork-heavy permitting process could be discouraging people from applying, said Matt Hummell, chairman of the city’s Cannabis Regulatory Commission. City officials know of more than 130 cannabis businesses operating under the radar.
Of the 72 applications completed, there were 31 equity applicants and 41 general applicants, meaning there won’t be a severe bottleneck some anticipated for the latter group to get permits, and there’s a big opportunity for incubator partnerships, said Greg Minor, who oversees the special activity permits division of the city that regulates cannabis businesses.
“It’s a challenge bringing people into the light and into compliance,” Minor said. “We’re going to learn and adjust as we go and as we try to level the playing field.”
The city permit is only the first step in legally operating a pot business in California. Starting next year, pot businesses that have local permits must apply annually for state licensing. It’s unclear whether equity applicants with criminal backgrounds will be approved for state licenses. State law authorizes agencies to deny licenses to some applicants with criminal backgrounds.
Lanese Martin, co-founder of the Hood Incubator in Oakland, which helps African Americans and minorities enter the cannabis industry, said the documentation needed to prove equity status in Oakland is impossible for some people who clearly qualify.
Young people may not have residency records stretching back two decades, and those who have been unemployed have difficulty proving the income requirement, Martin said. She suggested that school records and Supplemental Security Income documents be among those accepted by the city.
Robert Selna, a land use and real estate attorney at the Wendel Rosen law firm in Oakland, said that despite the city’s new “labyrinth of regulations,” the town remains an appealing cannabis destination because it’s one of the few places in California that allow every type of operation — from laboratory testing and cultivation to delivery and dispensary.
“Oakland’s regulations are complex and onerous,” he said. “They likely give cannabis businesses some pause, but there’s a counterbalancing effect by the range of permits available and the city’s history in cannabis legalization efforts.”
The demand to do business in Oakland is making access to brick-and-mortar spots “nearly impossible,” Hummell said, adding that the number of hoops people have to jump through to get a permit are discouraging for would-be cannabis operators — equity or otherwise.
“Especially if you’re not in the industry right now … when you get into the nitty-gritty, there’s so many steps to be successful,” he said. “If the city from the start had treated cannabis like tomatoes or any other crop, it’d be easier to just do something and start from scratch.”
Kaplan has put forward several proposals, to be discussed at a City Council meeting Tuesday, that are designed to ease some of the regulations around opening a cannabis business. In addition to selling unused city buildings, she suggested loosening requirements on where edibles can be produced. Under current rules, such a business would need to be in a building authorized for manufacturing, rather than one suited for a standard industrial kitchen.
“People still have barriers to entry,” Kaplan said. “Where you can bake brownies, you should be able to bake pot brownies.”