The Diversion, Inclusion, and Social Equity (DISE) Committee of the California Cannabis Industry Association (CCIA) released a detailed accountability report earlier this week. The report carefully examined California’s social equity program, specifically the state’s initial seven districts that received grant funds from the California Cannabis Equity Act passed in 2018.
The California Cannabis Equity Act of 2018 was designed to empower minority business owners who have been most impacted by the War on Drugs. Children of those incarcerated for non-violent crimes were among the applicants who applied to benefit from the program, which is about as close to “impacted by the War on Drugs” as it gets.
But many people believe California’s social equity program isn’t living up to what was promised when the bill was passed. The accountability report released by the CCIA proves that to be true.
Here are some key findings:
- In Oakland, 90% of respondents said lack of capital is a major problem plaguing their business
- In Los Angeles, as of October 1, 2021, only 28 of the 200 identified social equity applicants have received temporary approval
- In Mendocino, the County has not yet approved any Equity Eligible Applications
Taking a closer look at Mendocino County’s cannabis social equity program
Mendocino County was one of the seven initial district’s that received grant funds from the California Cannabis Equity Act, alongside Oakland, San Francisco, Los Angeles, Sacramento, Humboldt, and Long Beach. Mendocino County requires social equity applicants to be “extremely low income” or “very low income.” This means entrepreneurs after cannabis social equity grants in Mendocino County need to make between $20,000-$50,000 annually in many households. Social equity applicants Mendocino must also meet one of these five criteria:
- Have lived within a 5-mile radius of the location of raids conducted by the Campaign against Marijuana Planting (CAMP) program.
- Have a parent, sibling or child who was arrested for or convicted of the sale, possession, use, manufacture or cultivation of cannabis (including as a juvenile).
- Any individual who has obtained or applied for a cannabis permit in Mendocino County, or who has worked in or currently works in the cannabis industry, and was arrested and/or convicted of a non-violent cannabis-related offense, or was subject to asset forfeiture arising from a cannabis-related event.
- Is a person who experienced sexual assault, exploitation, domestic violence, and/or human trafficking while participating in the cannabis industry.
- Have become homeless or suffered a loss of housing as a result of cannabis enforcement.
At the time of the report’s writing, which was just released this week, Mendocino County hasn’t approved a single Equity Eligibility Application. This is mostly due to the income limits imposed on applicants. Those applicants who meet one of the five criteria above don’t meet the “very low income” or “extremely low income” requirements set forth by the county, hindering successful adults who were harshly impacted by the War on Drugs at some point in their life.
Mendocino County has accumulated $3,077,978.57 total funds for social equity applicants in 2020 and 2021.
Oakland, California’s social equity program
The Oakland Cannabis Commission shared a report just a few weeks ago detailing some shocking facts about the social equity program in that area. It was revealed that the city was sending a percentage of equity operators who have fallen out of compliance with the loan agreement to collections.
It’s evident there’s a social equity cash flow problem in Oakland, despite a total of $10,668,619.90 raised for the program. The report shared by the Oakland Cannabis Commission said 90% of respondents said the lack of capital is a huge problem in their business, and 82% claimed to make less than $50,000 in gross receipts the prior fiscal year. The CCIA report cites loan repayment as the current cannabis social equity issue to focus on in Oakland, highlighting the data from the Oakland Cannabis Commission’s recent report.
No transparency or timeliness
There is no uniformity for tracking social equity-related dollars in cannabis across all jurisdictions in California. This makes finding and analyzing data difficult. The structure, eligibility, and funding implementation are different across each county.
Testimonials for equity operators in California
“You’re expected to start basically a million dollar a year business, from scratch, not knowing what the budget is, not knowing what the state’s gonna put in front of you in terms of costs. Not having, really, the technical expertise to start the business. But you’re given a piece of paper saying you’ve got a license, start a business without either the proper capitalization and in that case, in our case, and everybody’s case, the consultants weren’t in place at that time, “ an anonymous equity applicant in Oakland said in the report.
Evelyn and Brandon from Green Paradise, a cannabis dispensary in Los Angeles, said “The hardest part about the social equity program, I think, for us, definitely raising capital we’ve experienced. We’ve had several relationships with investors over the period of time of the course of this program and they all fell short, just because of the timing of the entire program. So when we think about the funds, that big issue, the program itself, not a lot of information was given directly from the department.”
How California can improve the cannabis social equity program
The Diversion, Inclusion, and Social Equity Committee recommends the state create a “comprehensive definition for what constitutes cannabis social equity on the state level in order to facilitate more direct and intentional support of marginalized individuals seeking to enter the cannabis industry.” In other words, create a linear definition as to what cannabis social equity means to the state and entrepreneurs, so those business owners can be equally supported throughout California. The data must also be made publicly available, so people can see where the money is going and who is being helped. The report also recommends greater financial relief for social equity business owners and to simply make more funding accessible to these individuals.