California Black Cannabis Business Owners Call Foul on Social Equity Issues

California has always been a forward-thinking state in the history of legalized cannabis. Recently, though, chinks in the legislation armor have been uncovered, leading lawmakers to consider the impact of legalization seriously.

Stemming as far back as a failed legalization initiative in 1972, California has been at the forefront of instituting ground-breaking cannabis laws. The state legalized medical marijuana in 1996 and recreational use in 2016, along with social equity provisions, in motion in 2018, for cities like Oakland and Los Angeles. Now, minority canna-business entrepreneurs are citing significant issues with the fabric of the legislation.

The Los Angeles Social Equity program was immediately lauded as a framework upon which other states should build similar programs.

When it was launched in 2018, the Los Angeles Social Equity program was immediately lauded as a framework upon which other states should build similar programs. Social equity is not a new phrase to Californians, though. The Oakland City Council has been known for its Equity permit program, first introduced in May 2016, and the impact that legislation had on cultivating minorities into canna-business entrepreneurs. Equity applicants, as with legislation in Massachusetts, get priority applications for licensing opportunities. Additionally, these applicants have access to less binding, criminal background checks, zero-interest small business loans, and conditional approval if the applicant doesn’t have all the material squared away at the time of application. The social equity program’s costs are covered by the $3.4 million in licensing fees that the city collects from existing canna-businesses. Although this appears to be a foolproof plan for minorities, it comes with its fair share of controversy as well.

Los Angeles, as with Oakland, set forth legislation to enforce social equity provisions for those seeking start-up assistance. Minorities struck back with evidence that although the provisions were being taken advantage of, Los Angeles law enforcement was still actively profiling African-American and Latinx citizens. Virgil Grant, a long-time citizen of Los Angeles, had six licensed medical marijuana dispensaries and had trademarks actively in place, all by 2006. In 2008, the DEA raided his home and all six businesses, indicted him on counts of drug conspiracy, money laundering, and operating drug-related premises within 1,000 feet of a school. He was sentenced to six years in prison, and all of his dispensaries folded.

When he was released from jail in 2014, he was a broke, convicted felon with no business empire to his name. He credits unfair racial profiling with his incarceration. Grant struck back in 2016 when he founded the California Minority Alliance, meant to combat racial profiling while promoting inclusion in cannabusiness, as well as the Southern California Coalition. He, along with other formerly incarcerated social equity applicants, is worried that the same system which sent them to jail will be unwilling to now help them succeed.

Los Angeles had formed a Department of Cannabis Regulation (DCR) to adequately monitor the cannabis market for flaws and discrepancies but didn’t include advocacy for those affected by racial profiling. In doing that, minorities were actively excluded, especially when initial licenses were given to medical dispensaries which were already up and running. The second phase of licensing went to manufacturers and cultivators, of which minorities were nearly non-existent. However underrepresented Los Angeles citizens felt during phases one and two; they were almost wiped from the industry in phase three: storefront licensing.

A portal opened licensing to 100 social equity candidates.

In September 2019, a portal opened licensing to 100 social equity candidates. Of more than 1,800 applications, 14 were submitted in less than a minute and hundreds between 10:00 and 10:05 a.m. This spawned an audit of the times applicants opened the link, thus uncovering applicants who began their processes nearly a minute before the system’s “official opening.” Those few seconds, though minute, were the difference between claiming one of the 100 licenses and falling short. The licensing process was suspended, and the cherry on top of the defunct licensing process was that many candidates who did make the 100-applicant list were not even eligible under social equity qualifications. Those who had applied and been tagged as social equity applicants claimed that the geographic lines laid out in the initial social equity plan were too broad; also, these areas were said to include those with higher socioeconomic status and those who did not represent the adverse effect of the War on Drugs.
A spokesperson from the Department of Cannabis Regulation stated that the system was legally barred from racially discriminating during the application process. Still, activists estimate that only 18 of the 100 applicants were African-American. The uncertainty of licensing, coupled with the ongoing audit, negatively impacted those social equity applicants who were renting retail space and in communication with investors. Financial stability withered and dried up for some during this waiting period. Applicants have regularly downsized homes and sold personal property, such as cars and furniture, to pay to stay on the waitlist.

“Why call it social equity and make people think that you’re helping the black and brown communities?” Evelyn Brinson, a social equity applicant, and no. 200 on the infamous list, said. “It’s stressful seeing everything that you’ve worked for in your entire life being placed in something that you thought was going to be an opportunity to help you, and it has literally hurt you.”

Brinson had to sell an insurance agency she ran, and she estimates that her chance at fighting the stigma of minority cannabusiness owners is in the hole $200,000. Unfortunately, there are hundreds of stories just like Evelyn Brinson and Virgil Grant. Those with good intentions, but bad backgrounds, are more willing to put their profits back into the local communities, but those who are still waiting on their turn at a license are dwindling as funds run dry, and licenses are no longer guaranteed.

In January 2020, Cat Packer, executive director of the DCR, approached a crowd of disappointed activists and impatient social equity applicants at the Los Angeles City Hall and voiced her concerns regarding the implementation of social equity plans. She echoed those of activists and minority cannabusiness entrepreneurs and admitted that the social equity licensing process, ceased at the moment, had been stumbling and fumbling its way to success.

“It’s one thing to pass an equitable policy,” Packer told the crowd. “It’s another thing in its entirety for it to be implemented.”